WORLD  TRADE  
ORGANIZATION  WT/TPR/S/163/Rev.1 
23 August 2006 
 (06-3978) 
Trade Policy Review Body Original:   Spanish 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
URUGUAY 
 
Revision 
 
 
 
 
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/Rev.1 
 Page iii 
 
 
  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 WT/TPR/S/163/Rev.1 Trade Policy Review 
Page iv 
 
 
     Page 
 
 (v) Other charges affecting imports 44 
 (vi) Import prohibitions, restrictions and licences 49  (vii) Contingency measures 54 
 (viii) Standards and technical regulations 58 
 (ix) Sanitary and phytosanitary measures 63 
 (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 68 
 (iv) Tariff and tax concessions (including subsidies and export processing zones) 69 
 (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 76  (iii) Incentives 78 
 (iv) State-trading enterprises 81 
 (v) Government procurement 81 
 (vi) Protection of intellectual property 83 
 IV. TRADE POLICIES BY SECTOR 91 
 (1) O
VERVIEW  91 
 (2) A GRICULTURE AND FOOD PROCESSING (INCLUDING FORESTRY AND FISHERIES ) 92 
 (i) Agriculture and food processing 92 
 (ii) Forestry 97 
 (iii) Fisheries 98 
 (3) H YDROCARBONS  99 
 (4) O THER MANUFACTURES  101 
 (5) E LECTRICITY  103 
 (6) S ERVICES  106 
 (i) Main features and multilateral commitments 106 
 (ii) Telecommunications 107  (iii) Financial services 111 
 (iv) Air transport and airports 119 
 (v) Maritime transport 122  (vi) Tourism 124 
 (vii) Professional services 126 
 
REFERENCES 129 
 APPENDIX TABLES 133 
 Uruguay WT/TPR/S/163/Rev.1 
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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 47 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 52 III.10 Some technical regulations 60 
III.11 Sanitary and phytosanitary requirements for imported goods 64 
III.12 Import restrictions for sanitary reasons in effect during the period 1998-2005 65 III.13 Requirements for exporters, November 2005 69 
III.14 Free zones, February 2006 71 
III.15 Principal taxes applicable to production and investment 75 
III.16 Overall view of the pr otection of intellectual property rights in Uruguay, 2005a 84 
III.17 International intellectual property agreements ratified by Uruguay 85  
 WT/TPR/S/163/Rev.1 Trade Policy Review 
Page vi 
 
 
  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 
 
 Uruguay WT/TPR/S/163/Rev.1 
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  SUMMARY OBSERVATIONS 
 
(1) INTRODUCTION  
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) ECONOMIC 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 per cent between 1998 and 2004.  Strong growth, of over 6 per cent, 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 attempt to address the crisis by making use of trade restrictive measures.  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 per cent of GDP in 2005). 
 
4. Uruguay's fiscal policy is geared to 
achieving a primary surplus (3.5 per cent 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 an overall 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 per cent of GDP.  Although the external current account is traditionally  in deficit, since 2003 
these deficits have been moderate.  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 WT/TPR/S/163/Rev.1 Trade Policy Review 
Page viii 
 
 
  accounted for some 69 per cent of exports in 
2004.  A 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 per cent 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 per cent of Uruguayan imports still originate in other MERCOSUR countries, partly reflecting their preferential market access 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 
complement the general principles of non-
discrimination and investment guarantees in its Constitution. Uruguay WT/TPR/S/163/Rev.1 
 Page ix 
 
 
  (4) MARKET ACCESS FOR GOODS  
13. The average MFN tariff has fallen, 
from 12.2 per cent in 1998 to 9.3 per cent 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 per cent) than non-agricultural products (9.3 per cent).  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 bound tariffs (30.7 per cent).  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 per cent and 2 per cent of the c.i.f. value of most imports.  As a consequen ce, 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) OTHER 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 
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. WT/TPR/S/163/Rev.1 Trade Policy Review 
Page x 
 
 
  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 per cent 
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 per cent 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 per cent 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 the sector, although this is not precluded by 
law. 
 Uruguay WT/TPR/S/163/Rev.1 
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  28. The service sector is of considerable 
importance to the Uruguayan economy, accounting for some 62 per cent 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 per cent 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 per cent 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.