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