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II. TRADE AND INVESTMENT REGIME 
(1) OVERVIEW  
1. The overall legal framework in Uruguay has not ch anged greatly since the previous review in 
1998, although reforms have been introduced in so me particular areas (see Chapters III and IV).  
Measures to enhance the transparen cy of the trade and investment regime have continued to be 
adopted, for example, a large part of the legislation has been put on-line. 
2. Uruguay is a founding Member of the WTO and is  an active participant in the multilateral 
trading system, which it deems of vital importa nce in guaranteeing non-discr imination and national 
treatment and preventing the unilateral application of restrictive and discriminatory measures.  
Uruguay took part in the GATS negotiations on fi nancial services, but not in the negotiations on 
telecommunications.  It is an active participant in the Doha Development Agenda, under which it has 
made numerous proposals either individually or t ogether with other Members.  Uruguay's main focus 
is on the full incorporation of agriculture in  the rules of the multilateral trading system. 
3. Since the WTO came into being, Uruguay has had an active notification programme, although 
in certain areas such as agricultu re, subsidies and countervailing measures, as well as State-trading 
enterprises, there has been some delay in notification.   Since the previous review of its trade policy in 
November 1998, Uruguay has made relatively little use of the WTO dispute settlement mechanism 
and has participated in three disputes as a third party and in one as a defendant. 
4. Uruguay implements an autonomous trade policy which, nevertheless, must be consistent 
with its obligations within the Southern Comm on Market (MERCOSUR).  In the context of its 
participation in MERCOSUR, Uruguay has signed pref erential trade agreements with Bolivia, Chile, 
the Andean Community (Colombia, Ecuador and Ve nezuela) and Peru, which are associate members 
of the Common Market.  Uruguay also has bilate ral preference agreements with other member 
countries of the Latin American Integration Associ ation (LAIA).  The agreem ent with the broadest 
scope is the free-trade agreement with Mexico, signe d in 2003, which covers over 90 per cent of tariff 
headings. 
5. Uruguay's investment regime is generally open to  private, including foreign investors, except 
in those sectors deemed to be of national public in terest such as fixed telecommunications, water and 
sanitation, and specific areas such as insurance and tr ansport.  Foreign investors are excluded from the 
operation of radio and television stations, cabotage a nd domestic transport of passengers by sea or air, 
or in fishing within an area of 12 nautical mile s.  The Government does not provide any special 
incentives for foreign investment, but neither do es it discriminate between Uruguayan and foreign 
investors.  Uruguay has signed bilateral investme nt agreements with several countries, thereby 
reaffirming the principle of non-discrimination and the investment guarantees generally embodied in 
its Constitution.  Uruguay has also undertaken commitments under the WTO General Agreement on 
Trade in Services in order to reinforce and improve the predictability of its foreign investment regime 
(see Chapter IV). 
(2) FORMULATION AND IMPLEMENTATION OF TRADE POLICY  
(i) General legal and institutional framework 
6. Uruguay's general legal and institutional framewo rk has not seen any major changes since the 
previous review in 1998.  Uruguay is a democrat ic republic with separation of powers into the 
Executive, the Legislature and the Judiciary.  A ccording to the present Constitution, adopted in 1996, 
the President has executive power and is elected for a non-renewable five-year term; the current Uruguay WT/TPR/S/163 
 Page 15 
 
 
 
President took office in March 2005.  The President is assisted by the Council of Ministers, composed 
of 12 ministers appointed by the President and r esponsible to the General Assembly.  Legislative 
power is exercised by the Senate, composed of 30 members, elected by universal suffrage for five 
years and presided over by the Vice-President of the Republic, and the Chamber of Representatives, 
composed of 99 members, also elected for a fi ve-year term.  The Senate and the Chamber of 
Representatives together make up the General Assembly. Members of the General Assembly are elected by a system of proportional representation.
1 
7. Judicial power is vested in the Supreme Court of Justice, composed of five members 
appointed by the General Assembly;  judges in the other courts are appointed by the Supreme Court, 
but the approval of the Senate is required.  Judicial proceedings are usually at two levels.  The 
Uruguayan legal system is based on legal standards a nd even though rulings by a court or a judge may 
provide guidance for subsequent rulings, th ey do not constitute a binding precedent.2 
8. The legislative process has not changed since 1995.  Draft laws may originate in either of the 
two houses and may be proposed by any of their memb ers or by the Executive, with the exception of 
draft laws determining tax exemptions or fixing minimum wages or prices, which must be proposed 
by the Executive.  Draft laws must be discussed and approved by both houses.  Once they have been 
approved, draft laws go to the Executive in order to  be published.  If the Executive objects to a draft, 
it may oppose the text or comment thereon and return it to the General Assembly within an obligatory 
time-limit of 10 days.  Where the Executive returns the draft law, the General Assembly is convened 
and a decision must be taken by three fifths of the members present of each of the houses, who may either endorse the comments or reject them, retaining the draft they approved.
3 
9. The Constitution is the highest-ra nking legal instrument, followe d, in descending order, by 
laws, decrees and resolutions.  Article 50 of the Constitution provides that in the conduct of foreign 
trade, the State will protect production intended for e xport or to replace imports.  It also provides that 
the law shall promote investment intended for this  purpose and preferably channel public savings in 
that direction.  With the exception of these provisi ons in the Constitution, Uruguay does not have any 
general legislation regulating foreign trade. 
10. International treaties are negotiated by the Execu tive, which transmits them to Parliament for 
approval so that they can be ratified once the par liamentary process has been completed.  Parliament 
has the power to approve a treaty or not, but is  not empowered to introduce modifications or 
amendments.  The Ministry of Foreign Affairs is re sponsible for concluding inte rnational treaties;  in 
the case of international trade treaties, negotiations are conducted in coordination with the Ministry of 
the Economy and Finance and with technical s upport from other State entities, as appropriate. 
11. In Uruguay, treaties that have followed the due process provided in the 1969 Vienna 
Convention on the Law of Treaties and in the Cons titution form part of the legal order.  The 
Constitution does not determine an order of preceden ce between treaties and laws.  Nevertheless, the 
authorities have indicated that the prevailing theory and past practice is that treaties take precedence 
inasmuch as these cannot be repealed by subsequent  laws, even though their content may not be the 
same.  Where there are inconsistencies betwee n the Constitution and treaties, the Constitution 
imperatively prevails.  In principle, there is no precedence from the legal point of view between the 
various types of international agreement such  as those concerning the WTO and MERCOSUR.  
                                                      
1 Available at:  http://www.hg.org/ guide-uruguay.html, October 1997. 
2 Uruguay XXI, Acerca de Uruguay .  Available at:  http://www.uruguayxxi.gub.uy/. 
3 Constitution of the Eastern Republic of Uruguay, Section VII on the Proposal, Discussion, Approval 
and Enactment of Legislation. WT/TPR/S/163 Trade Policy Review 
Page 16 
 
 
Following the adoption of the WTO Agreements, a number of important changes were made to 
Uruguayan trade-related laws and regul ations (see Chapters III and IV). 
(ii) Trade and investment policy objectives 
12. The authorities consider that the growth and development of a small country such as Uruguay 
is inevitably linked to the expans ion, diversification and modern ization of its external sector.4  At the 
Doha Ministerial Conference, Uruguay expressed its support for the multilateral system and the WTO, 
which, with its principles of most-favoured-na tion, non-discrimination and national treatment, 
embodies the system of multilateral rules and disc iplines that prevents unilateral imposition of 
restrictive and discriminatory measures. 
13. In accordance with the provisions in its Cons titution, Uruguay continues to view export 
promotion as an important axis of its trade policy.  In this respect, the existence of more open markets for its major export goods, for example, textiles and agricultural products, is de emed to be of supreme 
importance for Uruguay so that it can continue to benefit from its comp arative advantages.  
Consequently, Uruguay intends to play an ac tive role in the Doha Development Agenda. 
14. Uruguay considers that the priority objective of its economic and trade policies is to continue 
opening up to the world even further through regi onal integration and in conformity with the 
multilateral trade rules.  It has shown that it is keenly interested in strengthening the multilateral 
trading system and the WTO.
5  Uruguay is a member of the Southern Common Market 
(MERCOSUR), together with Argentina, Brazil and Paraguay.  During the previous review of its 
trade policy, Uruguay underlined MERCOSUR's important role and contribution to the process of 
regional and world trade liberalization, the full comp atibility of this process with WTO rules and its 
contribution to the economic development of th e member countries by allowing fuller and better 
integration into the international economy.6 
15. Since it joined MERCOSUR, Uruguay's trade policy has been to a large extent determined by 
the common policies adopted at the regional level.   MERCOSUR's rules provide that none of the 
States Party may apply any trade policy measure indepe ndently, except in those sectors that are in the 
process of converging towards the customs union and t hose that have been granted a waiver from the 
general regime for extra- and/or intra-regional trad e.  In practice, however, as there is no agreed 
common policy for some production sectors (sugar in in tra- and extra-regional trade, automobiles and 
spare parts), some trade policy on goods continues to be formulated and implemented at the national 
level, as are policies pertaining to services.  Invest ment and intellectual property policies are also still 
designed and implemented at the domestic level. 
(iii) Formulation and implementation of trade policy 
16. In Uruguay, the major institutions that form ulate and implement trade policy have not 
changed since 1998 and are still the Ministries of Fo reign Affairs and of the Economy and Finance.  
The Ministry of Foreign Affairs is the policy and administrative arm of the Government responsible 
for conducting international policy, including trade po licy.  It represents Uruguay abroad and in the 
establishment of relations with foreign countries and international organizations in respect of 
international aspects of matters en trusted to other Ministries.  The Ministry of Foreign Affairs, 
therefore, plans, oversees, implements and coordina tes Uruguay's foreign policy in all areas, including 
trade policy.  International trade negotiations  in negotiating forums such as the WTO and 
                                                      
4 WTO document WT/MIN(01)/ST/35 of 10 November 2001. 
5 WTO document WT/TPR/G/50 of 12 October 1998. 
6 Ibid. Uruguay WT/TPR/S/163 
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MERCOSUR are conducted in coordination with the Ministry of the Economy and Finance and with 
technical support from the relevant State bodies.  Th e Ministry of the Economy and Finance, through 
the Asesoria de Política Comercial  (Trade Policy Office), is responsible for formulating and 
implementing trade policies.  The Trade Policy Office is responsible for giving the Ministry of the Economy and Finance the advice and information n eeded to conduct national foreign-trade related 
policy at the highest level and for implementing and applying this policy consistently with regional 
and international policies.  It is also respons ible for coordinating the position of various bodies on 
trade policy and for ensuring that the relevant national policy is consis tent with regional and 
international policies.
7 
17. Decree No. 253/003 of 19 June 2003 set up a special commission to advise the Government 
on the measures required to expand Uruguay's foreign tr ade, to coordinate foreign-trade related action 
and negotiations and to follow up these aspects.  In January 2006, however, the commission had not 
yet started to function. 
18. The private sector is involved in formulating tr ade policy through bodies that interact with the 
public sector, either singly or in the form of asso ciations, but there is no specific joint group 
exclusively concerned with the formulation of tr ade policy.  The private sector associations which 
cooperate with the Government to formulate tr ade policies include the Uruguayan Chamber of 
Industry, the National Trade and Services Chamber, the Chamber of Commerce, the Exporters' Union, 
the Rural Association and the Rural Federation.  Th e major associations of businesses, producers and 
other agents belong to the Uruguayan Supreme Bu siness Council (COSUPEM), which follows up the 
various international trade-rela ted negotiating processes.  At the regional level, Uruguay, acting 
through COSUPEM, participates in the MERCOSUR  Economic and Social Advisory Forum, in 
which private and trade associations in the member countries take part. 
(3) FOREIGN INVESTMENT REGIME  
19. Investment in Uruguay, including the foreign investment regime, is still governed by Law 
No. 16.906 of 7 January 1998 (the Invest ment Law) and various decrees which, inter alia , provide 
incentives for investors (Decree No. 59/998);  the requirements and procedures for obtaining such 
incentives (Decree No. 92/998) or which declare ce rtain activities, for example, the production of 
software, to be of national interest (Decree No. 84/999).8  The Investment Law repealed Law 
No. 14.179 of 1974 or Foreign Investment Law, which contained requirements and restrictions 
relating to foreign investment. 
20. No prior authorization is required for fore ign investment.  Foreign companies may act 
through a branch, a subsidiary or an agency.  In order to set up a Uruguayan company, a foreign investor may operate by setting up a Uruguayan public  limited company, which is the most commonly 
established type of company, in which a foreign investor may own up to 100 per cent of the share 
capital (see also Chapter III(4)(i)). 
21. The Investment Law prescribes that the invest ment regime shall not discriminate between 
foreign investors established in Uruguay and Urug uayan investors.  There are, however, some 
restrictions concerning market access.  For example, foreign investment is specifically prohibited in 
the following sectors:  the operation of radio and te levision stations;  cabotage and domestic transport 
of passengers by sea or air;  fishing within an area of 12 nautical miles;  and ownership of more than 
                                                     
 
7 Available at:  http://mef.gub.uy/portada_comercio.php. 
8 Further information on Uruguay's investment regime can be found on the Internet site of the 
Uruguay XXI government agency at http://www.uruguayxxi.gub.uy. WT/TPR/S/163 Trade Policy Review 
Page 18 
 
 
49 per cent of the shares in railway companies.  In general, foreign investors may engage in any type 
of activity on the same terms as Uruguayan investor s.  Foreign investors are eligible for the same 
incentives as Uruguayan investors (see Chapter III(4 )(iii)).  There are no restrictions on the 
employment of foreign personnel, except in certain sectors such as fishing, working on Uruguayan-
registered vessels and aircraft and in free zones, where three-quarters of the labour force must be 
Uruguayan residents. 
22. Although there has been no case of expropriati on since the new Constitution was adopted in 
1996, Uruguay's Constitution provides that there should be immediate compensation in cases of expropriation.  If there is a dispute between an i nvestor and the Uruguayan State, the matter can be 
brought before the courts. 
23. Moreover, since the previous review in 199 8, Uruguay has ratified nine agreements on 
investment promotion and protection with Australia, El Salvador, Finland, Israel, Malaysia, Mexico, 
Panama, the United States and Venezuela.
9  By December 2005, Uruguay had signed 27 investment 
promotion and protection agreements;  apart from those mentioned above, it has agreements with 
Belgium, Canada, Chile, China, the Czech Repub lic, France, Germany, Italy, Luxembourg, the 
Netherlands, Poland, Portugal, Romania, Spain, Sweden, Switzerland and the United Kingdom.  At 
that time, an agreement with Armenia was awaiti ng ratification.  Uruguay has also signed double 
taxation agreements with  Germany and Hungary. 
24. Uruguay is a member of international organizations that promote investment security, for 
example, the Multilateral Investment Guarantee Ag ency (MIGA) and the International Centre for 
Settlement of Investment Disputes, who se headquarters are in the World Bank. 
(4) INTERNATIONAL RELATIONS  
(i) World Trade Organization 
25. Uruguay is an original Member of the WTO and grants, as a minimum, MFN treatment to all 
its trading partners.  The Ministry of Foreign A ffairs represents Uruguay at the WTO, in coordination 
with the Ministry of the Economy and Finance.  As a developing country, Uruguay is given the 
transitional periods in which to implement th e commitments undertaken under the various WTO 
Agreements.10  The latter were ratified by Law No. 16. 671 of 13 December 1994. Uruguay has signed 
the International Bovine Meat Agreement and th e International Dairy Agreement, both of them 
plurilateral agreements which terminated at the end of 1997, but it has not signed any of the WTO's 
other plurilateral agreements. 
26. Uruguay took part in the extended negotiations in the WTO on financial services, but did not 
participate in those on telecommunications.  It  has accepted the Fifth Protocol to the GATS 
(Chapter IV(5)).11  In March 2003, Uruguay submitted its in itial offer to the Members of the Council 
for Trade in Services and in June 2005 revised its se rvices offer.  In December 2005, both offers were 
still the subject of restricted circulation. 
                                                      
9 Ratified through Laws No. 17.573 of 22 October 2002 (Agreement with Australia);  No. 17.759 of 
12 May 2004 (Finland);  No. 17.839 of 27 September 2004 (Israel);  No. 17.530 of 9 August 2002 (Malaysia);  No. 17.501 of 27 May 2002 (Mexico);  No. 17.446  of 31 December 2001 (P anama);  No. 17.943 of 
4 January 2006 (United States);  and No. 17.441 of 28 December 2001 (Venezuela). 
10 WTO document WT/Let/1 of 1 March 1995. 
11 WTO document S/C/W/223 of 5 May 2003. Uruguay WT/TPR/S/163 
 Page 19 
 
 
 
27. Table AII.1 shows Uruguay's status regarding the notification requirements in the 
WTO Agreements at November 2005.  Since the earl y days of the WTO, Uruguay has had an active 
notification programme, even though in some areas such as agriculture, subsidies and countervailing 
duties and State-trading enterprises, there has been some delay in submitting notifications. 
28. Since the previous review in November 1998, Uruguay has been involved in four cases under 
the WTO dispute settlement mechanism, one as a defendant and three as a third party.12  Since the 
establishment of the WTO in 1995, Uruguay has b een involved in one case as a complainant, one as a 
defendant, and five as a third party.  In June 2002,  Chile requested consultations with Uruguay within 
the framework of the WTO's Dispute Settlement Body  in connection with the Specific Internal Tax 
(IMESI) (see also Chapter III(2)(v)).13  A Panel was set up in May 2003 to address the issue, but was 
dissolved in August that year at the request of the parties in order to seek a bilateral solution to the 
dispute.  In December 2003, Chile and Uruguay signed an agreement resolving the dispute.14 
29. Uruguay has taken part in preparations fo r the WTO's Ministerial Meetings.  As a 
predominantly agricultural country, Uruguay has propo sed that agriculture be fu lly integrated into the 
multilateral trade rules, that domes tic support and export subsidies be abolished and at the same time 
new market access opportunities be opened up for agricultural products.15  Under the Doha 
Development Agenda, Uruguay, together with ot her Members, submitted a proposal to the Trade 
Negotiations Committee for the Cancún Ministerial Meeting.16  With other Members, it expressed 
concern at the state of play in the nego tiations, particularly regarding agriculture.17  As a member of 
MERCOSUR, Uruguay put forward some considerati ons regarding the negotiations on agricultural 
products.18  Together with other Members, it also presented positions to the Council for Trade in 
Services, the Negotiating Group on Trade Facilita tion and the Negotiating Group on Market Access.19 
30. In 2003, Uruguay notified its non-tariff trade ba rriers within the framework of the Negotiating 
Group on Market Access.20 
31. At the Hong Kong Ministerial Conference, Ur uguay reaffirmed its commitment both to a 
successful outcome to the Doha negotiations and to  the multilateral system in general and underlined 
the importance of achieving freer, fairer and more equitable trade.  Uruguay indicated that, if the 
Doha mandate was to be fulfilled in its entirety, ag riculture would have to be incorporated in the 
multilateral disciplines, guaranteeing substantive access to markets, the elimination of export 
subsidies for agricultural products and a substantia l reduction in trade-distorting domestic support.  
Uruguay also declared that it was crucial to gi ve developing countries special and differential 
treatment that addressed their development needs and maintained the right proportionality vis-à-vis 
the more substantive commitments to be made by the developed countries.21 
                                                      
12 WTO documents WT/DS121/R of 25 June 1999; WT/DS291/24, WT/DS292/18, WT/DS293/18 of 
5 March 2004; and WT/DS/OV/24 of 15 June 2005. 
13 WTO document WT/DS261/1-G/L/555 of 26 June 2002. 
14 WTO document WT/DS261/7 of 14 January 2004. 
15 WTO documents WT/MIN(99)/ST/47 of 1 Decem ber 1999; WT/MIN(01)/S T/35 of 10 November 
2001; and WT/MIN(03)/ST/25 of 11 September 2003. 
16 WTO document TN/C/W/13 of 6 June 2003. 
17 WTO document TN/AG/GEN/7 of 18 August 2003. 
18 WTO document OMC TN/MA/W/23 of 15 January 2003. 
19 WTO documents TN/S/W/31 of 18 February 2005;  TN/TF/W/41 of 2 June 2005;  and TN/MA/W/50 
of 24 February 2005. 
20 WTO document TN/MA/W/25/Add.1 of 13 May 2003. 
21 WTO document WT/MIN(05)/S T/150 of 17 December 2005. WT/TPR/S/163 Trade Policy Review 
Page 20 
 
 
(ii) Preferential agreements 
(a) Latin American Integration Association (LAIA) 
32. Uruguay is a member of the Latin American Integration Association (LAIA) set up in 1980 
under the Montevideo Treaty, and as such has conclu ded agreements of diffe ring scope with a number 
of member countries.22  At November 2005, Uruguay had concl uded 37 Partial Scope  Agreements and 
10 regional agreements on preferential tariffs.23 
33. Within the framework of the LAIA agreements, on 15 November 2003 Uruguay signed a 
free-trade agreement with Mexico.  This agreem ent was adopted by Law No. 17.766 of 17 May 2004 
and was incorporated into the Uruguayan legal system by means of Joint Note No. 053/04 and 
No. 302/04 of 17 June 2004 (CR/di 1797).  It entered into force on 15 July 2004.  The agreement 
creates a free trade zone between the two countries a nd stipulates that its provisions shall prevail if 
there is any inconsistency between them and the provisions in other treaties and agreements to which 
the two countries are party, including the WTO Ag reement and MERCOSUR.  Both parties undertook 
to phase out tariffs as of the entry into force of  the agreement, with the exception of automotive 
products, crude petroleum and its by-products, and the products included in the list of exceptions.24  
The majority of the products appearing on Uruguay' s list of exceptions remain subject to a reduction 
rate (i.e. preferential margin) of 50 per cent.  For some products, the reduction ra te is higher (60, 70 or 
80 per cent) and for sensitive produc ts (some made-up articles, some oils, vehicles) the reduction is 
zero in the majority of cases, and 12 per cent for a few products.25 
34. The agreement also establishes detailed regula tions on safeguards and unfair trade practices, 
as well as on competition policies.  It includes provisions on rules of origin, sanitary and 
phytosanitary measures and trade-related technical standards, as well as intellectual property and 
investment.  As regards services, the agreement provides that each Party shall grant national and 
most-favoured-nation treatment for services and service suppliers from the other Party.  It is also provided that no Party may require a service supplier from the other Party to establish or keep an agency or any type of business or to be resident in the country as a condition for supplying a cross-
border service.  The agreement does not cover financial services, air transport services or government 
procurement.
26 
(b) MERCOSUR 
35. Uruguay, together with Argentina, Brazil a nd Paraguay, was a founding member of the 
Southern Common Market (MERCOSUR), established in March 1991 by the Treaty of Asunción, 
                                                      
22 The LAIA member countries are Argentina, Bo livia, Brazil, Chile, Colombia, Cuba, Ecuador, 
Mexico, Paraguay, Peru, Uruguay and Venezuela. 
23 The full list of the agreements in effect is  available at:  http://www.aladi.org/NSFALADI/ 
cuaderno.NSF/0/edab40b53c5c92050325704d004db093?OpenDocument. 
24 In the case of Uruguay, the list of  exceptions includes products such as:  live animals;  bovine meat 
and meat of other animals;  fish and seafood;  milk and dairy products;  honey;  hair;  coral and similar 
materials;  natural sponges;  certain fruit, vegetables and nuts;  seeds and plant varieties;  certain grains and 
cereals;  flour, cornflour and starch;  st raw;  resins, plant extracts and materials;  animal and plant oils and fats;  
sausages;  meat and fish extracts;  sugar and sugar pr oducts;  cocoa and cocoa pro ducts;  malt extract;  cereal-
based products;  food supplements;  mineral waters;  wines, spirits, liqueurs and eau-de-vie;  vinegar; oilcake 
and other solid residues;  animal feed;  cigarettes, ciga rs and tobacco;  extracts and juices;  certain textile 
materials and fibres;  clothing;  tractors, lorries and other heavy vehicles;  vehicles;  trailers;  and storage tanks. 
25 Partial Scope – Economic Complementarity Agreements, AAP.CE No . 60, Chapter III. 
Annex 3 03(4).  List of Exceptions, Section B – Uruguay's List of Products. 
26 Available at http://www.mrree.gub.uy/mrree/Asuntos_Economicos%5Cum.htm. Uruguay WT/TPR/S/163 
 Page 21 
 
 
 
with the objective of establishing a common market that will provide for the free movement of goods, 
services, capital and labour among member countries.27  The Additional Protocol to the Treaty of 
Asunción on the Institutional Structure of MERCOSU R (Ouro Preto Protocol), signed in 1994, gave 
MERCOSUR legal personality under international law.  MERCOSUR membership has been open to 
other LAIA countries since January 1997. 
36. MERCOSUR was notified to the GATT for the fi rst time in July 1992 under the Enabling 
Clause.28  Since February 1996, the WTO Committee on Regional Trade Agreements has been 
examining MERCOSUR in the light of the rele vant provisions of the GATT 1994, including 
Article XXIV.  By December 2005, the Working Party on MERCOSUR, set up in May 1993, had 
reviewed the operation of the Treaty of Asunción on three occasions (the last time in May 1997).29  
The MERCOSUR countries have supplied the WTO with information on many aspects of their institutional and legal framework.
30  In May 2005, the WTO Secretar iat issued a document in which 
the weighted average tariff rates and cust oms duties levied by MERCOSUR members were 
calculated.31 
37. MERCOSUR's institutional structure, determined by the Ouro Preto Protocol signed in 1994 
and in force since December 1995, provides for two types of body:  decision-making and non-decision-making bodies.  The former include the following:  the Council of the Common Market (CMC), responsible for deepening the inte gration process and achieving the objectives of the 
Treaty of Asunción, which essentially acts through decisions;  the Common Market Group (GMC), 
which is the executive body responsible for monito ring implementation of the Treaty of Asunción and 
legally acts through resolutions;  the Trade Comm ission (CCM), which issues directives and is 
entrusted with monitoring application of common trade policy instruments and examining common trade policies related both to regional trade and trade with third parties.  Decisions by these bodies are mandatory on States Parties, pursuant to the proce dure concerning the applicability of rules laid down 
in the Ouro Preto Protocol.  The non-decision-ma king bodies consist of the Joint Parliamentary 
Commission, the Economic and Social Advisory Forum, and MERCOSUR's Administrative Secretariat. 
38. Since the previous review of Uruguay's trade po licy in 1998, there have been developments in 
MERCOSUR's institutional framework.  For exampl e, the Administrative Secretariat has been 
reorganized.  It has become a Technical Secretar iat and been entrusted with greater responsibilities.
32 
39. The dispute settlement mechanism has also been reorganized.  The Olivos Protocol, signed in 
2002 and in force since January 2004, replaced the Brasilia Protocol.  The amendments include the 
introduction of a procedure that provides for two levels : the first level is an ad hoc arbitration tribunal; 
the second is a new body, the Standing Review Tri bunal.  The latter is also empowered to give 
                                                      
27 The provisions in the Treaty of Asunción have been incorporated in the LAIA's legal structure by 
means of Economic Complementarity Agreement No. 18. 
28 WTO document WT/L/127 of 7 February 1996. 
29 GATT documents L/7044 of 9 July 1992;  L/7370 of 18 January 1994;  and L/7370/Add.1 of 
18 January 1994.  WTO document WT/COMTD/5/Rev.1 of 25 October 1995 and the WT/COMTD/1 series of documents. 
30 WTO document WT/COMTD/1 and addenda and revisions thereto subsequent to 1995. 
31 WTO document WT/COMTD/1/Add.15 of 24 May 2005.  In Uruguay's case, the weighted average 
tariff rose from 8.9 per cent prior to the customs union to 11.2 per cent after the customs union in 1995, and to 
13.6 per cent taking into account the 2006 Common External Tariff. 
32 MERCOSUR CMC/DEC/30/02.  Transformación de la Secretaría Administrativa del MERCOSUR 
en Secretaría Técnica .  Available at:  http://www.sice.oas.or g/trade/mrcsrs/decisions/dec3002s.asp. WT/TPR/S/163 Trade Policy Review 
Page 22 
 
 
consultative opinions and to act as a single level tri bunal subject to the agreement of the parties to the 
dispute. 
40. Another innovation has been the establishment of an option regarding forums according to 
which the complainant country can choose the forum before which the dispute will be heard, whether 
the MERCOSUR system, the WTO dispute settlement mechanism or those of other trade preference 
schemes to which the individual States party to MERCOSUR belong.  Once the proceedings have been initiated in a forum, they may not be heard by another, irrespective of the ruling given.  During the period under review, Uruguay participated in  six disputes within the MERCOSUR framework, 
four as a complainant and two as a defendant.
33 
41. The Treaty of Asunción provides for the free movement of goods among member countries, 
with a timetable for achieving this under the Trade Liberalization Programme.  Since 1 January 2000, 
with the exception of the sugar and automobile s ectors, goods have moved freely within MERCOSUR 
if they have a MERCOSUR certificate of origin. Specific deadlines for inte grating these sectors into 
common trade policy have not yet been set. 
42. The MERCOSUR Common External Tariff (CET) h as been in force since January 1995 (see 
also Chapter III(2)(iv)).  The cu rrent CET allows some exemptions under various CMC decisions.34  
The MERCOSUR CET rates can only be changed with the consent of all members. 
43. In December 2004, Decision No. 54/04 was a dopted and it contains an agreement on 
elimination of double charging of the CET and di stribution of customs revenue within MERCOSUR 
in order to develop the customs union.35  The Decision provides for the elimination of double 
charging of the CET by conferring originati ng status on goods imported from outside MERCOSUR 
which are consistent with MERCOSUR's common tari ff policy.  The Decision will be implemented in 
two stages.  The first stage was implemented by Uruguay as of 1 January 2006, under Decree 
No. 536/005 of 26 December 2005.  Implementation is s ubject to approval and entry into force of the 
MERCOSUR Customs Code and the adoption of  a single MERCOSUR customs document, an 
understanding on the distribution of customs revenu e, the interconnection of computerized customs 
management systems and the establishment of the Re gional Registers Database of Offenders (RIM).  
The authorities have indicated that approval of these three requirements in order to embark on the second stage should occur by 2008 at the latest. 
44. In 2002, the Common Market Council adopted the WTO Agreements on Anti-Dumping and 
on Subsidies and Countervailing Measures, together  with other measures supplementing WTO trade 
defence rules, in order to apply them to trade among member countries.
36  In 2003, the CMC approved 
the MERCOSUR Protocol on Government Procur ement, which will enter into force after 
                                                      
33 The disputes were the following (complainant/defendant): Uruguay/Argentina, "Restrictions on 
Access to the Argentine Market for Bi cycles of Uruguayan Origin";  Urugu ay/Brazil, "Ban on the Import of 
Retreaded Tyres from Uruguay";  Ur uguay/Brazil, "Discriminatory and Re strictive Measures on Trade in 
Tobacco and Tobacco Products";  Paraguay/Uruguay, "Application of the IMESI to the Marketing of 
Cigarettes";  Argentina/Uruguay, "Inconsistency of the Regime to Promote the Industrialization of Wool 
Granted by Uruguay under Law No. 13.695/68 and Decrees Additional to MERCOSUR Rules Regulating the 
Application and Use of Incentives in Intra-zone Trade";  and Uruguay/Argentina, "Dispute under Law No. 25.626. Ban on the Import of Retreaded Tyres". 
34 The list of exceptions to the Common External Tariff which States Parties may determine and 
maintain up to 31 December 2008 are contained in CM C Decision No. 38/05, impl emented in Uruguay through 
Decree No. 538/005 of 26 December 2005, and Uruguay's list of exceptio ns is to be found in Decree 
No. 543/005 of 26 December 2005. 
35 MERCOSUR CMC/DEC/54/04. 
36 MERCOSUR CMC/DEC/13/02, CMC/DEC/14/02 and CMC/DEC/22/02. Uruguay WT/TPR/S/163 
 Page 23 
 
 
 
parliamentary ratification by two of the four member s; by the end of 2005, the Protocol had not yet 
been ratified by any member.  In December 2004, th e relevant regulations were submitted and were 
amended.  In February 2006,  they were awaiting approval.37 
45. The Montevideo Protocol, signed in 1997, focuses on liberalization of services within a 
period of 10 years.  The Protocol has been ratif ied by Argentina, Brazil and Uruguay (Law No. 17.855 
of 20 December 2004) and came into force on 7 December 2005.  In order to coordinate 
macroeconomic policies, the Grupo de Monitoreo Macroecónomico  (Macroeconomic Assessment 
Group) was set up in 2000 and is composed of repre sentatives of the ministries of finance and of the 
central banks.38 
(c) Other regional trade agreements and initiatives 
46. Within the LAIA framework, MERCOSUR has signe d a number of agreements that contain 
provisions on rules of origin, safeguards, unfair trade practices, non-tariff restrictions, competition 
policy, customs valuation, technical, sanitary and phytosanitary measures, export incentives, and a 
dispute settlement mechanism (Table II.1).  ME RCOSUR has also started to negotiate free-trade 
agreements with members outside the region and to date has signed framework agreements with India, 
the South African Customs Union, Lesotho, Namibia, Swaziland, Botswana and Egypt. 
Table II.1 
Framework and free-trade agreements concluded by MERCOSUR, December 2005 
Agreement Date of signature/ 
entry into force Comments 
Free-trade agreements 
MERCOSUR-Chile 25 June 1996/ 
1 October 1996 Elimination of duties for at least th ree quarters of tariff lines before 
January 2004 and for all tariff lines by 2014 
MERCOSUR-Bolivia 17 December 1996/ 
2 March 1997 Creation of a free-trade zone by 1 January 2006 
MERCOSUR-Andean 
Community 16 December 2003/ 
Not yet in force Gradual creation of a free-trade zone  within a transitional period of 
10 years; negotiating rounds currently under way 
MERCOSUR-Peru 25 August 2003/ 
Not yet in force  Creation of a free-trade zone within  a maximum transitional period of 
15 years 
Framework agreements 
MERCOSUR-South Africa; MERCOSUR and Lesotho, 
Namibia, Swaziland and 
Botswana (2003) 15 December 2000 The first stage is to draw up an agreement on fixed preferences so as to 
provide the conditions for the subsequent signature of a free-trade 
agreement  
MERCOSUR-Mexico 5 July 2002 Gradual creation of  a free-trade zone; negotiations under way. 
MERCOSUR and Mexico have signe d a partial scope agreement 
providing for free trade in vehicles by 2011 
MERCOSUR-India framework 
agreement. 
MERCOSUR-India preferential 
trade agreement 17 June 2003 
25 January 2004 Limited scope (some 900 tariff headings); concessions still to be 
finalized with preference margins of 10 or 20 per cent, and as much as 
100 per cent for a limited group of products 
MERCOSUR-Egypt framework 
agreement 7 July 2004 The first stage is to draw up an agreement on fixed preferences as a 
preliminary to a free-trade agreement 
Source : MERCOSUR Secretariat. 
 
                                                      
37 MERCOSUR CMC/DEC/55/04.  Information available from the Directorate-Ge neral of Customs at:  
http://www.aduanas.gub.uy/. 
38 MERCOSUR CMC/DEC/30/00. WT/TPR/S/163 Trade Policy Review 
Page 24 
 
 
47. WTO Members were informed of the signature of agreements with Chile and Bolivia in a 
report transmitted by the LAIA Secretariat to the Committee on Trade and Development, but there has 
been no formal notification.39  The agreements signed with Peru, Colombia, Venezuela, Ecuador and 
Mexico have not been notified either. 
48. Uruguay participates in the negotiations for th e establishment of the Free Trade Area of the 
Americas (FTAA), an initiative launched in December  1994 with the aim of phasing out barriers to 
trade in goods and services and to investment am ong the 34 participating countries in the western 
hemisphere.  The original timetable envisaged signa ture of the FTAA on 1 January 2005 and its entry 
into force, after ratification, on 31 December 2005.  It did not prove possible, however, to conclude 
the negotiations within the scheduled timeframe. 
49. MERCOSUR and the European Union are negotia ting an interregional association agreement 
with a view to establishing a political and ec onomic association based on the EU-MERCOSUR 
Interregional Framework Cooperation Agreement, signed in 1995. 
50. Uruguay is eligible for the Generalized System of Preferences of Belarus, Bulgaria, Canada, 
the European Union, Japan, Ne w Zealand, Norway, Russia, Switzerland and the United States. 
51. Uruguay does not itself participate in the Global System of Trade Preferences among 
Developing Countries (GSTP), but MERCOSUR, as a group, took part in the second round of 
exchanges of tariff concessions.40 
(5) TRADE -RELATED TECHNICAL ASSISTANCE  
52. Uruguay has received trade-related technical assistance from a number of international 
organizations, including the WTO.  The techni cal assistance given to Uruguay by the WTO has 
mainly focused on improving government official s' knowledge of WTO-rela ted issues.  Between 1999 
and November 2005, Uruguay took part in 96 tec hnical assistance activities, including 68 workshops, 
seminars and technical training activities at the regional level and nine training activities at the 
national level.  These covered a wide variety of issues relating to WTO rules, including agriculture, 
dispute settlement, anti-dumping practices, disciplines on subsidies, regional trade agreements, 
technical barriers to trade, sanitary and phyto sanitary measures, services, government procurement, 
trade facilitation and investment. 
53. Uruguay has also benefited from technical assist ance and training programmes provided by 
other multilateral organizations such as the World Ba nk, the International Monetary Fund (IMF), the 
International Trade Centre (ITC), the United Nations Conference on Trade and Development 
(UNCTAD), the World Intellectual Property Organi zation (WIPO) and the United Nations Industrial 
Development Organization (UNIDO), as well as programmes of bilateral donors. 
  
                                                     
 
39 WTO Document WT/COMTD/11 of 8 October 1997. 
40 Information on the Global System of Trade Pref erences among Developing Countries available at:  
http://www.g77.org/gstp/#membership.