Trade policymaking in Uruguay: Recent trends and challenges ahead

• Author: Carmen Estrades,Manuel Flores
• Published date: 01 December 2020
• Date: 01 December 2020
• DOI: http://doi.org/10.1111/twec.12957

World Econ. 2020;43:3133–3141. wileyonlinelibrary.com/journal/twec

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3133

© 2020 John Wiley & Sons Ltd

DOI: 10.1111/twec.12957

SPECIAL ISSUE ARTICLE

Trade policymaking in Uruguay: Recent trends and

challenges ahead

CarmenEstrades

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ManuelFlores

Economics Department, Universidad de la República, Montevideo, Uruguay

KEYWORDS

MERCOSUR, trade facilitation, trade policy, trade policy review, Uruguay

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INTRODUCTION

The last trade policy review (TPR) of Uruguay was published in May 2018. It is the fifth review of

Uruguay's trade policies since its integration to WTO in 1995. The previous report had been published

6years before, in April 2012. The first impression when reading the last TPR is that trade policy

and trade liberalisation in Uruguay have not changed much in these six years. Tariff levels remained

unchanged, with an average applied MFN rate of 9.4%, and the country did not sign important trade

agreements.

However, at a closer look, some advances are noticed. In this paper, we review the main trends in

trade and trade policy in the last years, according to information included in the TPR and data from

other sources. Finally, we present the ways in whichUruguay's trade policy changed in the short run

and the challenges that lie ahead.

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RECENT EVOLUTION OF URUGUAYAN TRADE

Uruguay is a small open South American economy, located between Argentina and Brazil on the

Atlantic coast. Historically, the country has specialised in agriculture and livestock exports and has

relied on imports of oil and most manufactured goods. Its liberalisation policy started in the 1970s

and deepened in the 1990s when the country entered the Southern Common Market (MERCOSUR)

together with Argentina, Brazil and Paraguay. This led to an increase in trade flows and trade open-

ness in the country, and this increasing trend was reinforced in the 2000s with the commodity price

boom (see Figures1 and 2).

In the latter years, however, as reported in the TPR, the country experienced a decline of trade flows

relative to GDP, both measured in current and constant prices (see Figure1). This contrasted with a

period of strong increase in trade and trade openness during the previous decade. In the period analysed

by the TPR, both exports and imports fell, although the decrease in imports was steeper (see Figure2).

As shown in Figure3, imports had a stable composition in the last years, with metal products,

chemicals and minerals and oil products representing almost 80% of total imports. Exports, however,