Uruguay is a member of the Latin American Integration Association (ALADI), the largest integration group of Latin America. ALADI consists of 12 nations: Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.
ALADI was established on 12 August 1980 with the Treaty of Montevideo, which regulates its operations and established general principles of the group: pluralism in economy and policy issues; progressive convergence of actions for the formation of a common Latin American market; flexibility; differential treatment based on the development of member nations; and multiplicity in trade instrument implementation methods.
ALADI supports the creation of an area of economic preferences in the region through three mechanisms: a regional tariff preference, regional agreements and partial scope agreements. Both regional agreements and partial scope agreements can cover diverse issues such as: tariff reduction, trade promotion, economic complementation, agriculture and livestock trade, financial, tax, customs, health and environmental cooperation, preservation of the environment, technological and scientific cooperation, tourism promotion, technical standards and many other areas.
World Trade Organization
The 153-member World Trade Organization (WTO) was created to replace GATT and is headquartered in Geneva, Switzerland. Negotiation rounds are held where member countries must meet at least once every two years.
The most relevant principles of the WTO include the following: a code of conduct that includes a series of legal commitments to reduce trade barriers; the Most Favored Nation status that requires that a good produced by a member State shall be treated no less favorably than a similar product from any other country (free trade areas and customs unions are excluded); and the national treatment principle (once foreign products have satisfied national requirements to be imported, they must be treated in a no less favorable manner than similar nationally produced products). The WTO also mediates in conflict resolution.
Uruguay has been a member of the World Trade Organization since its creation on 1 January 1995.
Free Trade Agreements
Uruguay is a member of the following free trade agreements, whether as an independent State or as a Mercosur member country.
Mercosur - Southern Common Market (customs union)
On 26 March 1991, Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asuncion to create the Southern Common Market or Mercosur. The Mercosur agreement seeks the following:
- The free circulation of goods and factors of production among countries through the elimination of customs duties and non-tariff barriers on the circulation of merchandise and any other equivalent measure.
- The establishment of a common external tariff and the adoption of a common trade policy with third party States or groups of States and the coordination of positions in regional and international economic trade forums.
- The coordination of macroeconomic and industrial policies of member States to ensure appropriate conditions of competition among member States, including the following: foreign trade, agriculture, fiscal policy, monetary policy, exchange rate policy, capital, services, customs, transportation communication and others.
- The commitment of member States to harmonize legislation in pertinent areas to strengthen the integration process.
Between 1991 and 1994, member countries established a free trade zone with progressive tariff reductions that eventually reached 0% on 31 December 1994 (certain products were delayed a few years and the sugar and automotive industries were excluded from the elimination). On 1 January 1995, Mercosur became a customs union with the entrance of a common external tariff with rates varying from 0% to 20%.
MERCOSUR - Chile (free trade zone)
In July 1996, Mercosur signed a free trade agreement with Chile (Economic Complementation Agreement number 35 in ALADI nomenclature). Main objectives of the agreement are:
- Establish the legal and institutional framework for economic and physical cooperation and integration to contribute to the creation of a widened economic sphere, thus facilitating the free circulation of goods and services and the maximum use of factors of production.
- Foment a free trade area among member countries in a maximum period of 10 years through the expansion and diversification of trade and the elimination of tariff and non-tariff restrictions that affect trade reciprocity.
- Promote the development and use of physical infrastructure, with special emphasis on the establishment of bi-ocean interconnections.
- Promote reciprocal investments among economic agents of member countries; promote complementation and cooperation in economics, energy, science and technology.
The establishment of a free trade zone was performed through a trade liberalization program with progressive tariff reductions through 2004 (with the exception of certain products that will be liberalized by no later than 2014).
MERCOSUR - Bolivia (free trade zone)
In December 1996, Mercosur signed a free trade agreement with Bolivia (Economic Complementation Agreement number 36 in ALADI nomenclature). Main objectives of the agreement are:
- Establish the legal and institutional framework for economic and physical cooperation and integration to contribute to the creation of a widened economic sphere, thus facilitating the free circulation of goods and services and the maximum use of factors of production.
- Foment a free trade area among member countries in a maximum period of 10 years through the expansion and diversification of trade and the elimination of tariff and non-tariff restrictions that affect trade reciprocity.
- Promote the development and use of physical infrastructure with special emphasis on the progressive liberalization of communications as well as land and river transportation (i.e., Parana-Paraguay Riverway, Cáceres-Nueva Palmira ports).
- Establish a normative framework for investment promotion and protection.
- Promote economic, scientific and technological complementation and cooperation.
The establishment of a free trade zone was performed through a trade liberalization program with progressive tariff reductions through 2006 (with the exception of certain products that will be liberalized by no later than 2014).
Uruguay - Mexico (free trade zone)
In November 2003, Uruguay and Mexico signed a bilateral free trade agreement (Economic Complementation Agreement number 60 in ALADI nomenclature) that went into effect in 2004. The specific objectives of the treaty are:
- Stimulate trade expansion and trade among members.
- Eliminate trade barriers and facilitate the circulation of goods and services among members.
- Promote fair competition in trade among member countries.
- Substantially increase investment opportunities in the territories of countries party to the agreement.
- Protect and enforce intellectual property rights in an appropriate and effect manner in each member country.
For more information (in Spanish) on the Treaty, please visit: http://www.mef.gub.uy/apc_mexico.php
MERCOSUR - Colombia/Ecuador/Venezuela (free trade zone)
In October 2004, Mercosur signed a free trade agreement with Colombia, Ecuador and Venezuela (Economic Complementation Agreement number 59 in ALADI nomenclature). Main objectives of the agreement are:
- Establish the legal and institutional framework for economic and physical cooperation and integration to contribute to the creation of an widened economic sphere, thus facilitating the free circulation of goods and services and the maximum use of factors of production in an atmosphere of competition between countries.
- Foment a free trade area among member countries through the expansion and diversification of trade and the elimination of tariff and non-tariff restrictions that affect trade reciprocity.
- Achieve harmonious development in the region, taking into consideration the asymmetries of various economic development levels among countries.
- Promote development and use of physical infrastructure with special emphasis on integration corridors to reduce costs and create competitive advantages in reciprocal regional trade and trade with countries outside the region.
- Promote investments among economic agents of member countries.
- Promote economic, scientific and technological complementation and cooperation.
- Promote queries in trade negotiations that are made with third party countries and groups of extra-regional countries.
The establishment of a free trade zone was performed through a trade liberalization program with progressive tariff reductions that began in 2005. In the case of bilateral trade between Uruguay and the three signatory countries, the reduction will be progressive until 2018.
MERCOSUR - Peru (free trade zone)
In November 2005, Mercosur signed a free trade agreement with Peru (Economic Complementation Agreement number 58 in ALADI nomenclature). The objective is the establishment of a free trade zone through a trade liberalization program with progressive tariff reductions. In the case of bilateral trade between Peru and Uruguay, tariffs will be progressively reduced until 2017.
- Establish the legal and institutional framework for economic and physical cooperation and integration to contribute to the creation of an widened economic sphere, thus facilitating the free circulation of goods and services and the maximum use of factors of production in an atmosphere of competition between signatory countries.
- Foment a free trade area among member countries through the expansion and diversification of trade and the elimination of tariff and non-tariff restrictions that affect trade reciprocity.
- Achieve harmonious development in the region, taking into consideration the asymmetries from various economic development levels among the countries.
- Promote development and use of physical infrastructure with special emphasis on integration corridors to reduce costs and create competitive advantages in reciprocal regional trade and trade with countries outside the region.
- Promote investments among economic agents of member countries.
- Promote economic, scientific and technological complementation and cooperation.
- Promote queries in trade negotiations that are made with third party countries and groups of extra-regional countries.
MERCOSUR - Israel (free trade zone)
In December 2007, Mercosur signed a free trade agreement with Israel. The specific objectives of the agreement are:
- To eliminate trade barriers and improve the goods movement through the territories.
- To promote fair competition through the free trade zone.
- To increase substantially investment opportunities and to increase the cooperation in mutual interest areas.
On November 9th, this agreement has been ratified by Israel. Uruguay is the only Mercosur member that has already signed the mentioned agreement.
