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U.S. Department of State 
Uruguay Country Commercial Guide 
Office of the Coordinator for Business Affairs 

                        Country Commercial Guide


                           Fiscal Year 1996

This Country Commercial Guide (CCG) presents a comprehensive look at 
Uruguay's commercial environment through economic, political and market 

The CCGs were established by recommendation of the Trade Promotion 
Coordinating Committee (TPCC), a multi-agency task force, to consolidate 
various reporting documents prepared for the U.S. business community.  
Country Commercial Guides are prepared annualy at U.S. Embassies through 
the combined efforts of several U.S. governement agencies.  


Major Obstacles to Doing Business

Major Trends and Outlook
Public Sector Reform
Principal Growth Sectors
  Agriculture and Livestock
Government Role in the Economy
Balance of Payments situation
  Current Account
  Merchandise Trade
  Capital Account
  Net Foreign Reserves
Infrastructure Situation Re: Goods/Service Distribution

Nature of Bilateral Relationship with the United States
Major Political Issues Affecting Business Climate
Brief Synopsis of Political System, Schedule for Elections, and 
Orientation of Major Political Parties
  Colorado Party
  National (Blanco) Party
  Frente Amplio (Broad Front)

Distribution and Sales Channels
  Use of Agents/Distributors - Finding a Partner
  Direct Marketing
  Joint Ventures/Licensing
  Steps to Establishing an Office
  Selling Factors Techniques
  Advertising and Trade Promotion
  Pricing Product
  Sales Service/Customer Support
  Selling to the Government
  Protecting Your Product from Intellectual Property Right (IPR) 
  Need for a Local Attorney

Best Prospects Products and services for U.S. Exports
Major Infrastructure Projects Underway
  Parana-Paraguay River Transportation System
  Colonia-Buenos Aires Bridge
  Construction and Operation of Gas Pipeline Between Argentina
    and Uruguay
  Renewal of Truck Fleets
  Private Power Generation
  Other Major Infrastructure Projects
  Major Local & Third Country Competitors in Specific Sectors (Table)

Tariffs and Import Taxes
Customs valuation
Import Licenses
Export Controls
Import/Export Documentation
Temporary Entry
Labeling, Marking Requirements
Prohibited Imports
Free Trade Zones/Warehouses
Special Import Provisions
Membership in Free Trade Arrangements

Openness to Foreign Investment
Trade and Investment Barriers
Industrial Promotion Law of 1974
Foreign Investment Law
Promotional Benefits
Conversion and Transfer Policies
Expropriation and Compensation
Dispute Settlement
Political Violence
Performance Requirements/Incentives
Right to Private Ownership and Establishment
Protection of Property Rights
Regulatory System: Laws and Procedures
Efficient Capital Market and Portfolio Investment
Bilateral Investment Agreements
OPIC and other Investment Insurance Programs
Foreign Trade Zones/Free Ports
Capital Outflow Policy
Foreign Direct Investment (FDI) Statistics
Major Foreign Investors

Brief Description of Banking System
Foreign Exchange Controls Affecting Trading
General Financing Availability
How to Finance Exports/Methods of Payment
Types of Available Export Financing and Insurance
Project Financing Available, Including Lending from Multilateral 
Institutions and   Types of Projects Supported
List of Banks with Correspondent U.S. Banking Arrangements

Business Customs
Travel Advisory and Visas
Business Infrastructure

Appendix A: Country Data
Appendix B: Domestic Economy (table)
Appendix C: Trade (table)
Appendix D: Investment
Appendix E: U.S. and Country Contacts
    Country Government Agencies
    Country Trade Associations/Chambers of Commerce
    Country Market Research Firms
    Country Commercial Banks
    Washington-based U.S. Government Country Contacts
    U.S.-based Multipliers Relevant for Country
Appendix F: Market Research
Appendix F: Trade Event schedule



Since 1990, Uruguay has pursued a program of economic liberalization 
similar to that of many other Latin American countries, but with only 
partial success.  The new administration of President Sanguinetti is 
pursuing the basic economic program of the former Lacalle administration 
(March 1990 to March 1995) which has included lowering tariffs, Southern 
Common Market (Mercosur) integration, reducing deficit spending, 
controlling inflation and downsizing government.  However, lack of 
public support and a fragmented political system have stymied many of 
these objectives.  The conservative nature of the Uruguayan people and 
the fragmented political system suggest continued slow modernization.

After growing at 7.9 percent in 1992, GDP grew 2.5 percent in 1993 and 
5.1 percent in 1994, reaching $15.5 billion.  GDP is projected to grow 
1.0 percent in 1995.  Growth in 1994 was led by the services sector (up 
25.6 percent -- particularly tourism, a second record year), commerce, 
banking and transportation.  Construction increased 2.4 percent, 
agriculture by 4.5 percent  and manufacturing by percent.

Imports are growing rapidly - by 19 percent to $2.8 billion, in 1994 - 
in an economy of $15.5 billion and 3.2 million people.  Imports have 
been stimulated by a growing economy, falling tariffs (to an average of 
7.6 percent), the progressive implementation of Mercosur, revaluation of 
the Uruguayan peso and gradual liberalization of the economy.

Imports of both consumer and capital goods have increased sharply, the 
former reflecting pent up demand and lower international prices, the 
latter reflecting the need to retool productive facilities to meet 
increased foreign competition.

U.S. products and services are highly regarded.  The U.S. occupies, and 
has traditionally occupied, the third place in both imports and exports 
after neighboring Brazil and Argentina.  Everything else being equal, 
the Uruguayan businessman will naturally prefer to conduct business 
with, and import from, U.S. sources.  The U.S. is seen as a provider of 
high quality services and goods with a good reputation for product 
backing.  The only area in which the U.S. is seen as inflexible and with 
little creativity is in export financing.

Best prospects for U.S. products continue to be chemicals (including 
agricultural chemicals), transport equipment, food processing machinery, 
computer hardware and software, office machinery, and medical and 
laboratory equipment.  The growth of tourism, forestry, and agribusiness 
(especially off-season fruit growing) also provide excellent 
opportunities for expanding U.S. exports.  Opportunities for sales of 
equipment or services and/or investment exist in several major projects 
including the Parana-Paraguay River Transportation System, the Colonia-
Buenos Aires Bridge, construction and operation of a gas pipeline from 
Argentina, renewal of the cargo truck fleet, construction of power 
plants and private power generation (including wind and solar), and road 
and port construction. 

Given the close proximity of Brazil and Argentina to Uruguay, 
businessmen visiting those markets should consider including a stop in 
here on their itinerary to explore sales and investment opportunities.

Major Obstacles to Doing Business

U.S. manufactured products are generally regarded as high in quality and 
competitive in price, but are sometimes rated low on an important factor 
in the decision to buy: financing.  American manufacturers offering 
flexible, innovative, and competitive credit terms will overcome a 
difficult hurdle in achieving export sales to Uruguay.

The distance and small size of the market often discourages U.S. 
businessmen from investigating the Uruguayan market.  Businessmen, as 
well as government agencies planning trade and investment programs, 
should consider including a trip to Uruguay in conjunction with business 
in neighboring countries.  Establishing an agent or distributor can 
facilitate most sales to Uruguay.

Country Commercial Guides are available on the National Trade Data Bank 
on CD-ROM or through the Internet.  Please contact Stat-USA at 1-800-
STAT-USA for more information.  To locate Country Commercial Guides via 
the Internet, please use the following World Wide Web address: WWW.STAT-
USA.GOV.  CCGS can also be ordered in hard copy or on diskette from the 
national Technical Information Service (NTIS) at 1-800-553-NTIS.


Major Trends and Outlook

Since 1990, the administrations of presidents Lacalle and Sanguinetti 
have attempted to carry out a program of economic liberalization similar 
to that of many other Latin American countries, but with only partial 
success.  The Government's program has included lowering tariffs, 
Southern Common Market (Mercosur) integration, reducing deficit 
spending, controlling inflation and government downsizing.  However, 
lack of public support and a fragmented political system have thus far 
stymied many of the Government's efforts.  The conservative nature of 
the Uruguayan people and the fragmented political system suggest 
continued slow modernization.

The first two elements of the program, lowering tariffs and Mercosur 
integration, have progressed the furthest.  Lower tariffs in general 
have generated a surge of imports, including both of consumer and 
capital goods.  Duties among the members of Mercosur (Argentina, Brazil, 
Paraguay and Uruguay) were completely eliminated and a common external 
tariff for most products was implemented on January 1, 1995.

Fiscal adjustment efforts faltered after achieving a small surplus in 
1992.  As expenditures rose more rapidly than revenues, a deficit of 1.2 
percent of GDP reemerged in 1993 and grew to 1.9 percent of GDP in 1994.  
Three stubborn and interrelated economic problems also remain a 
challenge --persistent and high inflation, a bloated public sector and 
high social security expenditures.

In November 1994, Dr. Julio Maria Sanguinetti of the Colorado Party was 
elected President.  The new government, which took office on March 1, 
1995 is in the process of implementing a three-stage stabilization 
program consisting of: a) an immediate fiscal adjustment package focused 
mainly on increased consumption and payroll taxes and industrial tax 
incentives; b) a medium-term program for government downsizing; and, c) 
a long-term program for social security reform to address one of the 
main sources of the deficit.  A fiscal adjustment law to implement the 
tax measures of the stabilization program went into effect on May 1, 
1995.  In addition, social security reform legislation was submitted to 
Congress on June 5 and is expected to be approved by the end of the 
year.  The reduction of the fiscal deficit from social security reform 
will be a gradual process of at least ten years and will require long-
term foreign financial assistance during the transition period.  The 
medium-term program for a major restructuring of government is to be 
submitted to Congress by August 31 as part of the Sanguinetti 
Administration's five-year budget submission.

Inflation  President Lacalle and his economic team had some success in 
taming inflation, bringing the rate down from 129 percent in 1990 to 
44.1 percent in 1994.  At the end of June, 1995, the twelve-month 
inflation rate remained at a level of 44 percent.  The projected rate 
for all of 1995 is 35.0 percent.

Given a lack of means to exercise effective monetary policy, the 
Government's only effective tool to fight inflation is through fiscal 
measures.  After a small budget surplus was achieved in 1992, 
expenditures have since risen faster than revenues and resulting in 
deficits of $151 million in 1993 and $339 million in 1994.

Public Sector Reform   The former administration failed to reform the 
bloated and inefficient public sector.  Public enterprise privatization 
stalled when voters rejected sale of the telephone company, ANTEL by 72 
percent in a referendum in December 1992.  The legislature also rebuffed 
the former administration's attempt to reduce the government work force 
and  even rejected the proposed closure of a small government office 
which had ceased to serve any practical purpose.

Despite the setback of the referendum, the Government continued 
implementation of those parts of the state enterprise reform law passed 
in September 1991 which had not been overturned.  Privatization of port 
services was implemented, improving efficiency and lowering prices.  
Other activities which were transferred to the private sector either 
under contract, concession or sale were:  land services to airplanes and 
operation of the cargo terminal at the Carrasco Airport; domestic air 
service; construction and operation of the sewage and water supply for 
the zone at the east of Punta del Este; construction of the new Punta 
del Este airport; construction and operation of a new tollroad to Punta 
del Este; operation of railroad passenger service; operation of a 
cellular telephone system; reprivatization of one of the two banks taken 
over by the government due to bankruptcy; termination of the government 
insurance monopoly; privatization of the Montevideo gas company, and 
privatization of 51 percent of the national airline (PLUNA).

The greatest single fiscal concern is social security, which will cost 
10 percent of GDP this year.  A growing population of pensioners 
increases the burden yearly.  Passage of Sanguinetti's modest social 
security reform legislation is expected this year, but implementation 
may prove difficult or impossible should the legislation, once approved 
by congress, then be rejected by referendum.

After growing by 7.9 percent in 1992, GDP grew by 2.5 percent in 1993, 
and by 5.1 percent in 1994, reaching $15.5 billion.  GDP is projected to 
grow at 1.0 percent in 1995.  Growth in 1994 was led by the services 
sector which was up by 25.6 percent (particularly tourism with second 
record year).  Construction increased by 2.9 percent, manufacturing by 
3.1 percent and agriculture by 4.5 percent.  Among smaller sectors of 
the economy, fisheries were up by 3.8 percent and utilities declined by 
3.6 percent.

Principal Growth Sectors

Agriculture and Livestock  The agricultural sector (10.6 percent of GDP) 
grew at an average yearly rate of 4.7 percent between 1990 and 1992.  In 
1993 it decreased 5.1 percent and recuperated 4.5 percent in 1994. Corn, 
sunflower, wheat and malting barley production increased because of 
larger acreage planted in response to rising domestic demand, while rice 
decreased somewhat in response to the contraction of foreign demand.  
Livestock holdings expanded as did beef production (up 25 percent) and 
exports (up 51 percent).  Wool and dairy production increased because of 
very favorable weather conditions.

Fishing Fisheries production increased 3.8 percent in 1994.  However, 
fisheries production is 42 percent below the level of ten years ago.

Construction  The sector grew 2.4 percent in 1994, substantially below 
the 17.8 percent increase in 1993.   Activity was concentrated in the 
private sector, mainly in the construction of hotels and shopping 
centers in the tourist area of Punta del Este and in the capital, 
Montevideo.  Financed by the Mortgage Bank, housing construction rose as 
did public sector construction, led by the Municipality of Montevideo 
and telephone company (ANTEL) projects.

Manufacturing  Largely in decline since 1985, industrial production rose 
3.1 percent in 1994 to meet rising domestic demand and increasing 
exports to Brazil and other Mercosur countries and from Brazil.  
Expanding industries included dairy products, tanneries, processed food, 
beef and vehicles.  Industries showing production decreases were glass, 
textiles, alcoholic beverages and milling.

The manufacturing sector has severe structural problems as a carryover 
from the protectionist import-substitution policies of the 1970's 
designed to promote production for the domestic market.  Conversion to a 
more efficient and competitive industry will require substantial 
investment in equipment, technology and training.

The advent of Mercosur has increased potential markets for Uruguayan 
industrial products, but has also opened the domestic market to strong 
competition from Argentina and Brazil.  A few sectors, like textiles, 
could thrive in Mercosur, since they are already competitive 
internationally.  Others, such as chemicals, pharmaceuticals and tires 
are reasonably competitive and should do well given investment in new 
technology and effective market strategies.  Losers are likely to 
include automotive, electronic and machinery manufacturers.

Services  Commerce, restaurants and hotels, government services, 
insurance, banking and other financial services, and various other 
private sector services (60 percent of GDP) again registered solid gains 
in 1994 (up 25.6 percent), accounting for almost 76.5 percent of total 
growth for the year.  The services sector has shown consistent growth 
since 1984, based largely on tourism and the strength of Uruguay as a 
regional financial center.

Utilities  Despite a small increase in domestic demand, production 
decreased by 3.6 percent mainly due to lower demand from Argentina for 
hydro-generated electricity.

Government Role in the Economy

The Uruguayan economy is based on the principle of free enterprise and 
private ownership.  Businessmen, however, are faced with cumbersome and 
lengthy bureaucratic procedures.  These are the result of many years of 
strongly protectionist economic policies.  The Government owns outright 
or partially companies in the sectors of insurance, water supply, 
electricity, telephone service, petroleum refining, postal service, 
railways, banking, and aviation.  Wholly government-owned companies are 
held on the basis of legal monopolies.  The Government also assumed 
control of a number of failing companies such as the gas company and 
various commercial banks (one of which was reprivatized in 1994).  These 
activities generate about 18 percent of the gross domestic product and 
employ a similar percentage of the total labor force.  The first step 
toward a more open and market-oriented economy can be traced to laws to 
liberalize foreign trade and exchange policies in 1959.  In 1974 
existing laws were consolidated in the foreign investment law and the 
industrial promotion law and the foreign exchange banking was opened to 
competition.  Since 1991 the pace of liberalization has stepped up, with 
Mercosur, lower tariffs, and privatization and demonopolization laws.

Balance of Payments Situation

Current Account  Uruguay had a negative current account balance of $396 
million in 1994 .  This negative balance was comprised of an $859 
million foreign trade deficit, a $456 million travel account surplus and 
a $7 million surplus in net interest and other services.  Both a lower 
trade deficit and a lower surplus in the services account (primarily 
from tourism) are expected in 1995.  The current account deficit is 
expected to remain in the same magnitude as that of 1994.

Merchandise Trade  In 1994, Uruguay's exports increased 16.3 percent, 
imports rose 19.2 percent and the trade deficit was $859 million.

The leading categories of Uruguayan exports in 1994 were:

  Category                             Change   Amount
                                    (Percent)  (Million $US)

  Beef and other animal products      + 37.6      489
  Wool and textile manufactures       +  1.0      392
  Vegetables, mainly rice             -  0.8      248
  Leather and leather manufactures    + 20.3      212

           Total Exports              + 16.3    1,913

The leading import categories and their percentage increases in 1994 
  Machinery and electrical equipment   +  7.8     586
  Vehicles                             +  5.4     429
  Chemicals                            + 19.2     319
  Minerals                             + 25.5     284
  Plastic and rubber products          + 16.2     166

           Total Imports               + 19.2   2,773

The country's principal trading partners in descending order in 1994 
were Brazil, Argentina, the United States, and the Federal Republic of 
Germany.  Uruguay's leading export markets in 1994 were Brazil ($492.5 
million), Argentina ($382.3 million), the United States ($130.6 million) 
and Germany ($121.3 million).  The leading suppliers of Uruguayan 
imports in 1994 were Brazil ($709.6 million), Argentina ($652.6 
million), the United States ($259.6 million) and Italy ($134.8 million).  
The United States bought 6.8 percent of Uruguay's exports in 1994 and 
sold 9.4 percent of the country's imports.

During the first four months of 1995, exports increased 21.4 percent and 
imports increased 11.5 percent (of which 5 percent of the increase was 
in the capital goods category) compared to the same period in 1994.  
Exports to the U.S. declined by 5.4 percent while imports from the U.S. 
increased 4.7 percent. 

Capital Account  The capital account in 1994 had a net inflow of $634 
million, comprised of a $427 million net capital inflow for the public 
sector and a $207 million inflow for the private sector.  The public 
sector capital inflow reflects a $131 million increase of financial 
sector foreign debt and the $296 million increase of non-financial 
sector foreign debt.  The private sector inflow of $207 million includes 
foreign credit and a negative errors and omissions item of $71 million, 
reflecting mainly unregistered capital outflows since unregistered sales 
are included in the travel account (tourism) of the current account.

Net Foreign Reserves  The combination of a deficit in the current 
account ($396 million), a surplus in the capital account ($634 million -
- including errors and omissions amount of -$71 million) resulted in an 
increase of $238 million in the net foreign reserves of the Central Bank 
in 1994.  Total net foreign exchange reserves amounted to $1,440 million 
on December 31, 1994.  As of May 1995, the reserves had increased to 
$1,473 million, due to the Central Bank's continued purchases of foreign 
currency in the domestic market.

Infrastructure Situation Re: Goods/Service Distribution

Uruguay is covered by a North-South network of good to adequate roads.  
From East to West however, roads are narrow and often in a poor state of 
repair.  Railway transportation is used for the shipment of goods mainly 
along the Uruguay river border with Argentina and through other limited 
routes in the interior.  A major world-class seaport is located in the 
capital city of Montevideo and most of its services have been recently 
privatized.  Small ports are located in the free zones of Nueva Palmira 
and Colonia, and in the towns of Piriapolis, Punta del Este, and La 
Paloma.  Uruguay is connected to the rest of the world via an 
international airport located in Montevideo which is serviced by 
approximately twelve regularly scheduled foreign airlines and one 
national airline.  Interior air service, while recently privatized and 
available, is not very reliable.  Studies are currently underway for the 
rehabilitation of certain stretches of the railway network as Uruguay 
will soon need an efficient and reliable method to transport lumber from 
the interior of the country to the seaports.


Nature of Bilateral Relationship with the United States

Relations between the United States and Uruguay are excellent.  A 
staunch defender of multilateralism and international law, differences 
sometimes arise over U.S. actions which the Uruguayan government views 
as unilateral.  Uruguay is an active participant in international fora 
and generally supports U.S. positions in the OAS and UN.  The two 
governments cooperate on a wide range of issues, including counter-
narcotics, technology, defense, and development projects.

Major Political Issues Affecting Business Climate

The government of President Julio Maria Sanguinetti (Colorado Party/Foro 
Batllista), upon taking office March 1, 1995, immediately introduced a 
vigorous legislative program to address the most pressing problems 
facing the country.  A parliamentary coalition with the Blanco Party 
assured passage of the administration's economic plan, which took effect 
May 1.  The coalition is now pushing for approval of the government's 
plan for reforming the social security system.  This plan was submitted 
to Parliament on June 5 and the government hopes for approval before the 
end of the year.  An administrative reform project, which would reduce 
the number of central government offices and employees on the public 
payroll, is currently under consideration by a working group of the 
parliamentary coalition.  

The main opposition to the government's programs comes from the Frente 
Amplio, a grouping of leftist parties and factions, and from the 
national labor confederation.  The social security reform legislation is 
also vigorously opposed by the large number of retired persons who 
benefit from the current plan.  The government has embarked on a public 
relations program to convince the public of the need for social security 
reform, and to avoid a public referendum which might reverse any reform 

Brief Synopsis of Political System, Schedule for Elections, and 
Orientation of Major Political Parties

Uruguay is a constitutional democracy with an elected president and 
parliament.  The country is divided into nineteen departments (states) 
including Montevideo, the capital.  Uruguay's electoral system is unique 
to Latin America in that political parties can (and do) present multiple 
candidacies.  The candidate receiving the most votes within the party 
receiving the most votes is elected president.  The president may not 
stand for re-election, but may be re-elected after at least one term out 
of office.  State governors may be re-elected one time, but there is no 
limit on the re-election of senators and deputies.  All elected offices 
are for a five-year term.  The judiciary, one of the most independent in 
Latin America, is headed by a five-member Supreme Court.  Departmental 
governments have budgetary independence from the central government and 
may set their own tax rates.

The next general elections are scheduled for November 28, 1999.

There are three main political forces in Uruguay.  The two traditional 
parties, the Colorado and the Blanco (National), have existed for most 
of this century.  The third, the Frente Amplio (Broad Front), a leftist 
coalition of parties and factions, was founded in 1971.  The Frente 
Amplio consists of numerous factions, but is more unified than the 
traditional parties in terms of candidacies, generally selecting one 
candidate for major offices.  The factionalized nature of the parties 
makes defining their orientations somewhat difficult.  Nevertheless, in 
general terms, the following observations hold true.

Colorado Party  The Colorado Party is the traditional party of the urban 
areas and, until being usurped by the Frente Amplio, was the party of 
the working class.  The largest faction of the party, the Foro 
Batllista, is led by President Julio Maria Sanguinetti.  Sanguinetti is 
a self-proclaimed social democrat who advocates gradual economic reform 
while protecting basic Uruguayan sectors, such as agriculture.  For 
example, during the electoral campaign, Sanguinetti pledged to protect 
the tiny sugar industry.  His economic team has sharply criticized the 
overvaluation of the peso and the growing trade deficit registered by 

National (Blanco) Party  The Blanco Party is the traditional party of 
the rural interior.  In the minority for most of its existence, the 
1990-95 administration of President Luis Alberto Lacalle was only the 
third Blanco Administration this century.  While party ideology runs 
from fiscal conservatism to populism, the largest factions favor 
economic reform and free enterprise.  The Lacalle administration 
attempted to privatize a number of unprofitable state-owned enterprises 
and reduced inflation from 129 percent to 44 percent during its term of 

Frente Amplio (Broad Front)  The leftist Frente Amplio presented the 
most detailed economic program of the 1994 electoral campaign.  The 
Frente advocates a redistribution of wealth through the reduction of the 
value added tax (now 23%) and increases in other taxes directed at the 
wealthy and at speculative enterprises.  It has also advocated weakening 
the country's legendary bank secrecy laws, although it acknowledges that 
this may lead to a reduction in revenues.  The Frente's 1994 
presidential candidate, populist Montevideo ex-mayor Tabare Vazquez, 
also promised to protect sugar growers and to defend industrial jobs.  
The party supports Mercosur, but only if tariffs are sufficiently high 
to defend domestic production and employment.  As mayor of Montevideo, 
Vazquez partially privatized garbage collection and promoted cooperation 
with private business to address some of the city's more pressing needs.  
His successor, also from the Frente, has continued and expanded these 


Distribution and Sales Channels

Use of Agents/Distributors - Finding a Partner

A foreign supplier should be thorough in the selection of an agent or 
local representative.  For this purpose, the supplier may wish to take 
advantage of U.S. Commerce Department services.  These include the 
Agent/Distributor Service (ADS), which helps identify 
prospective/interested agents and distributors.  The supplier should 
make clear in the contractual agreement between the parties whether 
their relationship is that of employer-employee or whether it is merely 
a commission-based relationship.  Failure to do so could result in 
supplier liability for severance and related benefits if he or she 
decides to sever the relationship.


Franchising in Uruguay has so far been limited to fast-food outlets and 
some retail clothing stores.  The growth of franchised fast-food outlets 
has been particularly noteworthy.  There are no legal restrictions on 
operating franchises in Uruguay.

Direct Marketing

Because of Uruguay's small size, direct marketing is generally not cost 
effective.  Exceptions to this norm include the one-time sale of major 
high value capital, power generation, transportation, and medical 
equipment, as well as inputs for major infrastructure projects.

Joint Ventures/Licensing

Both joint ventures and licensing are common in Uruguay and involve 
similar or identical procedures to those practiced in most other 

Steps to Establishing an Office

The formation of a new enterprise or the acquisition of an existing 
Uruguayan company can be made freely.  Shell corporations already formed 
but with no operations are also available for acquisition.

Selling Factors/Techniques

Foreign manufacturers enjoying sustained sales of their products 
imported into Uruguay typically use the services of an agent or 
distributor.  Practically all importers/distributors are based in 
Montevideo, although some maintain sales networks in the interior of 
Uruguay.  A U.S. firm with a local representative has the advantage of 
keeping up-to-date with local market conditions, as well as with changes 
in policies affecting trade.

Uruguay is a good market for both new and used equipment and machinery.  
Often, equipment considered obsolete in the U.S. may be sold to local 
industry.  U.S. manufacturers will find that the major factors affecting 
a decision to buy their products are quality, price and payment terms, 
delivery time, after-sales servicing, and compatibility with existing 

U.S. manufactured products are generally regarded as high in quality and 
competitive in price, but are sometimes rated low on an important factor 
in the decision to buy -- financing.  American manufacturers offering 
flexible, innovative, and competitive credit terms will overcome a 
difficult hurdle in achieving export sales to Uruguay.

Advertising and Trade Promotion

Advertising in Uruguay is relatively inexpensive by U.S. standards.  It 
is advisable to work through an advertising agency in selecting 
appropriate media and which can obtain substantial rate discounts.  The 
major newspapers and business journals are Busqueda, El Observador 
Economico, El Pais, and Cronicas Economicas.

The major U.S. export promotion activity in Uruguay is the yearly Prado 
Agro-Industrial and Commercial Fair held in September.  The U.S. 
pavilion at this fair is traditionally the largest and features exhibits 
of approximately 40 U.S. companies.  It provides an excellent means of 
introducing a new product or service to the Uruguayan market as it is 
visited by approximately 400,000 people during the fair's two-week 
duration.  Another biannual fair, the Feria Internacional de la Plata 
(FIPLA) is more appropriate for introducing industrial goods and 
establishing contacts with agents and distributors.  The Embassy also 
hosts several industry-specific catalog exhibitions each year.  Details 
concerning these fairs may be obtained from the Commercial Attache, 
American Embassy Montevideo, Unit 4510, APO AA 34035, Tel: (5982) 48-77-
77, Fax: (5982) 48-85-81.

Pricing Product

The Uruguayan market price structure reflects world market prices plus 
import tariffs and transportation costs.  In addition to tariff 
advantages, products from large, nearby Mercosur countries like 
Argentina and Brazil enjoy significantly lower transportation costs than 
do products from the U.S., Europe and Asia.

Sales Service/Customer Support

Sales service and customer support are weighed heavily when deciding 
which products to buy.  U.S. manufacturers should appoint an agent in 
Uruguay to provide customer support services.  Experience has shown that 
having an agent in a neighboring country such as Brazil or Argentina to 
perform such services is less effective.

Selling to the Government

Although U.S. companies may sell directly to the Uruguayan Government, 
it is useful to have a registered local representative.  Registration 
takes place once a year during a specified period of time in which 
interested parties may be added to the listing of official government 
suppliers.  Companies should also consider providing product literature 
and quotations to selected government purchasing offices, and to the 
different state entities, as they frequently refer to literature on hand 
when drafting specifications for their procurement tenders.  The Embassy 
continually reports via the Major Projects Program and other means to 
the Department of Commerce on major opportunities for U.S. contractors 
and manufacturers in Uruguay.

Protecting Your Product from Intellectual Property Right (IPR) 

Uruguay's IPR regime is not always consistent with international 
standards.  The most serious lack of IPR protection is the specific 
exclusion of pharmaceuticals and chemical products from patent 
protection.  Uruguay is a member of the World Intellectual Property 
Organization (WIPO) and a party to the Bern Convention, the Universal 
Copyright Convention (UCC) and the Paris Convention for the Protection 
of Industrial Property.  Although the Government recognizes and accepts 
the concept of IPR protection, it has not ratified these agreements.  
Registering a foreign trademark without proving a legal commercial 
connection with the trademark is no longer a possibility.

Need for a Local Attorney

It is advisable to obtain a local attorney before setting up operations 
in Uruguay or carrying-out substantial amounts of business.  Local 
attorneys can be very helpful in sorting through the red tape and 
bureaucracy which may otherwise be frustrating for a newcomer.  A list 
of reputable local attorneys may be obtained from the Embassy's Consular 


Best Prospects Products and Services for U.S. Exporters

The United States occupies the third place in the ranks of leading 
exporters to Uruguay, after Brazil and Argentina.  Best prospects for 
U.S. products are chemicals (including agricultural), manufactured goods 
and machinery, transport equipment, food processing equipment, computer 
hardware and software, office machinery, alternative energy sources 
(such as wind energy and to a certain extent solar power), 
telecommunications, and medical and laboratory equipment.  Uruguay's 
proportionally large elderly population should be a good market for 
geriatric equipment and services in the near future.  Tourism and 
forestry are high in the Government's development plans and represent 
excellent areas for exploration as prospective opportunities for U.S. 

Major Infrastructure Projects Underway

Uruguay receives loans and grants from the World Bank, the Inter-
American Development Bank and other multilateral institutions for major 
projects and programs.  The Embassy continually reports via the Trade 
Opportunity Program, the Foreign Government Tender Program, and the 
Major Projects Program to the Department of Commerce and its district 
offices on major opportunities in Uruguay for U.S. contractors and 
manufacturers.  Brief descriptions of these opportunities follow:

Parana-Paraguay River Transportation System - The governments of 
Uruguay, Argentina, Brazil, Paraguay, and Bolivia are jointly working 
together on what has become the largest Latin-American "regional 
integration" program -- the joint use of the 2,500-mile long Parana-
Paraguay-Uruguay rivers for the transportation of goods from the five 
countries to the Atlantic Ocean.  The project, expected to be completed 
by the year 2000, calls for investments on the order of $935 million 
including civil construction ($120 million), dredging and maintenance 
($150 million), ports (including equipment, $115 million), and fleet 
($550 million).  Further opportunities for U.S. involvement lie in the 
development of the administration of the waterways.

Colonia-Buenos Aires Bridge - Feasibility studies for the construction 
of this 24- to 32-mile long bridge joining the capital city of 
Argentina, Buenos Aires, and the riverside town of Colonia in Uruguay 
are being currently carried out by a U.S. firm and will be ready later 
this year.  If deemed feasible, possibilities for U.S. involvement will 
exist in all aspects of this multibillion dollar bridge project.  It is 
planned that the bridge will be constructed and operated by a private 
concession under a build-operate-transfer (BOT) regime.

Construction and Operation of a Gas Pipeline Between Argentina and 
Uruguay - The governments of Argentina and Uruguay are considering the 
construction and operation of a natural gas common carrier pipeline 
joining both capital cities.  The Government of Uruguay plans to grant a 
concession to a private investor to finance the construction of the 
project (estimated at 70-80 million dollars).  The concession will 
involve a contract to purchase Argentine natural gas at the well head 
and resell the gas to the Uruguayan state electric utility and other 
customers for a period of twenty years.

Renewal of Truck Fleets - Following a successful program to renew the 
urban and interurban bus fleet, the Government of Uruguay is now 
planning to help private companies in the renewal of their cargo truck 
fleets.  Essentially, the Government of Uruguay purchases the trucks 
directly from the manufacturer and then leases them to the trucking 

Private Power Generation - As part of its privatization program, the 
Government of Uruguay is now allowing the private generation of 
electrical power which is then resold to the state-owned power company.  
Opportunities exist in the sale of aeolic and solar power generators.  
Feasibility studies for the construction of a rice-husk operated plant 
are currently underway.

Feasibility studies for the reconversion of existing and the 
construction of new power plants are currently being done by a U.S. 
firm.  Among the projects being examined are a $7 million project 
proposal to reconvert boilers (currently using fuel oil) to natural gas 
with consumption capacity of 3,000,000 cubic meters of gas per day, a 
$106 million proposal to transform a power plant into a combined cycle 
119MW plant, and the proposed construction of 180MW and 362MW combined 
cycle power plants at an estimated cost of $110 to $115 million).

Other major infrastructure projects currently underway include the 
enlargement of the Punta del Este seaside resort airport, the 
construction of two more 62-mile-long lanes along the road joining 
Montevideo and Punta del Este, the construction of two more 95-mile-long 
lanes along the road joining Montevideo to Colonia, the building of a 
road bridge over the Santa Lucia River, and the enlargement of the Punta 
del Este, La Paloma, and Piriapolis yacht ports.

  Major Local & Third Country Competitors in Specific Sectors
Imports ($ millions) by country of origin

(HS Code/  World  Arg.   Bra.   Ger.   Jap.   U.S.   U.S. % Product)
           total  total  total  total  total  total  of total

equipment    30.4  0.4   0.4    0.1    0.6    22.2    72.4
Fertilizers  23.1  0.0   0.6    0.1    0.0    11.4    47.6
instruments  29.8  0.2   1.1    1.2    1.0     6.8    23.5
TV sets      34.6  0.4   0.0    0.2    1.2     5.4    14.5
equipment   33.6  4.1   9.3    0.1    0.1      4.7    14.9

The Government of the United States acknowledges the contribution that 
outward foreign direct investment makes to the U.S. economy.  U.S. 
foreign direct investment is increasingly viewed as a complement or even 
a necessary component of trade.  For example, roughly 60 percent of U.S. 
exports are sold by American firms that have operations abroad.  
Recognizing the benefits that U.S. outward investment brings to the U.S. 
economy, the Government of the United States undertakes initiatives, 
such as Overseas Private Investment Corporation (OPIC) programs, 
investment treaty negotiations and investment facilitation programs, 
that support U.S. investors.


Tariffs and Import Taxes

Since June 1992, Uruguay's tariff structure has followed the "HS" or 
Harmonized System of tariff nomenclature.  All customs duties, 
surcharges, service and other charges are consolidated in a customs 
unified rate or "tasa global arancelaria" (TGA).  There are basically 
three tariff rates:  1) 6% (applied on capital goods and raw materials 
not produced in Uruguay); 2) 15% (applied on intermediate or semi-
industrialized goods); and, 3) 20% (applied on finished goods, excluding 
capital goods used in export related industries or considered vital to 
the national interest).  Goods imported from Mercosur countries 
(Argentina, Brazil, and Paraguay) pay a 0.66%, 1.65%, and 2.20% tariff 
respectively.  These rates declined to zero percent for most Mercosur 
products on January 1, 1995 and a common external tariff entered into 
effect on imports from non-member countries, ranging (with some 
exceptions) between 0 and 20 percent.  

Customs Valuation

Customs valuation may be applied by the Office of the Director General 
of Customs when there is a question concerning a supplier's 
classification and/or valuation.  Deception on the part of the importer 
or altering the value of imports is considered fraud.

Import Licenses

Certain imports require special licenses or customs documents.  Among 
these are drugs, certain medical equipment and chemicals, firearms, 
radioactive materials, frozen embryos, livestock, bull semen, anabolics, 
sugar, seeds, hormones, meat, and wheat.  

Export Controls

There are no export controls currently in force.  Export sales of 
certain domestic products enjoy tax exemptions and special credits.

Import/Export Documentation

Only commercial firms, industrial firms, or individuals listed in the 
Registry of Importers may legally import products into Uruguay.

Temporary Entry
Products may be imported under the temporary admission or drawback 
provisions.  Products imported under temporary admission provisions must 
be reexported within 18 months of being introduced into the country.

Labeling, Marking Requirements

Labeling and marking requirements are set and controlled by two federal 
and several municipal agencies.  Basically, labels must contain a 
description in Spanish of the main ingredients of a product, its country 
of origin, expiration date and the full name and address of the 
Uruguayan importer.

Prohibited Imports

From time to time the Government bans the import of certain food 
articles originating from areas declared to be infested by the World 
Health Organization.


Uruguay uses the metric system of weights and measures.  The Laboratorio 
Tecnologico del Uruguay (LATU) is the officially approved agency that 
controls standards and quality control of imports and exports.

Free Trade Zones/Warehouses

The use of established free trade zones as well as the establishment of 
new free-trade zones is encouraged.  These zones are designed to store 
and process goods or raw materials of Uruguayan or foreign origin and 
for the establishment and operation of export-oriented industries.

Special Import Provisions

There are no special import provisions or restrictions.  All goods may 
be imported except for a very limited list of goods which may be 
imported only with special authorization.

Membership in Free Trade Arrangements

Uruguay is a member of the World Trade Organization (WTO), GATT and the 
Latin American Integration Association (ALADI).  It is also a founding 
member of the Southern Common Market (Mercosur) comprised of Brazil, 
Argentina, Uruguay and Paraguay which became a customs union on January 
1, 1995.  Separate interim free trade arrangements for certain products 
are also in effect with Brazil and Argentina.


Openness to Foreign Investment

The Government recognizes that foreign investment has an important role 
to play in the continuing development of the economy and maintains a 
favorable policy through a number of incentives, though it offers no 
special benefits vis-a-vis foreign investors.  There is neither de jure 
nor de facto discrimination towards investment by source of origin.  
Although not required, foreign investment may be channeled through the 
Industrial Promotion or Foreign Investment Laws of 1974.  Because there 
are almost no restrictions on foreign investment, most investors do not 
take advantage of these programs.  However, a declaration by the 
Uruguayan Government that an investment project is in the national 
interest under this law may provide important tax and customs benefits.  
One hundred percent of foreign ownership is permitted except where 
restricted for national security purposes.

The Uruguayan Government does not generally prescribe specific 
authorization in order to establish an industry, to import and export, 
to effect deposits and banking transactions in any currency, or to 
obtain credit.  No special government authorization is needed to have 
access to the Industrial Promotion Law, to capital markets or to foreign 
exchange.  Foreign investors, nevertheless, may obtain those guarantees 
under the Foreign Investment Law of 1974.

Trade and Investment Barriers

U.S. banks, which have largely withdrawn from retail banking in Uruguay, 
have attributed that withdrawal to the dominance of retail banking by 
the state-owned Bank of the Republic of Uruguay (BROU), the militancy of 
banking unions, as well as to legal difficulties in foreclosing on the 
assets of delinquent debtors.

There are no significant official barriers to legal services by foreign 
individuals or firms in Uruguay.  However, the Uruguayan legal system 
follows the Napoleonic Code, rather than English common law, and 
therefore it is difficult for U.S. lawyers to meet local licensing 

Similarly, there are no significant restrictions on ticketing and travel 
services.  Uruguayan importers are required to pay a four percent ad 
valorem tax on all freight arriving via foreign-registered airlines.  
Freight which arrives by the national airline is exempt from the tax.  A 
civil aviation agreement between Uruguay and the United States provides 
for equal treatment between U.S. and Uruguayan air freight carriers. 
Therefore U.S. carriers are also exempt from this tax.

There are limitations on foreign equity participation in a number of 
important areas of the Uruguayan economy deemed strategic for the 
country's development.  Investment in these areas require authorization 
from the Government and include electricity, hydrocarbons, basic 
petrochemicals, atomic energy, exploitation of strategic minerals, 
banking and finance, railroads, telecommunications, radio, television, 
press and those activities entrusted by law to government-owned 
enterprises.  However, authorization is readily granted for equity 
participation in mining, hydrocarbons and banking and finance.  There 
are no restrictions on technology transfer.

Uruguay has long owned and operated state monopolies in a number of key 
areas in which, by law, foreign equity participation is prohibited.  The 
state monopoly, UTE, controls all electrical distribution in Uruguay 
(generation of power can now be produced, for sale to UTE, by private 
firms).  The state-owned oil company, ANCAP, is the only importer, 
refiner and distributor of petroleum products in the country.  It also 
produces cement and distilled alcohol products.  The retail gasoline 
industry was privatized, although it is currently subject to extensive 
regulation.  All freight shipment by rail in Uruguay is controlled by 
the state railroad AFE.  The state telephone company, ANTEL, controls 
the telephone and telecommunications industry.  Cellular service is 
provided by ANTEL and a private firm regulated by ANTEL.  All Uruguayan 
ports are operated by and administered through the National Port 
Administration (ANP).  Many port services, however, were privatized as a 
result of the April 1992 passage of a port reform law.  The state 
enterprise, OSE, controls most water and sewage services in Uruguay 
except in some small resort areas on the Atlantic coast.  Fifty-one 
percent of the state-owned airline PLUNA was recently sold to the 
private sector.

Industrial Promotion Law of 1974 (No. 14,178 of 3/20/74):

This law establishes the benefits which may be granted to investments 
that comply with objectives set forth in government social and economic 
development plans and promote the establishment or expansion of 
industrial plants deemed to be in the "national interest."

The promotional measures provided under this Act are in effect tax and 
tariff exemptions.  These "national interest" projects must support one 
or more of the following objectives:

(1) greater efficiency in production and marketing;

(2) increase and/or diversification of industrial/manufactured exports 
which incorporate the highest possible value-added;

(3) creation of new industries and expansion or reform of existing ones 
when this promotes more advantageous use of local raw materials and/or 
available manpower;

(4) encouragement of selected technical research programs which promote 
the economic use of unexploited national raw materials, the improvement 
of national products and the training of technicians and workers; and,

(5) promotion of tourism through the improvement and expansion of 
related infrastructure.

Under this law, the following benefits may be granted:

(1) exemption from all import taxes (except value added and excise 
taxes) levied on equipment required for the development of a project 
provided it is not locally produced.  In some cases, surcharge 
exemptions may be provided to import equipment which is locally 

(2) exemption from the Net Worth Tax on assets incorporated in the 

(3) access to long-term loans through the Development Investments 
Financing Fund, promotional credit for priority sectors and loan 
guarantees from the Central Bank of Uruguay,
(4) deduction from the tax on industrial and commercial income of up to 
twice the amount of expenses incurred in selected applied technological 
research programs directed at training workers and technicians; and,

(5) a 20 percent reduction in port service charges on imported capital 

Operations which are eligible for the terms granted under this law 
without the national interest provision include meat processing, 
tanning, leather finishing, the production of leather goods, textiles, 
dairy products, knitted fabrics, garments, fisheries, fruits and 
vegetables, rice, semi-precious stones, soaps, glass, crockery and 
porcelain, clay products, extraction and transformation of marble and 
granite, malting and roasting of barley, and prospecting, exploitation, 
reduction and refining of metallic minerals.

Projects declared to be in the national interest may derive two major 
benefits under the Industrial Promotion Law.  First, credit is available 
through the Central Bank in the form of local and foreign currency loans 
for: the purchase of equipment, machinery and domestic raw materials; 
the modernization and/or expansion of existing industries; and, to 
finance accumulated tax debts which arose from the inefficiency of an 
acquired Uruguayan company (where there is a reasonable expectation that 
the investor will make the company profitable).  Secondly, import 
surcharges, import tariffs, consular fees, port charges, and other taxes 
on imported equipment for the project may be waived.

Firms interested in the benefits of the national interest provision of 
the Industrial Promotion Law may apply to the Uruguayan Ministry of 
Industry and Energy.  Applications require a detailed investment project 
proposal including technical information on the financial and 
operational status of the firm, the purpose of the planned investment 
and the production process, costs, sales, export markets, financial and 
credit needs, profitability and any other factors envisaged by the 
investor.  For more detailed information, interested investors may 
contact the Unidad Asesora de Promocion Industrial, Rincon 723, 
Montevideo, Uruguay.  This office of the Ministry of Industry and Energy 
will screen investment project proposals and determines whether they 
meet the criteria for a national interest designation.

Foreign Investment Law

The Foreign Investment Law (Law No. 14,179 of 3/28/74 and Regulatory 
Decree No. 808/974 of 10/10/74) guarantees the convertibility and 
remittance of profits and invested capital within the terms fixed by 
investment contracts signed with the Government.  For the purpose of 
this law, a foreign company is one whose foreign capital represents more 
than 50 percent of the total capital and holds the decision-making 
authority in the company.  The remittance of profits is subject to a tax 
of 40 percent on the portion of profits exceeding 20 percent per year of 
the foreign capital invested.  The capital invested, however, may not be 
repatriated prior to the end of the third year from the date the 
investment contract was signed.

Foreign investors under the Foreign Investment Law are not allowed to 
make use of medium-term and long-term domestic credit and are required 
to obtain prior consent of the authorities on a case-by-case basis for 
the use of foreign credit.

If a foreign company chooses not to be established through the Foreign 
Investment Act, it will not enjoy the permanent guarantee of profit 
repatriation.  However, as a result of the freeing of the foreign 
exchange market in late 1974, a firm can, in practice, fully remit 
capital and profits, even if the investment is not made within the 
framework of this act.  Few foreign companies are therefore operating 
under the protection of this law.

While foreign investment is broadly permitted, there are a number of 
sectors in which special approval on "national interest" grounds is 
required.  These include electricity, hydrocarbons, basic 
petrochemicals, atomic energy, exploitation of strategic minerals, 
agriculture and livestock raising, meat-packing, banking (financial 
intermediation), railroads, telecommunications, radio, press, 
television, and activities entrusted by law to state companies.

The Government is preparing a new investment law to eliminate many 
provisions which in practice are not enforced and especially any 
discriminatory treatment of foreign investment.

Promotional Benefits

Executive Decree No. 521/977 of September 1977 established minimum 
promotional benefits for industrial projects declared in the "national 
interest" which are eligible for exemptions from surcharges, consular 
duties and taxes, the unified customs tax on imports, load handling 
charges and, in general, taxes which would otherwise apply to imports of 
equipment declared to be "non-competing" with domestic industry.

Executive Decree No. 461 of August 13, 1979, granted the "channeling of 
savings" benefit which provides for an exemption from corporate tax, up 
to the amount of a firm's paid-in capital in an approved project.  Law 
No. 15,548 of May 17, 1984 allows deduction from the corporate tax of 
the increase in paid-in capital originating from the reserves or 
dividends.  Moreover additional special provisions exist for exemption 
from income, wealth and some other taxes.

Conversion and Transfer Policies

There are no restrictions whatsoever on the purchase of foreign currency 
or remittance of profits abroad.

Expropriation and Compensation

The Uruguayan Constitution provides for the prior payment of fair 
compensation in the event of expropriation.

Dispute Settlement

Uruguay is not a member of the ICSID (International Center for the 
Settlement of Investment Disputes).  One unresolved expropriation case 
involving a U.S. investor remains in litigation.  The dispute, which 
originated in 1968, revolves around the issue of whether there was any 
net value to the assets and liabilities of the firm which was in 
bankruptcy at the time of expropriation.

Political Violence

There have been no significant incidents over the past few years 
involving politically motivated damage to property and/or installations.

Performance Requirements/Incentives

There are currently no specific performance requirements on which 
foreign investment is conditioned.

Right to Private Ownership and Establishment

There are no restrictions on private ownership, the establishment of a 
business and/or on engaging in any form of remunerative activity except 
in areas declared of national interest or in which the Government 
maintains a legal monopoly.

Protection of Property Rights

Trademark protection is provided for ten years from the date of filing, 
with subsequent ten-year extensions renewable indefinitely.  Names and 
trademarks can be registered as well as emblems or other creations 
provided the product or service is clearly distinguishable.  The name of 
a merchant or industrialist, the company, and the title of a commercial 
establishment also qualify for intellectual property right protection.

Patents are granted for a non-renewable 15-year duration.  Patents are 
granted for inventions not previously released, publicized or 
distributed in Uruguay or offshore before the application date.  Patents 
must be exercised within three years.

Books, records, videos and computer software may be copyrighted.  
Computer programs can now be registered as intellectual property, 
including successive versions of derivative programs.  However, U.S. 
companies report that a large portion of the software circulating in 
Uruguay is pirated.

Uruguayan laws protecting intellectual property are outdated.  The 
Government is working on proposals to update them.

Regulatory System:  Laws and Procedures

Laws and procedures regulating foreign investment are transparent and 
streamlined.  Red tape has been, for the most part, eliminated.  

However, labor and social security legislation add significantly to the 
firm's cost structure.  Furthermore, the Government from time to time 
creates a series of regulations that allow local debtors to refinance 
debt on extremely favorable terms and conditions.  This practice has the 
effect of sustaining inefficient firms which compete with well-managed 
firms and thus diminish their profitability.

Efficient Capital Market and Portfolio Investment

Foreign investors have easy access to credit on market terms in the 
local market unless protection under the Foreign Investment Law is 
sought.  The private sector has access to a variety of credit 
instruments.  Uruguayan accounting systems are transparent and 
consistent with international norms.

As the stock market is underdeveloped, there is no effective regulatory 
system established to encourage and facilitate portfolio investment nor 
are there "cross shareholding" or "stable shareholder" arrangements used 
by private firms to restrict foreign investment.

Bilateral Investment Agreements

The Government of Uruguay has signed bilateral investment treaties with 
a number of countries and investment protection agreements have been 
signed with Italy, Germany, Switzerland, the Netherlands, Hungary, 
Romania, France and Spain.  Double taxation agreements have been signed 
with Germany and Hungary.  The Government has indicated a willingness to 
negotiate a bilateral investment treaty with the United States and the 
text of a draft agreement provided by the U.S. Government is currently 
under review.

OPIC and Other Investment Insurance Programs

The Uruguayan Government signed an investment insurance agreement with 
the Overseas Private Investment Corporation (OPIC) in December 1982.  
The agreement allows OPIC to insure U.S. investments against risks 
resulting from expropriation, inconvertibility, war or other conflicts 
affecting public order.


The Uruguayan labor force of some 1.5 million is well-educated.  It has 
shown itself adept in the application of modern industrial techniques.  
The Government has instituted technical training programs such as those 
at the Universidad del Trabajo del Uruguay to help meet industry's 
skilled labor requirements.

The social security overhead in Uruguay is high, increasing the basic 
wage bill of an employer by over 50 percent.  The social security system 
currently allows for retirement at age 60 for men and at age 55 for 
women.  Disabled workers receive payment from the Government of 70% of 
their salaries plus free medicine and medical care.

The average unemployment rate in Montevideo for 1994 was approximately 
9.2 percent, up from 8.4 percent in 1993.  The value of local 
manufactured goods reflect a relatively high percentage of labor 

For several years, Uruguay's economy has experienced steady declines in 
manufacturing while the services sector (especially tourism) has grown 
sharply.  It was estimated that approximately 50,000 industrial jobs 
were lost in 1993 as companies trimmed their work forces or were forced 
to close for lack of competitiveness.  Whether these jobs were replaced 
in the services and other sectors was a subject of heated discussion.  
Official statistics reflect a slight downturn in unemployment and 
government officials contended that jobs lost in industry had been 
gained in other sectors.  Others, however, argued that former industrial 
employees were now working as street vendors or part-time employees, or 
were otherwise underemployed.  The high cost of wages was perceived to 
be a primary factor in the overall decline of manufacturing.

Organized labor has also been undergoing a decline in influence, as aid 
from the former Soviet Union has disappeared and far left domination of 
the labor movement has diminished.  While union leaders continue to come 
from the far left, there are signs that their former confrontational 
attitudes are changing.  Unions show signs of beginning to recognize 
that protection of jobs is as important as wage levels.  Strikes and 
labor-management conflict have diminished slightly, and some of the 
union leadership appear to be seeking methods of cooperation and 

An estimated 15 percent of the workforce is unionized.  The Uruguayan 
Constitution guarantees workers the right to organize and strike and 
union leaders are protected by law against dismissal for union 
activities.  Labor unions are independent of government and political 
party control.  Sympathy strikes are not illegal.  Uruguay has ratified 
a large number of ILO conventions protecting worker rights, and 
generally adheres to their provisions.

Uruguayan labor is neither plentiful nor inexpensive, but it is literate 
and adapts to new techniques readily.  These factors, combined with the 
stiffer foreign competition resulting from reduced trade barriers, are 
causing Uruguayan industries to adopt more capital intensive 

Foreign Trade Zones/Free Ports

Law No. 15,921 of December 17, 1987 regulates the operation of free 
trade zones within the country.  The law allows storage and warehousing, 
manufacturing, and financial, data processing, or other related activity 
to take place within free trade zones.  State-owned and operated, state-
owned but privately operated, and private sector-owned free trade zones 
are located throughout the country.  Free zone locations include 
Colonia, Nueva Palmira, Montevideo, Fray Bentos, Florida, Rivera, Nueva 
Helvecia and Libertad.  Mercosur regulations treat products manufactured 
in all member-state free trade zones as extra-territorial and thus 
manufacturing in Uruguayan free trade zones by a Uruguayan or foreign 
firm will not provide for Mercosur customs union advantages.

The following advantages are granted by law to both local and foreign-
owned industries operating in a free zone:
1. Users of free trade zones are exempt from all domestic taxes in 
effect or which may be created.  The only tax not covered by this 
exemption is employer contributions to social security for Uruguayan 
employees.  Uruguayans must comprise 75 percent of the labor force 
employed by the user of the zone.  The employer is free from payment of 
social security taxes for non-Uruguayan employees if those employees 
waive coverage under the Uruguayan Social Security.

2. Goods, services, products or raw materials of foreign and Uruguayan 
origin may be entered into the zones, held there, processed, and re-
exported without payment of Uruguayan customs duties and import taxes 
(goods of Uruguayan origin re-entering into free zones will be treated 
as Uruguayan exports for all tax and other legal purposes).  Goods 
entering into Uruguayan customs territory from free zones are subject to 
customs duties and import taxes.

3. Any industrial or commercial government monopolies are not allowed 
within free trade zones.

Capital Outflow Policy

There are no controls on capital outflow from Uruguay.  Some Uruguayan 
companies, mostly state-owned, have foreign investments but they are 
very limited.  There is no government policy to promote investment 

Foreign Direct Investment (FDI) Statistics

Statistics on FDI in Uruguay are misleading because the vast majority of 
the investors do not register under the Foreign Investment Law.  The 
latest year for which some data are available is 1988 at which time the 
Uruguayan Central Bank estimated that foreign direct investment amounted 
to $352.2 million.  That source estimated U.S. investment in Uruguay at 
$62.1 million, which contrasts with the U.S. Survey of Current Business, 
which published a figure of $128 million for the same year.  The 
estimate of the Survey of Current Business for 1993 was $316 million.

The Government recognizes that Uruguay will require substantial amounts 
of private capital investment to achieve sustained economic growth.  
Therefore, significant adverse changes in the present favorable policy, 
laws or regulations on foreign investment is unlikely.

Major Foreign Investors

As investment does not need to be registered, there are no reliable data 


Brief Description of Banking System

The private commercial banking system is comprised of 21 banks and 13 
financial houses.  They jointly supply about one quarter of all banking 
credit to the private sector, nearly all of it for periods of six months 
or less.  Major activities financed include foreign trade, industry, 
livestock marketing, domestic retailing, and consumer purchases.  
Financial houses operate with limited functions -- they may neither 
accept resident deposits nor offer checking account services.  They 
engage primarily in intermediating foreign currency denominated funds 
from abroad in the domestic financial market.

The Central Bank of Uruguay (BCU) is charged with the responsibility for 
formulating and executing monetary and credit policies, supervising and 
controlling the banking system, issuing currency, and managing 
international reserves.  The BCU also administers various development 
credit lines provided by international and bilateral institutions for 
the financing of industrial and agricultural activities.

The Bank of the Republic (BROU) is a multi-purpose government-owned bank 
and the largest credit institution in Uruguay.  The BROU is also in 
charge of certain fiscal and foreign-trade financial activities such as 
the collection of some excise duties and tariffs and the control of 
foreign exchange proceeds from exports.  It also provides about three-
quarters of total bank credit to the private sector.  Roughly 90 percent 
of the bank's private sector credit is short-term.
The Banco Hipotecario del Uruguay is the only mortgage bank in Uruguay 
and the principal intermediary of medium- and long-term funds for 
housing in the country.  About one third of the bank's lending has been 
channeled into the construction of low-income public housing under 
contractual arrangements with municipalities and various central 
government agencies.  The remaining two-thirds is provided to the 
private sector, chiefly to builders for the construction of housing for 
middle-income families and individuals.

Foreign Exchange Controls Affecting Trading

There are no foreign exchange controls which significantly or otherwise 
affect trading.  There is only one exchange rate which applies to all 
transactions and it is determined by market fluctuations.

General Financing Availability

Major project financing provided by such agencies as the World Bank, the 
Inter-American Development Bank and the EXIM Bank.  Foreign investors 
also have ready access to local financing sources such as the Banco de 
la Republica and other banks, government securities and the use of 
repatriated funds.  Debt-equity swap arrangements are also in use.

How to Finance Exports/Methods of Payment

U.S. exports are generally financed by EXIM, OPIC, the international 
banking departments of major U.S. banks, the Small Business 
Administration and the Trade and Development Agency.   Exports are 
usually financed through export letters of credit, sales on open 
account, or drafts on foreign buyers.

Types of Available Export Financing and Insurance

The Overseas Private Investment Corporation (OPIC) offers investors 
insurance against currency inconvertibility, damage or interruption of 
operations from war, expropriation, and political risk.  OPIC also 
provides U.S. lenders with protection against both commercial and 
political risk by guaranteeing repayment of principal and interest on 
loans made to eligible investors.

Project Financing Available, Including Lending from Multilateral 
Institutions and Types of Projects Supported

Some of the major sources of project financing include:

A. Export-Import Bank (EXIMBANK): Eximbank provides U.S. exporters with 
several financing programs including working capital guarantees, export 
credit insurance, commercial bank guarantees, medium-term credits, small 
business credits, direct loans to foreign purchasers, and financial 
guarantees.  Further information on EXIMBANK's programs may be obtained 
at 1-800-565-EXIM.

B. Overseas Private Investment Corporation (OPIC): OPIC's programs 
include loans and loan guarantees, investment funds, and political risk 
insurance (currency inconvertibility, expropriation, and political 
violence).  OPIC may be contacted at 202-336-8799.

C. Commodity Credit Corporation (CCC): The CCC finances exports of U.S. 
agricultural commodities.  The CCC may be reached at 202-447-4274.

D. Small Business Administration (SBA): SBA's Export Revolving Line of 
Credit Loan helps small businesses export their products.  SBA may be 
contacted at 202-653-7794.

E. World Bank and Inter-American Development Bank:  Both these banks 
offer programs which allow U.S. companies to compete in international 
major infrastructure projects.  The Public Information Centers of both 
banks may be contacted through 202-458-5454 and 202-623-2096 

Several states also have their own laws allowing for state export 
financing programs.

List of Banks with Correspondent U.S. Banking Arrangements

U.S. banks operating in Uruguay include the American Express Bank, 
Citibank, the First National Bank of Boston, the Republic National Bank 
of New York and the Chase Manhattan Bank.


Business Customs

Business dress and appearance, as well as one's general approach to 
business relations, should be conservative.  An advance appointment for 
a business visit is usually necessary and considered customary courtesy.  
Typically, business is discussed after social amenities.  Extensive 
entertaining is common as are business lunches.  At such meetings, 
personal matters should not be discussed on your initiative. 

Travel Advisory and Visas

U.S. citizens need a valid American passport, but visas are not required 
for holders of other than official and diplomatic passports.

Business and tourist stays are limited to 90 days, although business 
visits may be extended for an additional 90 days.

No inoculations are currently necessary for entry.  International 
travelers are advised to contact their local public health department, 
physician or travel agent at least two weeks prior to departure to 
obtain current information on health requirements.


January 1    New Year's Day
January 6    Epiphany
February     Two days for Carnival (6 weeks before Holy Week)
March  Five days for Holy Week (dates vary from year to year)
April 19     \Landing Day of the 33 "Orientales"
May 1        Labor Day
May 18       Battle of Las Piedras
June 19      Birthday of Artigas
July 18      Constitution Day
August 25    Independence Day
October 12   Columbus Day
November 2   All Saints Day
December 25  Christmas

Business Infrastructure

International telephone, telex, and fax service is efficient.  The local 
telephone service is adequate.  International phone cards with "Dial-
USA" features, such as AT&T, MCI and Sprint, may be used.

Several airlines have frequent service to Montevideo's Carrasco 
International Airport from the U.S., Europe, and other parts of Latin 
America.  Internal transportation is mainly by car or bus.  There is 
very limited internal passenger railway or airline service.  Within 
Montevideo, bus and taxi services are extensive and inexpensive.

Uruguay observes standard time.  This is three hours behind Greenwich 
Mean Time, two hours ahead of Eastern Standard Time, and one hour ahead 
of Eastern Daylight Time.  

Electrical current is alternating 50 cycle, 220 volts, single and triple 
phase.  Specially requested electric power supply to industry may be 
three-phase, 380 or 415 volts, 50 cycles.



Country Data 

  Source of data
Population  1  1995 - 3.19 million
Population growth  1  Estimated yearly average 1985-95: 0.57% rate  

Religions  3  Roman Catholic 66%, Protestants 2%, Jewish 2%, Non-
Professing or other 30%

Government system  4  Uruguay is a democratic republic with three 
separate government branches: a) the Executive branch made up of the 
President and twelve cabinet ministers; b) the legislative branch, a 
bicameral system with a 30-member Senate and 99-member Chamber of 
Deputies; and, c) the judiciary comprised of the Supreme Court,  lower 
courts and justices of the peace.

Language    Spanish

Work week  5  Maximum 48 hours


Domestic Economy (USD millions, except where noted)

  Source                                   1995  1996
  of data                            1994  Est.  Proj.

GDP  6                             15,543  17,736  19,137
GDP growth rate (%)  6                5.1     1.0     3.5
GDP per capita  6                   4,908   5,567   5,974
Central Government spending
 as percent of GDP  6                21.7    20.0    19.0
Inflation percent  2/6               44.1    38.0    25.0
Unemployment  1/6                     9.2    10.0     9.0
Foreign exchange reserves  2/6      1,432   1,480   1,500
Average exchange for
  USD 1.00  2/6                      5.05    6.39    7.90
Foreign debt  2/6                   4,605   4,800   5,000
Debt service ratio  2/6              10.0    12.0    12.0
U.S. economic assistance  7           1.0      --      --
U.S. military assistance  8
  Sales of equipment                  2.0      --      --
  Grants                              3.0      --      --


Trade (USD millions, except where noted)

    Source                                  1995  1996  
    of data                           1994  Est.    Proj.

Total country exports  2/6            1,913  2,300  2,700
Total country imports  2/6            2,772  3,050  3,350
Exports to U.S.  2/6                    131    200    250
Imports from U.S.  2/6                  260    310    350
US share of imports (%)  2/6            9.4   10.2   10.5

Imports of manufactured goods  2/6  
Total from world                      2,128  2,350  2,580
From the U.S.                           242    290    320
 US share of imports (%)               11.4   12.3   12.4
 Manufactured goods trade
  balance with U.S.                    -191   -230   -250
 Projected average annual
  growth rate from world
  through 1996 (%)                     10.4    9.8
 Projected average annual
  growth rate from U.S.
  through 1996 (%)                     19.8    10.4

Imports of agricultural
 goods  2/6
Total from world                        430     450    470
 From the U.S.                           19      20     30
 U.S. share of agricultural
  imports (%)                           4.4     4.4    6.4
Agricultural goods trade
 balance with U.S.                       60     120    150

Trade balance with three leading
 partners in 1994  2/6
 Brazil                                -217     -50    -50
 Argentina                             -270    -290    -240
 U.S.                                  -129    -110    -100

Principal exports to U.S.  2/6
4104  Bovine leather                     30      33      36
4203  Leather clothing
      accessories                        13      14      15
6403  Shoes                              11      12      14
1602  Prepared meat                       8       9       9
5101  Wool                                7       7       6

Principal imports from U.S.  2/6
8471  Data processing
      machines                           22      24      30
3105  Fertilizers                        11      13      15
9018  Medical instruments                 7       8       8
8528  TV sets                             5       6       6
8418  Refrigeration
      equipment                           5       7       7

Sources of data:

1  -  National Institute of Statistics (INE)
2  -  Central Bank of Uruguay (CB)
3  -  U.S. Department of State - Background Notes on Uruguay - January 
4  -  1967 Constitution of Uruguay
5  -  Law 7318 of 12/10/1920
6  -  Embassy computations based on CB data, GOU economic program 
submitted to IMF and estimates
7  -  A.I.D.
8  -  Embassy Office of Defense Cooperation


Investment - The Government of Uruguay does not keep records on foreign 
direct investment.  The survey of current business estimates U.S. direct 
investment for 1993 is $ 316 million.


U.S. and Country Contacts

Country Government Agencies

Laboratorio Tecnologico del Uruguay
Av. Italia 6201
Montevideo, Uruguay
Tel: (5982) 61-37-24
Fax: (5982) 60-47-63

Ministry of Industry, Energy, and Mining
Rincon 747
Montevideo, Uruguay
Tel: (5982) 90-02-31
Fax: (5982) 92-12-45

Ministry of Economy and Finance
Colonia 1089, piso 3
Montevideo, Uruguay
Tel: (5982) 92-10-17
Fax: (5982)

Ministry of Tourism
Av. del Libertador 1409, piso 4-6
Montevideo, Uruguay
Tel: (5982) 90-41-48
Fax: (5982) 92-16-24
Ministry of Agriculture and Fishing
Constituyente 1476
Montevideo, Uruguay
Tel: (5982) 48-22-56

Investment Development Committee
Luis Alberto de Herrera 3350, piso 2
Montevideo, Uruguay
Tel: (5982) 47-21-10 ext. 1233
Fax: (5982) 80-93-97

Office of Planning and Budget
Edificio Libertad, piso 3
Montevideo, Uruguay
Tel: (5982) 81-95-25
Fax: (5982) 29-97-70

Central Bank of Uruguay
Paysandu y Florida
Montevideo, Uruguay
Tel: (5982) 98-50-08

MERCOSUR Sectorial Committee
Paysandu 919 
Montevideo, Uruguay
Tel: (5982) 92-10-00
Fax: (5982) 92-36-55

Ministry of Transport and Public Works
Rincon 561
Montevideo, Uruguay
Tel: (5982) 95-73-86
Fax: (5982) 96-28-93

Country Trade Associations/Chambers of Commerce

Union of Exporters
Rincon 454, piso 2
Montevideo, Uruguay
Tel: (5982) 95-60-50
Fax: (5982) 96-11-17

Chamber of Industries
Av. Libertador Lavalleja 1672
Montevideo, Uruguay
Tel: (5982) 91-50-00
Fax: (5982)

Uruguayan Chamber of Commerce
Rincon 454
Montevideo, Uruguay
Tel: (5982) 96-12-77
Fax: (5982) 96-12-43
American Chamber of Commerce
Bartolome Mitre 1337, Esc. 108
Montevideo, Uruguay
Tel: (5982) 95-90-48
Fax: (5982) 95-90-59

Association Pro Intensification of U.S.-Uruguay Commerce
Rincon 454, Esc. 520
Montevideo, Uruguay
Tel: (5982) 95-18-07

Country Market Research Firms

Colonia 933, piso 4
Montevideo, Uruguay
Tel: (5982) 92-64-70

Coopers & Lybrand
Treinta y Tres 1374, Piso 5
Montevideo, Uruguay
Tel: (5982) 96-08-20
Fax: (5982) 96-33-81

Equipos Consultores
Bulevar Artigas 1089
Montevideo, Uruguay
Tel: (5982) 40-26-63

Ernst & Young 
18 de Julio 984, Piso 4
Montevideo, Uruguay
Tel: (5982) 92-31-47
Fax: (5982) 92-13-31

Oikos Consultora
Soriano 898, Esc. 401
Montevideo, Uruguay
Tel: (5982) 90-15004
Fax: (5982) 91-39-75

Montaldo y Associados
18 de Julio 841, Esc. 301
Montevideo, Uruguay
Tel: (5982) 92-09-44
Fax: (5982) 92-17-16

Country Commercial Banks

Commercial banks operating in Uruguay include ABN/AMRO, American 
Express, Banesto, Centro Hispano Banco, Citibank, the Banco Comercial, 
the Bank of Boston, the Discount Bank, the Republic National Bank of New 
York, Lloyds Bank, Caja Obrera, Caja Pan de Azucar, Caja de la 
Republica, Caja Hipotecario and the bancos de Credito, de la Nacion 
Argentina, de Montevideo, do Brasil, Exterior, ING, Real, Santander, 
Sudameris and Surinvest.

Washington-based U.S. Government country contacts

Uruguay Desk Officer
U.S. Department of Commerce
14th & Constitution Avenue
Washington, D.C. 20230
Tel: (202) 482-1495

Uruguay Desk Officer
U.S. Department of State
2201 C Street, N.W.
Washington, D.C. 20520
Tel: (202) 647-2296

Trade and Development Agency
Regional Director, Latin America/Caribbean
Washington, D.C. 20523
Tel: (703) 875-4357

Overseas Private Investment Corporation (OPIC)
1100 New York Ave, N.W.
Washington, D.C. 20527
Tel: (202) 336-8625
Fax: (202) 408-8625

811 Vermont Avenue, N.W.
Washington, D.C. 20571
Tel: (202) 566-4613
Fax: (5982) 566-7524

U.S.-based Multipliers Relevant for Country

General Directorate of Foreign Trade
Economic and Commercial Department
747 3rd. Avenue
New York, NY 10017 
Tel: (212) 751-7137/7138

Bank of the Republic (branch)
Rockefeller Center
1270 Avenue of the Americas, 30th floor
New York, NY 10020
Uruguay-U.S. Chamber of Commerce, Inc. of New York
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, NY 10038
Tel: (212) 504-6619
Trade Promotion Coordinating Committee
Tel: 1-800-USA-TRADE

U.S. Department of Agriculture
Foreign Agriculture Service
Trade assistance and Promotion Office
Tel: (202) 720-7420


Market Research

List of Available and Upcoming Industry Sector Analyses and 
International Market Insights
The Embassy reports International Market Insights on an ad hoc basis to 
the U.S. Department of Commerce's National Trade Data Bank.  Subjects 
currently reported include: gas storage project, auto import overview, 
insurance industry reform, oil company registration regulations, bridge 
construction project, bank privatizations, highway construction, cable 
tv projects, cellular phone projects, transport industry profile, 
highway toll system purchase, piped gas network project, talc mining 
joint venture project, thermal resort project, and hotel construction 

The Embassy also plans to prepare comprehensive Industry Sector Analyses 
on tourism, agroindustries (including forestry), and the medical 
equipment and supplies sector during FY95.

List of U.S. Department of Agriculture/Foreign Agricultural 
Service/Commodity Reports and Market Briefs

The Foreign Agricultural Service will be preparing a Livestock Annual 
Report (in August), and an Agricultural Situation Report (due in 


Trade Event Schedule

The only regularly scheduled trade events of interest to U.S. companies 
are the Prado Agro-Industrial and Commercial Fair which takes place each 
year in September, and the Feria Internacional del Plata (FIPLA) which 
takes place every other year in May.  The next FIPLA fair will take 
place in May, 1996.

Sponsored by the U.S. Department of Commerce, the Embassy organizes a 
U.S. Pavilion in the Prado International Agro-Industrial and Commercial 
Fair.  Last year the prizewinning U.S. Pavilion was host to over thirty 
U.S. companies which promoted their products and services.  Attendance 
at this exposition was calculated at over 400,000 by Fair authorities.  
Many other nations also have pavilions along with those of local 
companies.  Participation in this fair is an excellent opportunity to 
introduce U.S. products and services, especially consumer products to 
the local market and to, a limited extent, the larger surrounding 
markets of Brazil and Argentina.

The Embassy also organizes a smaller U.S. section in the FIPLA fair.  
This fair has a much more restricted attendance and its target audience 
is the Southern Cone (Brazil, Argentina, Paraguay) businessman.
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