RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/G/50
12 October 1998
(98-3902)
Trade Policy Review Body Original: Spanish
TRADE POLICY REVIEW
URUGUAY
Report by the Government
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), the policy statement by the Government of Uruguay is attached.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Uruguay.Uruguay WT/TPR/G/50
Page 3
CONTENTS
I. INTRO DUCTION ................................................................................................................. ...4
II. ECONOMIC AND INVESTME NT ENVIRO NMENT ........................................................4
(i) Macroeconomic policy.................................................................................................4
(ii) Economic  reforms........................................................................................................5
(iii) Investm ent po licy ......................................................................................................... 6
III. TRADE ENVI RONMEN T.......................................................................................................8
(i) The extern al sector.......................................................................................................8
(ii) Trends in foreig n trade, 1992-1997 ............................................................................8
(iii) Development of the trade policy, 1992-1997..............................................................9
(iv) Regional integration ..................................................................................................10
IV. URUGUAY AND THE WTO ................................................................................................11
(i) Uruguay and the multilateral trading system .........................................................11
(ii) Application of the WTO Agreements.......................................................................12
(iii) Uruguay’s position regarding future negotiations..................................................13
V. FUTURE DIRECTIONS OF TRADE POLICY..................................................................13WT/TPR/G/50 Trade Policy Review
Page 4
I. INTRODUCTION
1. In 1974, Uruguay began a unilateral process of trade liberalization and economic reforms,
after several decades of import-substitution policies.  In this process of economic liberalization,
quantitative restrictions and other barriers to trade were removed, trade regulations were simplified
and a gradual but steady process of reducing import duties was begun.
2. Uruguay has continued and deepened its economic reform process.  The structural reforms to
the social security system and the tax system and reform of the State and the educational system havebeen among the most important.  The Government has reduced its involvement in economic activities
by eliminating monopolies, privatizing and outsourcing certain activities and allowing private
investment.  In a stable macroeconomic context that is favourable to investment and is based on
responsible fiscal policy, inflation has gradually been reduced, dropping from 60 per cent in 1992 to
15 per cent in 1997, with projections for 1998 running between 7 per cent and 9 per cent.  GDP hasgrown steadily over the last five years at a cumulative rate of 3.5 per cent per annum.
3. Uruguay is a founding member of MERCOSUR.  When it was created in 1991, the process of
liberalization continued but changed in nature from a unilateral programme to a programme
negotiated within the framework of MERCOSUR, with the objective of forming a common market
with the main trading partners, Argentina, Brazil and Paraguay.  In 1991, the members ofMERCOSUR began a tariff reduction programme, which was completed in 1994 with the removal of
tariffs on intraregional trade, with some temporary exceptions.  In parallel, the four countries defined
a common external tariff which Uruguay adopted on 1 January 1995, and which allows periods for
tariff convergence in some cases.  The systematic process of entrenching the openness and
liberalization of the Uruguayan economy is continuing in an international context that is not
favourable to the country in terms of access to international markets for its main export products.
II. ECONOMIC AND INVESTMENT ENVIRONMENT
(i) Macroeconomic policy
4. Current economic policy objectives are to improve conditions for sustained economic growth,
raise the standard of living and bring inflation down to levels comparable with those observed
internationally.
5. The medium-term policy includes strengthening of public finances, curbs on spending and
tight money, in order to achieve a gradual and sustainable reduction in inflation.  The stabilization
programme is complemented with a series of structural reforms and coverage of sensitive social areas.
6. The structural reforms to the social security system, the tax system, the State and education
are particularly important.  The country has been moving toward deregulation of the economy and
privatization or concession of activities previously run by the State.  There has also been considerableimprovement in the legal regulatory framework gove rning the capital market.  In the field of trade
policy, openness of the economy has been deepened, favouring sound allocation of productive
resources and efficient investment, which has substantially improved the productivity of the economy.
This growing liberalization of trade has also contributed to the stabilization process.
7. Social policy is intended to assist the most vulnerable groups, such as the unemployed,
children, young mothers and the elderly living on low incomes, providing them with broader
coverage, particularly in health care and education.  In the last decade, the country has improved
income distribution and the main social indicators.  The challenge is to consolidate and build on this
situation.Uruguay WT/TPR/G/50
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8. Confidence in and the credibility of the model for gradual stabilization of prices and a solid
and favourable macroeconomic climate for investment are underpinned by a responsible fiscal policy.
The public sector deficit, including the quasi–fiscal operations of the Central Bank and the costs of the
structural reforms of the State and social security, amounted to 1.6 per cent in 1997 and is projected to
be 1.2 per cent in 1998.  Excluding the transfers ne eded to implement these two key reforms, whose
returns will be felt in the future, public sector management experienced a slight deficit in 1997(0.2 per cent), with a balance expected for this year.
9. Inflation has declined gradually and steadily over the period under review.  In 1992, it was
about 60 per cent, but had fallen to 15 per cent at the close of 1997.  Projections for 1998 are between
7 per cent and 9 per cent.  Gradual stabilization of the economy has gone hand-in-hand with a
reduction in the fiscal deficit and a foreign debt policy that seeks to bring the level down even furtheras a percentage of GDP (today in net terms it is 13 pe r cent).  Although the benefits of stability are not
felt instantaneously, low levels of inflation have been achieved in just a few years without prompting
large transfers of resources between sectors or sudden changes in the rules of the game.
10. GDP has grown uninterruptedly since 1988, with the sole exception of 1995 when it shrank
by 1.8 per cent as a consequence of the regional crisis.  In the last five years, GDP has risen steadily(at a cumulative 3.5 per cent a year), based chiefly on growth in exports and private investment.  The
annual cumulative growth rate for exports of goods and services was 8.9 per cent, while the figure for
private investment in machinery and equipment was 12.4 per cent.
11. Higher economic productivity resulting from investment, coupled with the scant flexibility of
the labour market, has caused the unemployment rate to rise above the levels current at the beginningof this decade.  In 1992, unemployment was about 9 per cent and today it is about 10 per cent.  The
recession during 1995 caused it to jump to 13 per cent in the first half of 1996.
(ii) Economic reforms
12. Three major structural reforms were carried out between 1995 and 1996:  reform of the social
security system, reform of education and reform of the State and non-financial public companies.
13. Reform of the State and the non-financial State-owned companies involves the reorganization
of approximately 800 central government offices and units, a reduction of approximately 6,000 jobs
and non-coverage of about 2,000 vacancies, out of a total of some 55,000 public service positions.
The goal for State-owned companies is to boost the productivity of all operations in order to meet the
challenge of an integrated regional market by bein g more competitive.  This reform is not limited to
quantitative aspects or payroll spending.  The programme also includes real improvements in the
quality of administration, and in particular the management of human resources and financialadministration.
14. The social security reform extends thus far to workers who are members of the Social
Insurance Bank, who account for approximately 90 per cent of the entire working-age population.
This reform plays an important role in the macroeconomic programme, since it solves an interphase
problem by imposing extra costs at present in order to avoid excessive spending in future, when the
underfunding of the system will have been aggravated not only by demographic factors but also by
some of the system's current features.
15. The social security reform was implemented in the second quarter of 1996.  Its main
objectives are to check the upwards trend in costs, ease the tax burden on labour and improve
administration of the retirement and pension system.  The reform establishes a supplementary systemfor pension funding in individual accounts administered by the private sector, while maintaining an
intergenerational public pay-as-you-go system.WT/TPR/G/50 Trade Policy Review
Page 6
16. The educational reform extends compulsory sc hooling to four-year-olds, which will later be
expanded to cover three-year-olds.  It also shifts  the focus of primary education, increasing the time
spent on studying mathematics, languages and computer science.  It boosts the coverage of foodprogrammes for children with nutritional deficiencies and lengthens school hours in poor
neighbourhoods.  Reform of the curriculum is not limited to primary school.  It extends to secondary
school, where special stress is placed on more classes for students with difficulties in certain subjects,
such as mathematics.
17. Changes to the tax system have mainly taken place in two areas.  First, the strategy of making
companies more competitive in the face of liberalized  trade has led to the introduction of tax changes
to ease the tax burden on production factors.  Second, in order to establish homogeneous taxation for
different sectors of the economy, agricultural taxation based on estimated income levels has been
eliminated.
18. The government has reduced its involvement in the economy, doing away with monopolies in
certain activities, privatizing and outsourcing others, and ceding some investment activity to the
private sector.  The first case includes removal of the monopolies on the production of alcohol,
electric power generation and a substantial part of the insurance market, as well as the monopoly
enjoyed by the Mortgage Bank of Uruguay on housing mortgages.
(iii) Investment policy
19. Unilateral liberalization, on the one hand, and the open regional integration process, on the
other, pose a challenge for investment policy, since redeployment requires a flexible response by the
private sector, particularly by capital and skilled labour.  To tap the advantages of trade policy, which
are reinforced by a privileged geographical location in the region, a programme has been launched to
support private investment.
20. The main areas in which problems were detected with respect to establishing a climate that
would favour investment were:  the lack of long -term financing and heavy public sector involvement
in the economy, the scant development of business ties that could reduce the transaction costs of
protecting property rights, and the persistence of certain interferences with market signals despite the
liberalization.
21. Consequently, an investment sector reform programme was introduced, with support from the
Inter–American Development Bank, which had the following objectives: (a) to produce more saversand investors in order to generate large flows of domestic and foreign funds, which they would
intermediate; (b) to offer new investment opportunities in sectors that had previously been reserved
for public capital; (c) to improve the legal and institutional framework that governs trade and
investment; and (d) to boost the economy’s  internal and external competitiveness.
22. Since investment requires a stable and predictable macroeconomic environment, an overall
objective of the programme was simultaneously to introduce a macroeconomic policy that would be
compatible with the other specific objectives.  For private sector investment, the better the capacity to
predict the macroeconomic scenario, the fewer the risks that investors have to run, apart from the
investment risk.  In turn, the better the capacit y to predict the context in which a company will
develop and the longer the planning horizons that can be covered, the larger the number of investmentprojects that will be competitive.  In both instances, the rate of return demanded for the projected
investment is lower and therefore more projects can be undertaken.  Accordingly, a gradual price
stabilization process has been followed, without prompting large transfers of wealth, while assuring
that future changes in prices will be more predictable.  The strategy was to use a moving band for the
floating of the exchange rate, with pre-announcements by the monetary authority of the monthlyUruguay WT/TPR/G/50
Page 7
growth rate within which the band would move.  The Central Bank will intervene if the levels fall
outside these limits.  The roots or foundation of this gradual reduction in inflation lies in the public
sector’s responsible financial management, aimed at  rapidly establishing orthodox behaviour with the
goal of fiscal balance.
23. With respect to the mobilization of savings and investments by specialized agents to improve
the allocation of domestic financial resources, a number of measures were adopted particularly in thesocial security reform, which established Pension Fund Administrators as professional managers of
retirement investment portfolios.  The presence of these institutional investors, coupled with the
investment funds which are growing as a result of the legal framework approved under a specific law,
creates drive on the demand side for private securities.  In order to provide private business with more
opportunities to accede to these savings, conditions were improved for the issue of negotiablesecurities, which grew strongly in 1996, moving from a total of US$56 million in December 1994 to
US$545 million by the end of 1997.  Once the demand and supply of securities had been improved, it
was felt that the market would function better by making certain changes to the stock market
regulations.  The changes were made and an electronic stock exchange was created.
24. To offer new opportunities for private investment, many joint ventures were proposed with
the public sector in activities that had traditionally been carried out exclusively by the latter.
Examples that have had an impact on private sector productivity include:  highway construction and
operation, expansion and operation of international airports, operation of a large number of services at
the port of Montevideo, construction and operation of gas pipelines to carry natural gas from
Argentina and the distribution of piped gas.
25. As part of the legal framework for investment , an investment act (Law 16906) was passed in
order to attract and promote new investments and reinvestment in existing companies.  This
legislation codifies foreign investment guarantees and investment tax incentives in a single legal text
in order to provide investors with a clear and unified regulatory framework.  The law reaffirms some
of the country's traditional measures relating to foreign investment, such as equal andnon-discriminatory treatment in comparison with national investors, the removal of requirements for
authorization or registration as a foreign investor and freedom of currency exchange, which assures
that capital and profits in domestic currency can be converted to another currency at the market
exchange rate.  In the law, the Government assures investors that the conditions that prevailed at the
time they made their investments will remain stable, otherwise it assumes liability for damages.
26. Opening up the economy also requires a series of policies to improve competitiveness.  To
that end, labour has been made more flexible by ensuring that wages would reflect the decline in thepace of inflation and that no distortions in relative prices would be observed after 1995.  Today, with
inflation running at 10 per cent a year, wages can be adjusted once or twice a year, while in the past
they had to be adjusted every three or four months.
27. Investment has behaved very positively in recent years, although as a percentage of GDP it is
still low in comparison with other Latin American countries.  Total investment was slightly more than10 per cent of GDP in 1989 and 1990, having fluctuated between 10 per cent and 12 per cent of GDP
in the second half of that decade.  There was a sharp increase in investment at the start of the 1990s,
which peaked at 16 per cent of GDP in 1995 and has remained at over 15 per cent during the whole
period.  Investment in the period 1993-1997 was 72 per cent higher than in the period 1986-1990, for
cumulative annual growth of 8 per cent in the seven years separating these two five-year comparatorperiods.WT/TPR/G/50 Trade Policy Review
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III. TRADE ENVIRONMENT
(i) The external sector
28. The gradual liberalization of trade that has been taking place in the country since the 1970s,
which has speeded up in the present decade, has transl ated into significant growth in imports leading
to higher levels of consumption and productive investment in the economy.  Imports of goods
measured in current dollars grew at a cumulative annual rate of 12.4 per cent in the period between
1992 and 1997.
29. Greater efficiency in allocating productive resources in the economy and the investment
process mentioned earlier have led to an increase in exports which, when quantified in the same way
as imports, show cumulative annual growth of 10.3 per cent.
30. The economic openness coefficient estimated on the basis of the variables reported in the
national accounts, measured in constant currency, shows an increase from 65.2 per cent in 1992 to
90 per cent in 1997.  Although the figures overestimate the coefficient in question owing to the waythat exports are posted in the national accounts, this growth is still remarkable.
31. Consolidation of the country’s economic reforms in a context of international financial
liquidity has resulted in significant surpluses  in the balance-of-payments capital account over the
period under consideration.  These inflows of external capital have been so large that they have not
only offset the deficits in the current account but have permitted the Central Bank’s net internationalreserves to rise.
32. Faster growth in imports of goods and services than in exports led to negative results in the
balance-of-payments current account.  In 1992, the deficit was 1 per cent of GDP, rising to 2.5 per
cent in 1993/94.  The improvement in the fiscal accounts has freed up domestic savings to finance
private investment, permitting less reliance on external savings.  As a consequence, the deficit in the
balance-of-payments current account dropped to 1.6 per cent in 1997.  It is expected to rise slightly in
1998 to about 2 per cent, as a result of the deterioration in the international situation.
33. The surpluses in the balance of payments during the period under consideration increased the
net international reserves of the monetary authority from US$946.8 million in 1992 to
US$2,262.7 million in June 1998.  This amount covers about seven months of imports.
(ii) Trends in foreign trade, 1992-1997
34. Since Uruguay is a small economy, international trade is particularly important for the
country.  The process of economic and trade liberalization that it has carried out both unilaterally and
in the context of regional agreements and the multi lateral sphere has been mirrored in steady and
continuing growth in foreign trade flows.
35. Uruguay’s foreign trade in goods has increased significantly in recent years, from a total of
US$3,747 million in 1992 to US$6,441 million in 1997, for a rise of 72 per cent in current dollars.Exports have grown by 60 per cent since 1992, from US$1,702 million in that year to
US$2,725 million in 1997.  For their part, imports grew continuously over the period, from
US$2,045 million in 1992 to US$3,716 million in 1997 for an increase of 81.7 per cent in current
dollars.   The figures for foreign trade in goods continued to rise during the first half of 1998, chiefly
on account of larger imports.  The trade balance has posted increasingly negative balances since 1991as a consequence of higher growth in imports, with a deficit of US$990 million in 1997.Uruguay WT/TPR/G/50
Page 9
36. National statistics indicate that approximately one half of the value of foreign trade in goods
corresponds to commercial transactions with the member countries of the Latin American Integration
Association (LAIA) and within it, with the me mbers of MERCOSUR in particular.  In 1997, 55 per
cent of Uruguay’s exports and 50 per cent of its imports of goods were from LAIA countries.  The
countries of MERCOSUR, Uruguay’s main trading pa rtner, have gradually increased in importance in
recent years as destinations for Uruguayan exports.  In 1997, 49.7 per cent of the country’s totalexports went to MERCOSUR.  Total imports of goods from MERCOSUR were 43 per cent in 1997,
similar to the figure for 1992.
37. The European Union has declined as a destination for Uruguayan exports, from 24.5 per cent
in 1992 to 18.9 per cent in 1997.  Sales to the United States have also declined, from 10 per cent in
1992 to 6 per cent in 1997.  In the same period, imports from the European Union grew steadily, by103 per cent between 1992 and 1997 in current dollars, with their share of Uruguay’s imports rising
from 17.3 per cent to 19.3 per cent.  Purchases from the United States grew by 112.7 per cent in
current dollars between 1992 and 1997, accounting in that last year for 11.6 per cent of Uruguay's
imports, as compared with 9.9 per cent in 1992.
38. Trade in goods with Asia, excluding the Middle East and including China, accounts for
approximately 10 per cent of Uruguay’s exports and a similar percentage of its imports, while 10 per
cent of trade in goods is carried out with other countries in Europe, the Americas, Africa and the
Middle East.
39. Uruguay’s main exports are agricultural, with a small number of products accounting for a
substantial share of its external sales.  The main exports in 1997 included beef (13.9 per cent of thetotal), rice (9.3 per cent), wool (9.7 per cent), hides and skins (7.1 per cent), dairy products
(5.2 per cent) and fish (3.7 per cent).
(iii) Development of the trade policy, 1992-1997
40. Since the last Review in 1992, the thrust of Uruguay’s economic and trade policy has moved
steadily along the following general lines:
- Economic stability;
- trade liberalization and economic openness;- deepening of the MERCOSUR re gional integration process.
41. In order to improve the efficiency with which productive resources are allocated internally
and advance the country’s integration into the world economy, Uruguay has maintained a policy of
opening up its economy, removing different barriers and restrictions and rationalizing and reducing
import duties, through unilateral, bilateral, regional and multilateral measures.  This has been mirrored
in a substantial improvement in the degree of openness to the world and the region, with major growth
in Uruguay’s foreign trade in imports and exports alike.  Tariffs are the key instrument of import tradepolicy.  In the Uruguay Round of Trade Negotiations, the country bound all its tariff lines at 35 per
cent, with some exceptions below that level, and a few above, for certain agricultural products.
42. The tariff structure in effect in 1992, which included three levels (24 per cent, 17 per cent and
10 per cent), was subsequently reduced to 20 per cent, 15 per cent and 6 per cent, and maintained until
1994.  The tariff-cutting programme launched in 1991 by the members of MERCOSUR culminated at
the end of 1994.  All tariffs on trade among the MERCOSUR countries were eliminated in 1995,
except for a small list of products from each country on which they were to be removed in 1998 forWT/TPR/G/50 Trade Policy Review
Page 10
Argentina and Brazil and in 1999 for Uruguay and Paraguay.  In 1995, Uruguay adopted the Common
External Tariff agreed upon in MERCOSUR to impr ove the competitiveness of the member countries.
Periods are allowed, which in some cases extend to the year 2006, to make certain products convergewith the Common External Tariff.  The Agreemen t on Tariffs reached by the MERCOSUR countries
in Ouro Preto in 1994 required Uruguay to reduce its average tariff and the levels and dispersal of
effective protection on goods produced in the economy.
43. At the same time, Uruguay has continued its process of economic reforms and liberalization
unilaterally, stressing the streamlining of procedures and the removal of unnecessary barriers to tradein goods and services.  It has simplified and facilitated export and import procedures, through the use
of a single import document and a single export document.  This gradual and systematic reduction and
elimination of different barriers and obstacles to trade, such as bureaucratic formalities, advance
authorizations, administrative controls and supervision, has made a significant contribution to
facilitating foreign trade by improving the country’s allocation of resources.
44. Although progress must still be made in some fields, substantial headway has been made in
the treatment of products imported with distorted prices, through a reduction in the universe of
products included and the sphere of application.  The recent introduction of anti-dumping regulations,
which are fully compatible with WTO rules, is an indicator of the Government’s intent in this regard.
45. Although the Government is heavily involved in the provision of certain services, different
reforms have been made in this field, which are described in the previous chapter of this report.
46. Uruguay has enacted a new investment promo tion law which establishes the principles of
non-discrimination and transparency, common applicat ion of the system of benefits and a uniform
methodology, which has helped to improve the investment climate.
47. Since MERCOSUR was created, Uruguay has nego tiated and reached agreement with the
other member countries on different aspects of trade policy which led to the creation in 1995 of a
customs union, with different periods set for its full implementation, as an intermediate step to theestablishment of a common market.  In Uruguay’s view, as progress continues in the consolidation
and entrenchment of MERCOSUR and common trade policy mechanisms and instruments are
perfected in keeping with multilateral trade rules, the process of integration will make it possible to
continue with economic modernization and integrate Uruguay more fully into the world economy.
(iv) Regional integration
48. The Southern Common Market (MERCOSUR)  was created in 1991, when Uruguay,
Argentina, Brazil and Paraguay signed the Treaty of Asunción, with the goal of establishing a
common market that would promote the developmen t of its member countries and improve their
integration into the international economy.  The process of gradual, linear and automatic tariff
reduction among the four countries culminated in 1994, with some exceptions limited to a smallnumber of products whose tariffs are to be eliminated over a term of four years for Argentina and
Brazil and five years for Paraguay and Uruguay.
49. In 1995, the MERCOSUR countries adopted a Common Nomenclature and a Common
External Tariff, which responds to the objective of opening up their economies.  The levels of the
Common External Tariff range between 0 per cent and 20 per cent, in steps of two percentage points.To facilitate transition to the new tariff structure, certain temporary exemptions from the Common
External Tariff were agreed upon, as were mechanisms for their convergence, which was to be
concluded in the year 2001 (in the year 2006 for a small number of products).  At the end of 1997, theUruguay WT/TPR/G/50
Page 11
steps in the Common External Tariff were widened to three percentage points temporarily until the
year 2000.
50. In 1997, MERCOSUR approved a protocol on trade in services, with the goal of liberalizing
intraregional trade, and in 1998 it agreed on an initial list of specific commitments in that regard,
which is to be expanded in future.
51. Under its strategy of economic liberalization and greater involvement in the international
economy, Uruguay is working with its MERCOSUR partners on a broad agenda of trade negotiations
with other countries and regions.  With respect to LAIA, MERCOSUR has signed agreements to
establish free-trade zones with Chile and with Bolivia, expanding bilateral agreements that were
already in effect.  The agreement with Chile came into force in October 1996 and the agreement with
Bolivia in March 1997.  MERCOSUR is also renego tiating different bilateral and regional agreements
between its members and other countries in LAIA.
52. Uruguay attaches particular importance to the negotiations that are under way with the
countries of the hemisphere to establish the Free Trade Area of the Americas (FTAA) and to progress
under the Interegional Cooperation Agreement between MERCOSUR and the European Union
concluded in 1995 with the objective of moving towards reciprocal and gradual liberalization of trade.Negotiations under the FTAA were launched at the Summit of Heads of State and Government held in
Chile this year and the negotiating groups held their first meetings in September in Miami.  The initial
stage of preparatory work with the European Union was completed during 1998 and has helped to
identify the main aspects of trade relati ons between MERCOSUR and the European Union.
53. With the objective of promoting and strengthening economic ties, trade and investments,
Uruguay holds periodic meetings with other countries and regions under the framework of
MERCOSUR.  Agreements were signed with Canada and the countries of the Central American
Common Market during 1998 and meetings were held with different countries and regional groups
from all continents.
IV. URUGUAY AND THE WTO
(i) Uruguay and the multilateral trading system
54. Uruguay has a long history as an active part icipant in the interna tional community.  The
country also has a lengthy juridical tradition and has therefore participated actively in the multilateral
trading system since the outset, maintaining that the liberalization and expansion of international trade
contribute decisively to the development and well-being of peoples.  Since its accession to GATT in
1953, Uruguay has participated dynamically and constructively in all the rounds of negotiations.
Uruguay played a very active role during the GATT stage and in 1979 it chaired the meeting of theCONTRACTING PARTIES which completed the process of the Tokyo Round negotiations.
55. Uruguay was one of the promoter s of what came to be known as the Uruguay Round of Trade
Negotiations which began in the city of Punta del Este in 1986, signalling the country’s commitment
to the multilateral system.  In that Round, Uruguay chaired the Trade Negotiations Committee at the
ministerial level and had the honour of chairing negotiating committees in relevant areas, which led tomajor agreements that have helped to shape the WTO system.  Uruguay’s role in the establishment of
the Cairns Group — an excellent example of the cooperation and joint work that can exist between
industrialized and developing countries when common interests are present — should also be
underlined.  Uruguay was also active in negotiating the Agreement on Textiles and Clothing and some
of the articles of that agreement reflect the country’s specific concerns.WT/TPR/G/50 Trade Policy Review
Page 12
56. In Uruguay’s opinion, the agreements reached under the Uruguay Round strengthened and
expanded the institutional framework of the international trading system and promoted confidence in
the multilateral system through the creation of the World Trade Organization and the establishment ofa comprehensive system for dispute settlement through the Understanding on Rules and Procedures
Governing the Settlement of Disputes, rounding out the set of international economic institutions
which, until then, had been composed only of the Bretton Woods organizations.  For Uruguay, the
existence of clear and stable rules respected by all the members of the multilateral system constitutes
the best guarantee of freedom of trade, security of the rights acquired and compliance withobligations, with the ensuing creation of wealth, and international peace and security.  For the
Uruguayan Government, this is an opportunity to reiterate its firm commitment to the principles of
multilateralism and free trade.
(ii) Application of the WTO Agreements
57. The Uruguay Round Agreements have legal status  in Uruguay, having been approved under
Law 16.671 of 13 December 1994.  This means that the agreements have been incorporated into
Uruguayan law as domestic legal rules.  Uruguay has been complying with the commitments and
obligations assumed in the World Trade Organization, adopting the necessary domestic regulations
and measures.  It has established decrees and resolutions to regulate agreements, where necessary, and
has made notifications in different areas.
58. Uruguay believes that, in general, the results of the last round of trade negotiations were quite
satisfactory in terms of trade rules and discipli nes.  However, with regard to market access,
particularly for agriculture, the results should be viewed simply as the starting point for deepening the
process of liberalization and discipline in international trade.  Furthermore, Uruguay is following
implementation of some of the commitments, particularly in agriculture, closely and with concern,
since in its opinion some of them have not been applied in accordance with the spirit of the Uruguay
Round Agreement on Agriculture.  In view of this and the present world situation, which is marked byglobalization, interdependence and market volatility, Uruguay considers full implementation of the
results of the Uruguay Round, compliance with th e commitments negotiated within the time-limits
established and entrenchment of the liberalization process to be vital contributions to the stability and
growth of the international economy.
59. The Uruguayan Government has been making major efforts to comply with the obligations
stemming from the agreements, both in terms of notifications and in the establishment of enquiry
points as required under various agreements, such as the General Agreement on Trade in Services and
the Agreement on Technical Barriers to Trade.  It has recently established an inter-ministerial
committee with the mandate of ensuring that technical provisions and standards which can have an
impact on trade are approved in accordance with the provisions of the latter Agreement.
60. As for trade in services, Uruguay participated actively in the negotiations carried out under
the last round and in the subsequent sector negotiations, making substantive commitments in a large
number of sectors.  Since the previous review of the country’s trade policy in 1992, major domestic
reforms have been carried out in various sectors, which were mentioned earlier in this report and
which are referred to in the Secretariat Report.
61. With respect to the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS), the Uruguayan Government has begun to modify its domestic regulations in order to adjust
them to the commitments contracted under that Ag reement.  The Executive Branch has submitted a
bill to parliament introducing amendments to existing legislation in a sector which Uruguay views as
very important.Uruguay WT/TPR/G/50
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62. Uruguay attaches special weight to proper implementation of the Agreement on Textiles and
Clothing of the Uruguay Round, which regulates tr ade in one of the most important sectors for
developing countries.  Uruguay has a special profile in this sector since it is a small supplier, chiefly
of woollen textiles, but they are very important in the country’s total exports.
63. The WTO dispute settlement system has received a vote of confidence from Members in the
form of the heavy use made of it since it was introduced.  To date, Uruguay has only used theconsultation procedure in 1996 with one Member, relating to one of its most important exports, rice,
and reserved its right to participate as a third party in two dispute settlement procedures.  For
Uruguay, the dispute settlement system is one of  the most important achievements of the Round and
its smooth functioning should be safeguarded and respected by all the Members.
64. With regard to the WTO accession processes currently under way, Uruguay supports the entry
of new members since this will strengthen the multilateral system, on the understanding that they will
observe and respect the system’s and the Organization’s rules and disciplines and allow greater access
to their markets.  Uruguay has been an active member of the respective working groups and has and
continues to maintain bilateral discussions with each of the countries that are candidates for accession
to the WTO.
65. As to regional trade agreements, Uruguay wi shes to underline MERCOSUR's important role
and contribution to the process of regional and world trade liberalization, the full compatibility of this
process with WTO rules and its contribution to the economic development of the member countries,
by allowing fuller and better integration into the international economy.  Since MERCOSUR was
established, significant increases continue to be reported in intra- and extra-MERCOSUR trade flows
and in direct foreign investment in the member countries as well.
(iii) Uruguay’s position regarding future negotiations
66. Uruguay considers that the Second WTO Ministerial Conference held in May 1998 produced
positive results since the Ministerial Declaratio n has reaffirmed the commitment to respect the
timetable for the reviews, negotiations and other tasks already agreed upon and established that theprogramme of work of the General Council will include the negotiations already covered in the
Marrakesh mandate, to ensure that they will begin at the stated time.
67. The forthcoming negotiations on agriculture, established under Article 20 of the Agreement
on Agriculture, are priorities for Uruguay for entr enching the process of reform in international
agricultural trade.  The core objective of this reform process should consist of subjecting agricultural
trade to the same rules and disciplines as are applied to trade in other goods, in view of the fact that
agriculture has continually been relegated to the sidelines in multilateral trade negotiations in the last50 years.
68. The Uruguayan Government believes that issues such as trade and the environment and the
recent initiatives in electronic commerce are both interesting and important for the multilateral system
and that they should continue to be examined in greater depth.  Uruguay is aware that many interests
exist in this globalized system, as was noted in the Declaration of the Second Ministerial Conference,and therefore it is willing to consider and contribute to the discussion of trade issues of interest to all
the Member States.  However, discussion of these issues and their future negotiation should not be
allowed to delay the start of the negotiations that have already been planned and agreed upon.
V. FUTURE DIRECTIONS OF TRADE POLICY
69. After several decades of import substitution policies, in the 1970s Uruguay began a process of
reform and liberalization based on private initiative, which has led to gradual but broad and deepWT/TPR/G/50 Trade Policy Review
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structural transformation of the economy.  The gradual liberalization of trade in recent decades has
been beneficial, since it has contributed to the restructuring of the economy and to greater efficiency
in the use of resources.  As a small country which is highly dependent on its foreign economicrelations, Uruguay attaches special importance to its full integration into the world economy.
Uruguay considers that MERCOSUR has contributed an d continues to contribute to facilitating and
strengthening the international integration of its member countries, promoting their greater and better
inclusion in the hemispheric and global economies.
70. For Uruguay, the priority objective of its economic and trade policies is to continue
developing its openness to the world through regional integration, carried out in accordance with the
multilateral rules of trade.  Uruguay is firmly inte rested in strengthening the multilateral system and
the WTO.  The process of opening up and liberalizing the Uruguayan economy has been carried out in
an international setting that is not particularly favourable in terms of access by the country's exports to
the rest of the world.  Uruguay will continue to support initiatives to liberalize and expandinternational trade on the regional and multilateral levels alike, which will help to eliminate
protectionism and practices that distort trade, including trade in agriculture.
71. The Uruguayan Government will continue systematically to review unnecessary barriers to
trade and to the functioning of the economy, with the objective of broader liberalization that will
make for better allocation of productive resources and therefore for enhanced economic well-being.Uruguay also expects that its partners in the WTO will make rapid and significant progress in
dismantling distortions and limitations on trade in those products in which our country has clear
competitive advantages.
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