Mercosur

.. applied to the total nominal tariff of each country as of August 5, 1994. No other tariff or non-tariff barriers will be applicable to the products included in this Regime. About the Uruguayan Economy 153. What was GDP share of the main sectors during the years 1991-1993? Agriculture 11.3%, manufactured goods 23.1%, construction industry 3.9%, electricity 3.1%, retail and restaurant/hotel services 12.8%, transport, storage and communications 7.7%, financial institutions, insurance, real estate and services to enterprises 22%, municipal, social and personal services 17%.

These percentages are reflected in the employment structure. Employment structure excluding the agricultural sector as of 1993: People employed Total Exploitation of mines and quarries 0.3% Manufactured goods 24.7% Electricity, gas and water 2.0% Construction industry 3.7% Retail, restaurants and hotels 19.2% Transport, storage and communications 6.4% Financial institutions and services to enterprises 7.3% Communication, social and personal services 36.5% 154. What are the main fields within the manufactured goods sector? Foodstuffs, beverages and tobacco 33%; textiles, apparel industry and hides 19%; paper, printing and publishing houses 5%; chemicals, oil, rubber, plastics 25% (oil refining is 40%); non-metallic minerals 4%; metallurgy, machinery and equipment 13%. 155. What is the relationship between external and domestic trade? In 1995 exports (FOB) totalled US$2,116.7 million while imports totalled US$2,866.9 million. There was a negative balance of minus US$750.2 million.

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156. What are the main geographical areas with which we do business? Trade with the other MERCOSUR countries during 1995 totalled US$2,316 million (this represents a 47% of overall trade which was US$4,983.6 million). Exports from Uruguay to MERCOSUR: US$995 million Uruguays imports from MERCOSUR: US$1,320 million Exports from Uruguay to Europe: US$482.5 million Exports from Uruguay to the U.S.A.: US$112.8 million 157. What changes will MERCOSUR bring about? The coming into effect of MERCOSUR will open new business opportunities in a market of 200 million inhabitants. At the same time, Uruguayan businessmen will face new and greater challenges and will have to strive in order to meet new market requirements. Similar efforts will have to be made to improve quality of labor, quality of management and productivity, and to foster the use of proper technology.

All this will have to be done bearing in mind peoples needs and expectations, guaranteeing job security as far as possible, making better use of national resources and, finally, taking advantage of the benefits of integration. Once the negotiations have been completed enterprises, workers, professionals, farmers, students, the State, in other words, the society as a whole will have to take a stance within the new regional environment. In the short term most of the products and services Uruguay has to offer will undergo radical changes. The new markets will undoubtedly offer new opportunities, but in order to seize them Uruguay will have to offer the right products, with an excellent quality level and within a convenient time framework. 158.

What do we export to the other MERCOSUR countries? Vehicles Garments and accessories Dairy products Paper and carton Plastics Common metals and their products Footwear Ceramic products Fabrics and jersey garments Machines and electrical material Rubber Pigments, paints and varnishes Rice Milling products Wool and hair Fish and crustaceans Furs and hides Cattle on the hoof Barley Pharmaceutical products Inorganic chemical products Glass and their products Tobacco and their products Hydrocarbons and derivatives Honey Ovine and bovine meat Seeds Vegetables and fruits Products derived from wood Wines 159. What do we export to the rest of the world? Garments and accessories Dairy products Footwear Ceramic products Fabrics, leather garments and textiles Rice Wool, yarns and wool fabrics Fish and crustaceans Furs and hides Cattle on the hoof Barley Pharmaceutical products Leather handbags and accessories Meat and fish preparations Fur garments Cereal preparations Seeds and fruits Sugar Bovine meat Fresh fruits Ovine meat Products of animal origin Cereals Vegetables Honey Various foodstuffs preparations Wood, vegetable coal and its products Wines The MERCOSUR-Chile Agreement On June 19, 1996 MERCOSUR and Chile signed a Free Trade Agreement which was later endorsed (June 25) by the Presidents of the five countries in San Luis, Argentina. Key features: the agreement complies with the requirements of the World Trade Organization; the principles of the customs union are maintained (the common external tariff remains unchanged). Further, it should be pointed out that Chile has not become a new member of MERCOSUR, but has joined MERCOSURs free trade zone without adopting the common external tariff system. This is a 4 + 1 type agreement. General Outline On October 1, 1996 tariffs on goods not subject to exceptions will be reduced by a 40%. Reductions will continue in a progressive manner until a zero tariff is reached in 8 years, more precisely by 2004.

Tariffs for products considered sensitive will be liberalized in 10 or 15 years, according to the type of product. In this regard, Chile has decided to close its market for wheat and wheat by-products during 18 years. To counterbalance this, Chile has granted additional quotas for beef and rice and, for the first time, has opened its domestic market to dairy products from MERCOSUR. A very strict rules of origin regime has been approved by which Chilean products exported to MERCOSUR should have at least a 60% of national (Chilean) components; the remaining 40% may be from outside MERCOSUR. This system is already in force in the other MERCOSUR countries.

Dispute resolution will be done by means of consensus during the first three years after the signing of the Agreement. After that it will be done through arbitration. Uruguay-Chile Consequences of the Agreement The MERCOSUR-Chile Agreement may come to affect the fruit/vegetable and wine sectors in Uruguay. Chile is a large exporter of fruits and wine, internationally known. In Uruguay, however, fruit and vegetable growing is mostly family-run, with no rationalization of productive inputs used. Even though in general Uruguayan products will not benefit from the above mentioned tariff reductions, the Agreement with Chile will be advantageous for certain products such as rice, dairy products, beef and the apparel industry.

In the case of rice, Chile approved a quota of 14,000 tons for Uruguay until the year 2000 (presently the quota is 4,000 tons for shipments from September through December only). In the case of dairy products, Uruguay can now access the Chilean market with an advantageous tax of 40% and progressive reductions of up to a 100% by the year 2000. Up to the signing of the Agreement, Chile had refused to negotiate with Uruguay the introduction of dairy products. Regarding beef, until October 1, 1996 Uruguay had a quota of 750 tons per year, with a tax of 50%. Thanks to the agreement, Uruguay will be able to export 3,000 tons of beef per year (50% of frozen and 50% of fresh meat).

The textile sector was granted an additional quota for some articles with a 100% tax exepmtion (usual tax in this sector is 40%). Moreover, Uruguayan leather garments were completely liberalized in the Chilean market. Additionally, the MERCOSUR-Chile agreement opens new opportunities for business and investment in Uruguay. Business Reports.