RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/163 
12 April 2006  
 
(06-1692) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
URUGUAY 
 
  
 
This report, prepared for the third Trade Policy Review of Uruguay, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Uruguay on its trade policies and 
practices. 
 
Any technical questions arising from this  report may be addressed to Mr Angelo 
Silvy (tel.:  022/739 5249), or Mrs Ulla Kask (tel.:  022/739 5627) or 
Mr Raymundo Valdés (tel.:  022/739 5346). 
 
Document WT/TPR/G/163 contains the policy statement submitted by Uruguay. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Uruguay. Uruguay WT/TPR/S/163 
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CONTENTS 
 
  Page 
  
SUMMARY OBSERVATIONS vii 
 (1) INTRODUCTION vii  (2) ECONOMIC ENVIRONMENT vii 
 (3) TRADE AND INVESTMENT POLICY viii 
 (4) MARKET ACCESS FOR GOODS ix  (5) OTHER MEASURES AFFECTING TRADE ix 
 (6) SECTORAL POLICIES x 
 I. ECONOMIC ENVIRONMENT 1 
 (1) O
VERVIEW  1 
 (2) M ACROECONOMIC TRENDS  1 
 (i) Structure and reform of the economy 1 
 (ii) Production and employment 3 
 (iii) Fiscal policy 5 
 (iv) Monetary and exchange policy 7 
 (v) Balance of payments 9 
 (3) T RADE AND INVESTMENT FLOWS  11 
 (i) Trend in trade in goods 11 
 (ii) Trade in services 12  (iii) Foreign investment 13 
 (4) O
UTLOOK  13 
 II. TRADE AND INVESTMENT REGIME 14 
 (1) O
VERVIEW  14 
 (2) F ORMULATION AND IMPLEMENTATION OF TRADE POLICY  14 
 (i) General legal and institutional framework 14 
 (ii) Trade and investment policy objectives 16 
 (iii) Formulation and implementation of trade policy 16 
 (3) F OREIGN INVESTMENT REGIME  17 
 (4) I NTERNATIONAL RELATIONS  18 
 (i) World Trade Organization 18  (ii) Preferentia l agreements 20 
 (5) T
RADE -RELATED TECHNICAL ASSISTANCE  24 
 
III. TRADE POLICIES BY MEASURE 25 
 (1) O VERVIEW  25 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  26 
 (i) Procedures, documentation and registration 26 
 (ii) Customs valuation 30  (iii) Rules of origin 31 
 (iv) Tariffs 33 
 (v) Other charges affecting imports 44 WT/TPR/S/163 Trade Policy Review 
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   Page 
 
 (vi) Import prohibitions, restrictions and licences 50 
 (vii) Contingency measures 54  (viii) Standards and technical regulations 59 
 (ix) Sanitary and phytosanitary measures 64 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  67 
 (i) Procedures, documentation and registration 67 
 (ii) Taxes, levies and other export charges 68 
 (iii) Export prohibitions, restrictions and licensing regimes 69  (iv) Tariff and tax concessions (including subsidies and export processing zones) 70 
 (v) Export promotion, financing, insurance and guarantees 72 
 (4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE  74 
 (i) Establishment and taxation of enterprises 74 
 (ii) Price controls and competition policy 77 
 (iii) Incentives 79  (iv) State-trading enterprises 81 
 (v) Government procurement 82 
 (vi) Protection of intellectual property 84 
 
IV. TRADE POLICIES BY SECTOR 92 
 (1) O
VERVIEW  92 
 (2) A GRICULTURE AND FOOD PROCESSING (INCLUDING FORESTRY AND FISHERIES ) 93 
 (i) Agriculture and food processing 93  (ii) Forestry 98 
 (iii) Fisheries 99 
 (3) H
YDROCARBONS  100 
 (4) O THER MANUFACTURES  102 
 (5) E LECTRICITY  104 
 (6) S ERVICES  107 
 (i) Main features and multilateral commitments 107 
 (ii) Telecommunications 108 
 (iii) Financial services 112  (iv) Air transport and airports 120 
 (v) Maritime transport 123 
 (vi) Tourism 125  (vii) Professional services 127 
 
REFERENCES 129 
 
APPENDIX TABLES 133 
 Uruguay WT/TPR/S/163 
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CHARTS 
 
  Page 
 III. TRADE POLICIES BY MEASURE  
III.1 Breakdown of frequency of MFN tariffs, 2005 36 
  
TABLES 
 
I. ECONOMIC ENVIRONMENT  
I.1 Sectoral structure of GDP, 1998-2004 2 
I.2 Basic economic indicators, 1998-2005 4 I.3 Non-financial public s ector (NFPS) financial accoun ts, fiscal years 1998-2005 5 
I.4 Main monetary indicators, 1999-2005 7 
I.5 Balance of payments, 1998-2005 9 I.6 Trade in services, 1998-2004 12 
I.7 Foreign investment position, 2001-2004 13 
 
II. TRADE AND INVESTMENT REGIME  
II.1 Framework and free-trade agreements concluded by MERCOSUR, December 2005 23 
 
III. TRADE POLICIES BY MEASURE  
III.1 Registration requirements for importers and their products 27 
III.2 Special requirements for customs procedures or documentation 29 
III.3 Summary analysis of Uruguay's MFN tariff, 2005 34 
III.4 Breakdown of Uruguay's customs tariff, 2005 35 III.5 Tariffs applied in preferential agreements concluded by Uruguay, 2005 41 
III.6 Goods and services exempt from VAT 46 
III.7 Specific Internal Tax 48 III.8 Import prohibitions in effect during the period 1998-2005 50 
III.9 Requirements on import licensing and prior authorization in effect 
 during the period 1998-2005 53 III.10 Some technical regulations 61 
III.11 Sanitary and phytosanitary requirements for imported goods 65 
III.12 Import restrictions for sanitary reasons in effect during the period 1998-2005 66 III.13 Requirements for exporters, November 2005 69 
III.14 Free zones, February 2006 72 
III.15 Principal taxes applicable to production and investment 76 
III.16 Overall view of the pr otection of intellectual property rights in Uruguay, 2005a 85 
III.17 International intellectual property agreements ratified by Uruguay 86  
 WT/TPR/S/163 Trade Policy Review 
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APPENDIX - TABLES 
 
  Page 
 I. ECONOMIC ENVIRONMENT  
AI.1 Merchandise exports by product group, 1998-2004 135 
AI.2 Merchandise imports by product group, 1998-2004 137 AI.3 Merchandise exports by trading partner, 1998-2004 138 
AI.4 Merchandise imports by trading partner, 1998-2004 139 
 II. TRADE AND INVESTMENT REGIME  
AII.1 Summary of notifications by Uruguay to the WTO, 1999-30 November 2005 140 
 IV. TRADE POLICIES BY SECTOR  
AIV.1 Manufacturing sector:  tari ffs and international trade 142 
AIV.2 Summary of Uruguay's specifi c commitments under the GATS 145 
 
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SUMMARY OBSERVATIONS 
 (1) I
NTRODUCTION  
1. Since its last Trade Policy Review in 
1998, Uruguay has contin ued to revise its laws 
and regulations to facilitate trade and the implementation of its international commitments.  Thus, the average MFN tariff has been reduced, and improvements have 
been effected in areas such as import 
procedures, customs valuation and intellectual property protection, while additional reforms are under consideration.  Uruguay has made scant use of contingency measures and non-tariff trade barriers appear limited.  However 
issues remain concerning taxation, 
particularly the differential application of certain internal taxes to imported and domestic products as we ll as the numerous 
fiscal incentives in place.  Although market 
competition appears to have increased in 
recent years, in some important areas the State maintains a dominant presence.  Addressing these questions would be important to help ensure the sustainability of economic growth, which has resumed 
vigorously since 2003 but was disappointing 
in earlier years.  In this regard, and to promote greater economic efficiency and diversification, it would be particularly important for Uruguay to further liberalize its 
economy on an MFN basis, and anchor these 
efforts through multilateral commitments.  (2) E
CONOMIC ENVIRONMENT  
2. During the period since its last 
Review, Uruguay's economy had to overcome 
four years of economic contraction, as a result of which GDP declined at an annual rate of 0.2% between 1998 and 2004.  Strong growth, of over 6%, was expected for 2005.  Uruguay's poor growth record during much of the period 
under review reflects a combination of 
domestic and external factors, starting with sanitary problems in its agricultural sector and followed by events in neighbouring countries, especially Argentina, which led to a 
financial crisis in 2002.  The crisis was 
accompanied by increases in inflation, unemployment, the fiscal deficit and public 
debt, and a fall in imports and international reserves.  
3. Importantly, Uruguay did not make 
use of trade restrictive measures to address the crisis.  Instead, to restore growth, Uruguay applied a macroeconomic adjustment programme, including floating the currency 
and reducing public expenditure, together with 
measures to strengthen the financial sector.  The main macroeconomic indicators started to improve after 2002, aided by a favourable external situation, which supported substantial export growth.  Despite recent improvements, 
Uruguay continues to be vulnerable to 
external shocks particularly in view of its still high external debt (just over 90% of GDP in 2005).  
4. Uruguay's fiscal policy is geared to 
achieving a primary surplus (3.5% of GDP in 2005) to allow for the payment of the public debt.  The fiscal situation has improved with the resumption of economic growth, aided as well by tax increases and a reduction in 
expenditure.  Monetary policy has followed an 
"inflation monitoring" regime since 2004, which is intended to evolve into a full inflation targeting regime.  The adoption of a floating exchange rate regime in 2002 was 
accompanied by an initial sharp real currency 
depreciation, but the exchange rate has appreciated in real effective terms since 2004.  5. International trade in goods and 
services is important for the Uruguayan 
economy, representing as it does some 60% of GDP.  Although the external current account is traditionally in deficit, since 2003 these deficits have been moderate (around 1% of GDP).  The merchandise trade balance 
generally shows a deficit, while the service 
balance is traditionally in surplus.  6. Both imports and exports declined as a result of the 2002 recession but have 
recovered since.  Uruguay's exports are 
mainly commodities and agro-industrial goods (particularly bovine meat and rice), which accounted for some 69% of exports in 2004.  A WT/TPR/S/163 Trade Policy Review 
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salient feature of the period under review has 
been the redirection of exports to countries outside MERCOSUR, with the United States having become the destination for 21% of 
Uruguay's exports in 2004, replacing Brazil as 
Uruguay's main export market.  Exports to MERCOSUR have fallen mainly on account of a decline of exports to Argentina.  On the other hand, import patterns have remained 
relatively unchanged:  some 45% of 
Uruguayan imports still originate in other MERCOSUR countries, partly reflecting their preferential market acces s to the Uruguayan 
market.  
(3) T
RADE AND INVESTMENT POLICY  
7. Uruguay is an original Member of the 
WTO and an active participant in the multilateral trading system.  Uruguay considers the multilateral trading system as a 
vital guarantor of non-discrimination and the 
prevention of unilateral trade measures.  Uruguay has been an active participant in the Doha Development Agenda (DDA), having submitted numerous propos als individually or 
together with other WTO Members.  
Uruguay's main focus in the DDA has been on 
agricultural issues.  8. Uruguay has made commitments under the GATS in six of the 12 sectors 
identified in the classification.  Uruguay 
participated in the extended GATS negotiations on financial services and has ratified the Fifth Protocol to the GATS.  Uruguay did not participate in the extended 
negotiations on telecommunications, a sector 
in which it has no WTO commitments.  Uruguay has submitted an Initial Offer on Services in the context of the DDA.  9. Uruguay maintains an active 
programme of notifications to the WTO but 
there have been some de lays with respect to 
notifications in areas such as agriculture, subsidies and countervailing measures, and state trading enterprises.  Uruguay has made  
 
  relatively little use of the WTO dispute 
settlement mechanism since its last review, having participated in only four disputes:  one as respondent (concerning Uruguay's internal 
taxes) and three as third party. 
 10. Uruguay leads an autonomous trade policy which, however, is to be compatible with its membership in the Southern Common 
Market (MERCOSUR).  Through its 
participation in MERCOSUR, Uruguay has gained access to a much larger market for its exports;  such participation has also provided impetus for liberalization, and enhanced the stability of Uruguay's trade regime.  It may, 
however, have magnified Uruguay's 
dependency on neighbouring economies and, while fostering competition in the domestic market, placed strong pressure on Uruguay's manufacturing sector.  The latter has been 
able to take only limited advantage of the 
regional market.  11. Through its participation in MERCOSUR, Uruguay is party to trade agreements with the Andean Community 
(Colombia, Ecuador and Venezuela), Bolivia, 
Chile, and Peru.  Uruguay also has other preferential trade arrangements through its participation in the Latin American Integration Association, within which the 
agreement with the widest scope is that with 
México.  12. Uruguay's investme nt regime is open 
to private, including foreign, investors except 
in sectors considered of national public 
interest, such as fixed telephony services, water and sewage services, and some specific areas in insurance and transport.  Foreign investors are excluded from some activities, such as the operation of radio and television 
stations, air or sea cabot age, as well as fishing 
within an area of 12 marine miles from the coast.  Uruguay grants national treatment in the granting of investment incentives.  Uruguay has signed bilateral investment 
agreements with several countries, which  
   Uruguay WT/TPR/S/163 
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complement the general principles of non-
discrimination and investment guarantees in its Constitution.  
(4) M
ARKET ACCESS FOR GOODS  
13. The average MFN tariff has fallen, 
from 12.2% in 1998 to 9.3% in 2005, mainly due to the elimination of the general tariff increase maintained between 1998 and 2003.  
Agricultural products (WTO definition) face a 
slightly higher average tariff (9.7%) than non-agricultural products (9.3%).  All tariffs are ad valorem.  Tariff dispersion is relatively low, but the tariff shows signs of escalation.  Uruguay has bound its whole tariff in the 
WTO, which increases the predictability of its 
trade regime.  However, this is somewhat undermined by the considerable gap between average applied and bou nd tariffs (30.7%).  
Uruguay applies MERCOSUR's Common 
External Tariff, with exceptions. 
 14. Apart from tariffs, Uruguay applies other charges that fall exclusively on imports, such as a commission for the Banco de la República Oriental del Uruguay and a 
consular levy collected, respectively, at 2.5% 
and 2% of the c.i.f. value of most imports.  As a consequence, the average tariff underestimates the tax burden faced by imports.  Moreover, during the period under 
review, special import duties (derechos 
específicos de importación) were applied on some textile products.  15. Imports receive national treatment 
with respect to the application of internal 
taxes but some exceptions appear to exist.  These include the Specific Internal Tax (IMESI), which varies according to national content when applied on certain non-alcoholic beverages.  Additionally, for some products 
the IMESI is charged on values established by 
the authorities, which are twice as high for imported products as fo r domestic products on 
beer, non-alcoholic beverages, bitters, and liquid foods.  The application of the Value 
Added Tax also varies between imported and  
  domestic products:  only imports are subject to 
an additional ten percentage points advanced payment which, although subsequently refunded, imposes financial costs on 
importers. 
 16. Uruguay has made scant use of contingency measures since 1998, having applied no countervailing or global safeguard 
measures, and having used anti-dumping 
duties in only one case (on certain vegetable oils).  Uruguay maintains legislation that allows the use of special trade measures to restrict imports;  it was used during the period under review to adopt measures against a 
range of Argentinean products. 
 17. Uruguay applies non-automatic import licensing to products such as certain textiles and footwear, as well as new tyres.  
Additionally, the importation of a number of 
products is subject to prior authorization for sanitary, phytosanitary, safety, or environmental protection reasons.  In the period under review, Uruguay introduced a significant number of new sanitary and 
phytosanitary measures as well as technical 
regulations;  of these, it notified to the WTO three of the former and two of the latter.  18. Uruguay has adopted measures to 
streamline import procedures and adjust its 
import regime to multilateral rules, including by adopting the WTO Customs Valuation Agreement's transaction value definition and eliminating minimum import prices (so called 
"precios mínimos de exportación"). 
 (5) O
THER MEASURES AFFECTING 
TRADE  
19. The Investment Law of 1998 sets the 
general investment incentives framework in 
Uruguay, which consists  primarily of tax 
incentives.  Under the Investment Law, incentives may be granted for activities that, inter alia, aim to increase and diversify exports, or encourage the use of local inputs 
and labour.  In view of the fiscal constraints  
  WT/TPR/S/163 Trade Policy Review 
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Uruguay faces, it would be important to 
quantify the net economic benefits of the various incentives schemes;  the authorities noted that such a study was already being 
conducted. 
 20. Uruguay also grants fiscal incentives for exports under various regimes.  To obtain the refund of indirect taxes, the exported 
product must have a minimum of 20% of 
domestic inputs.  Uruguay has notified its automotive industry regime to the WTO as granting export subsidies.  Uruguay has also notified the WTO that it has granted no subsidies on agricultural exports.  Uruguay 
applies export taxes on certain hides and 
skins;  exports of some other agricultural products face duties or levies to finance the activities of certain entities.  Exports may be subject to restrictions for various reasons, 
including to ensure domestic supply.  Exports 
of steel and cast iron scrap are forbidden.  21. Prices in Uruguay are generally market-determined, although administered prices are used for certain agricultural 
products and maximum tariffs are fixed for 
certain services.  In some key sectors the State remains dominant, such as electricity and fixed telephony;  in banking, two state banks hold over half of all deposits.  There are state 
monopolies in the provision of water and 
sewage services and in the distribution, importation, exportation and commercialization of petroleum and most petroleum products. 
 
22. Specific competition statutes exist in certain sectors, including energy and telecommunications, but there is no general competition policy legislation in place.  However, as at early 2006 a draft competition 
law was being considered by the General 
Assembly.  This initiative to promote competition is important as Uruguay's economy, in part due to its small size, tends to generate market concentration. 
 
23. Uruguay is not a party to the WTO Plurilateral Agreement on Government Procurement.  However, since 2002 the Government has adopted measures to increase 
the transparency of the procurement process.  Moreover, Uruguayan legislation mandates that procurement take place primarily through 
open tendering.  Although the main criterion 
to evaluate bids is price, preferences of up to 10% of the domestic value added of a bid are granted to domestic bidders. 24. Since 1998, Uruguay has modified its 
legislation with respect to patents, trade marks 
and copyright with a view to aligning its domestic statutes with the provisions of the TRIPS Agreement.  Parallel imports of patented products are allowed, but not of goods protected by copyright. 
 
(6) S
ECTORAL POLICIES  
25. Agriculture continues to be a pillar of 
Uruguay's economy with agricultural products generating close to two thirds of export 
revenue.  The main agricultural products are 
livestock, cereals, dairy products and wool.  Tariff protection for agriculture and food processing is slightly higher than for other products.  Minimum import prices and anti-dumping measures have been used to protect 
sugar and oil production.  Additionally, the 
sector as a whole benefits from certain subsidies and fiscal exemptions or lower tax rates.  
26. Excluding agro-industry, the 
manufacturing sector is small.  Uruguay grants fiscal incentives to manufacturing activities through a number of schemes, including a special regime for the automotive 
industry, which links benefits to achieving a 
minimum 20% domestic content.  The textile and clothing industry benefited from minimum import prices until end 2000.  27. The electricity sector has been 
liberalized with respect to generation, 
commercialization and in ternational trade;  
although transmission and distribution remain a prerogative of the State, concessions may be granted to private operators.  In practice, a 
public enterprise continues to dominate the 
generation, transmission and distribution of electricity.  There is no foreign investment in Uruguay WT/TPR/S/163 
 Page xi 
 
 
the sector, although this is not precluded by 
law.  28. The service sector is of considerable 
importance to the Uruguayan economy, 
accounting for some 62% of GDP in 2004.  Although private participation in services has increased since Uruguay's last Review, public enterprises continue to play an important role, 
particularly in areas such as 
telecommunications and banking.  29. In telecommunications, an independent body has regulated the sector since 2001.  Although the State continues to 
have a de jure monopoly in fixed urban 
telephony and in domestic long distance calls, competition has been introduced in mobile telephony services, which are provided by private operators.  Foreign companies may 
engage in activities in any of the areas not 
reserved for the State.  In 2002, international long distance telephony services were opened to competition, and some 14 licences were granted;  subsequent amendments to the law prevent the possibility of granting additional 
licences. 
 30. There are some limitations to foreign participation in transportation services.  Domestic air services are reserved to domestic 
companies operating aircraft registered in 
Uruguay.  However, in early 2006 the authorities were considering changes to this and other provisions of the Aeronautic Code.  Airports are owned by the State, but their 
administration may be given in concession to 
private, including foreign, firms;  this has been the case for Uruguay's two main airports.  31. Cabotage restrictions also apply to maritime transport.  International transport is, 
however, open to foreigners and the majority 
of international trade takes place in foreign-flag vessels.  In practice, Uruguay applies    
 
   cargo preferences only to Brazil and 
passenger transportation preferences to Argentina.  Port services are provided by private operators under concessions granted 
by the State, which is the owner of all the 
ports.  32. The severe crisis experienced by the financial sector in 2002 resulted in a 45% 
contraction in bank deposits between 
February and September of that year.  In the wake of the crisis, deposits in public banks were rescheduled, four private banks were suspended and a deposit guarantee fund was created.  Although the banking system has 
largely recovered from the crisis, and 
supervision has been strengthened, deposits and credits remain at levels below those prior to the crisis, the number of banks has shrunk, and interest rates continue to be high.  
Foreign banks wishing to establish operations 
in Uruguay must be organized either as a corporation or as a foreign bank subsidiary.  The number of banks in operation may not exceed by more than 10% those in operation the previous year. 
 
33. The insurance market is mainly composed of foreign-firm subsidiaries.  There is no limit to foreign participation in the industry, but companies must be established in 
Uruguay to provide insurance policies 
covering risks in Uruguay.  This does not apply to passive reinsurance contracts.  34. Tourism continues to be an important 
source of foreign exchange for Uruguay, 
although the industry has been significantly affected by the fluctuations in overall economic activity.  The sector receives specific tax benefits.  Uruguay does not have a general law regulating the exercise of professional 
services;  professions are regulated by specific 
laws, and professional associations do not possess self-regulatory powers.