98-4780 MOREPRESS RELEASE
PRESS/TPRB/93
26 November 1998
 TRADE POLICY REVIEW
REVIEW OF URUGUAY
TPRB'S EVALUATION
The Trade Policy Review Body of the World Trade Organization (WTO) concluded its second
review of the trade policies of Uruguay 23 and 25 November 1998. The text of the Chairperson's
concluding remarks is attached as a summary of the salient points which emerged during the discussion.
The review enables the TPRB to conduct a collective ex amination of the full range of trade policies and
practices of each WTO member country at regular pe riodic intervals to monitor significant trends and
developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and
the government under review and which cover all asp ects of the country's trade policies, including its
domestic laws and regulations, the institutional framework, bilateral, regional and other preferential
agreements, the wider economic needs and the external  environment. A record of the discussion and the
Chairperson's summing-up together with the reports  will be published in due course as the complete
trade policy review of  Uruguay and will be available from the WTO Secretariat, Centre William
Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992),
Australia (1989, 1994 & 1998), Austria (1992), Bang ladesh (1992), Benin (1997), Bolivia (1993),
Botswana (1998), Brazil (1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990,
1992, 1994 & 1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Côte
d'Ivoire (1995), Cyprus (1997), the Czech Republi c (1996), the Dominican Republic (1996), Egypt
(1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997),Finland (1992), Ghana (1992), Hong Kong ( 1990 & 1994), Hungary (1991 & 1998), Iceland (1994),
India (1993 & 1998), Indonesia (1991 and 1994), Is rael (1994), Jamaica (1998), Japan (1990, 1992,
1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994),
Malaysia (1993 & 1997), Mali (1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 &
1996), New Zealand (1990 & 1996), Namibia (1 998), Nigeria (1991 & 1998), Norway (1991 &
1996), Pakistan (1995), Paraguay (1997), Peru ( 1994), the Philippines (1993), Poland (1993),
Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon
Islands (1998), South Africa (1993 & 1998), Sri La nka (1995), Swaziland (1998), Sweden (1990 &
1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Trinidad and Tobago (1998), Tunisia
(1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994 & 1996), Uganda (1995),
Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).PRESS/TPRB/93
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MORETRADE POLICY REVIEW BODY
Review of Uruguay
Concluding remarks by the chairperson
The second Trade Policy Review of Uruguay was conducted by the TPR Body on 23 and
25 November 1998.  These remarks, prepared on my own responsibility, are intended to summarize
the main points of the discussion;  they are not intended as a full report.  Further details of the
discussion will be fully reflected in the minutes.
The discussion developed under three main themes:  (i) economic environment;  (ii) trade
policies and measures;  and (iii) sectoral issues.
Economic environment
Members congratulated Uruguay on the economic and structural reforms undertaken
since 1992, which have resulted in steady growth and a sharp decline in inflation.  The opening of the
economy, pursued both unilaterally and through regional and multilateral fora, had resulted in a better
allocation of resources and an increase in trade flows.  However, unemployment had increased and thecurrent account deficit had widened, with imports outpacing exports.  Some Members, in expressing
concern about the deficit, asked if the real appreciation of the peso had played a role, and enquired
about the reliance on external resources for financing the current account, especially in the context of
today's financial crisis.  Members encouraged Uruguay to diversify both its export products and
markets and asked about the role of existing tax incentives in achieving this goal.
Members commended Uruguay for the reform of its public sector and for dismantling several
monopolies, but noted that state intervention remained important and that there was no competition
legislation.  Members welcomed Uruguay's new investment regulations which put domestic and
foreign investment on the same footing.
Members acknowledged MERCOSUR's importance in shaping Uruguay's trade and economic
policy.  Some concern was raised on the convergence to the Common External Tariff (CET);  the
possibility of trade diversion;  and the lack of a regional mechanism for managing the collection of
import duties.  Questions were also raised on th e state of MERCOSUR's negotiations with the Andean
Community, and with the European Union.
In response, the representative of Uruguay stated that the effect of the current world financial
problems on Uruguay was likely to be modest.  Uruguay's ability to withstand external shocks
resulted from its drive to improve competitiveness by reducing taxes and public charges, maintaining
prudent fiscal policies, and deepening integration within MERCOSUR.  Recently private savings and
investment had risen, while inflation had fallen sharply.  The current account deficit was sustainable,
particularly with the reduced foreign external debt to GDP ratio.  Unemployment had increased, butmeasures were in place to address this and improvement was discernible.  Fiscal incentives were
provided to the forestry, tourism and manufacturing sectors, but any resulting reductions on direct tax
revenues were largely offset by increased revenues from expanded economic activity.
The representative gave details on libera lization within MERCOSUR.  MERCOSUR had
approved a number of common trade policy instrume nts, including safeguards and anti-dumping.  A
Common Customs Code and customs procedures were being prepared, and rules on consumer
protection and public procurement were under negotiation.  There were also negotiations oncommitments to liberalize trade in services.  Uruguay had no competition authority or statutes, but
MERCOSUR discussions in this area were ongoing.  On incentives under the new Investment Law,
Uruguay had introduced regulations that would be made available to the WTO Secretariat.
Diversified trade flows, notably with Argentin a and Brazil, had reduced reliance on European
export markets.  Consistent with open regionalis m and complementary to multilateral liberalization,
Uruguay and its MERCOSUR partners had completed free trade agreements with Bolivia and Chile,PRESS/TPRB/93
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MOREand were pursuing initiatives with the Andean Community, Canada, the Central American Common
Market, the European Union and under the FTAA.
Trade policies and measures
Members welcomed Uruguay's trade liberalization, including the lowering of applied tariffs
within MERCOSUR's framework.  However, the schedule of convergence to the CET was complex.
Several Members questioned the recent temporary increase in the CET by 3 percentage points, noting
that as a result tariff bindings have been exceeded  in some instances.  Questions were also asked
about the provision of information to the Integrated Data Base (IDB);  import charges for services
rendered;  and the consistency of excise taxes with national treatment obligations.
Members congratulated Uruguay on streamlining customs procedures.  There were questions
about customs valuation procedures;  preferential rules of origin;  the use of international standards;
and preferences for domestic products in government procurement and about Uruguay's possible
accession to the Government Procurement Agreement (GPA).
Uruguay was commended for eliminating export taxes in all but one area.  Several questions
were raised regarding export incentives and subsidies, and on existing barriers to Uruguay's exports.
Questions arose about the status of pending legislation on intellectual property rights and on efforts to
strengthen their enforcement and train the judiciary in this area.
In reply, the representative noted that Uruguay had adopted MERCOSUR's Common External
Tariff (CET) on 1 January 1995, with rates between 0 and 20%.  The temporary increase of CET ratesby 3 percentage points, would end on 31 December 2000.  Applied tariffs were within WTO bindings,
except for a few lines, which Uruguay intended to correct by 1 January 1999.  Uruguay agreed to the
tariff schedule being provided to the WTO's Integrated Data Base.  Other import charges were based
on the estimated cost of services rendered.  Uruguay was reviewing its regulations to ensure that
excise duties were applied in a non-discriminatory manner.
On customs valuation, the representative noted that transaction value was used whenever
possible.  Rules of origin were currently applied to MERCOSUR intraregional trade, but would be
eliminated when convergence to the CET was completed.  Uruguay did not now envisage joining the
Agreement on Government Procurement.  The use of international standards was common practice in
Uruguay.
The representative noted that Uruguay's agricultural exports faced a number of barriers,
including tariff peaks and non-tariff barriers;  access was also distorted by subsidies in a number of
countries. Export taxes in Uruguay were applied only on one product;  elimination depended on
negotiations within MERCOSUR.  On export subsidies, the concessions granted to the motor vehicles
industry had been notified to the WTO.  Uruguay applied a system of temporary admission and import
duty drawbacks in a manner consistent with WTO obligations.  Uruguay had recently introduced new
trademark legislation;  draft laws on copyrights and patents were in Parliament.  Uruguay was
addressing the problem of enforcement of intellectual property rights, particularly regarding
trademark and copyright infringement.
Sectoral issues
Members commended Uruguay on the performance of its agriculture sector, but posed
questions on the pricing mechanism for milk and its impact on exports.  Clarification was soughtregarding the criteria to grant incentives under the "national interest" provision of the Industrial
Promotion Law.  Questions were also asked about the minimum "export" price system for textiles and
clothing, and on the automotive regime.  On services, Members welcomed Uruguay's liberalization
and encouraged further private sector participation.  Questions were raised on specific service issues,
including the contribution of financial services to GDP and high spreads in interest rates;  promotionof competition, particularly in basic telecommunications; commercial presence in port services;  and
incentives granted to the tourism sector.PRESS/TPRB/93
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ENDThe representative of Uruguay explained the pricing mechanism for milk, clarifying the
objectives and nature of the quota system and quality controls.  The national development bank(BROU) granted credit in a transparent manner.  Details were provided on the criteria for "national
interest" under the Industrial Promotion Law, and on the operation of the system of minimum
"export" prices.  Since 1995, this system had applied only to sugar and textiles and would in the future
be replaced by the trade defence and safeguard mechanisms established in the Uruguay Round.
Uruguay had notified one TRIM in the automotive industry;  MERCOSUR partners were negotiating
a common regime for the industry.
On financial services, the representative noted the sector's continued importance in terms of
GDP, the increased bank deposits by non-residents, and the availability to firms of credit at highly
competitive interest rates.  The provision that  banks authorizations may not exceed 10% of the
number of banks in the preceding year was maintained for prudential reasons.  The insurance sector
was open to foreign investment, but there were no plans to eliminate the state monopoly on insurance
related to work accidents and public procurement.  Neither were there plans to eliminate the state
monopoly on basic telecommunications services (ANTEL ), although private investment was possible
in value added services.  There were no restrictions to private participation in port services, and
locally established foreign firms received national treatment.  Restrictions on foreign professionals
were virtually non-existent.
*******
Conclusions
In conclusion, it is my feeling that this B ody welcomed Uruguay's wide-ranging structural
reform programme, including the significant steps ta ken in trade liberalization and the reform of the
public sector.  Delegations appreciated Uruguay's involvement in and commitment to the multilateral
trading system and were in no doubt that Urugua y would play, as in the past, an important and
constructive role in future negotiations.  Members encouraged Uruguay to continue to liberalize its
economy thus consolidating the basis for steady growth and diversification, including of export
markets and products.  It is also my sense that Members saw the importance for trade liberalization
within MERCOSUR to contribute to strengthening the multilateral trading system.