Return to table of contents

= Chapter 1: Doing Business In Urugu= ay

Market Overview &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Urugua= y is a market-oriented economy in which the state still plays an important role. The country suffe= red the steepest crisis in recent history from 1999 through 2002 due to an adverse combination of external and internal factors. The crisis was overcome with timely U.S. and IMF support. <= /span>

· Growth resumed in 2003 an= d was particularly robust in 2004 (11%) and 2005 (over 6%), driving GDP close to = its pre-crisis levels. The 2005 G= DP amounted to $ 16.8 billion, and GDP per capita was $5,100. Initial estimates registered a 4 &= #8211; 5 percent growth rate = for 2006 but final figures are closer to 7 percent.

Debt r= ating was upgraded in 2003 after a successful voluntary debt exchange, whic= h, along with political stability, contributed to reduce country risk. As of early 2006, country ri= sk stands at about 300 basis points.

The left-of-center Frente Amplio, which took office in March 2005, contin= ued implementing an orthodox macroeconomic policy, and promptly signed agreements with the IMF, the World Bank and the IDB. The administration continues= to favor increased foreign investment in order to sustain the economic recovery and, in late 2005, it signed a Bilateral Investment Treaty (= BIT) with the U.S. The BIT w= as also ratified by the U.S. and has been in effect since November 1, 20= 06.

As a founding member of MERCOSUR, Uruguay shares a common external tariff = with Argentina, Brazil and Paraguay. The MERCOSUR Secretariat is located in Montevideo.

Prelim= inary 2006 figures show that Uruguay’s exports (FOB) totaled $3.8. Brazil was the largest buyer= with 14 percent, the U.S. was the second with 13 percent and Argentina thi= rd with 8 percent of the total exported. Exports are concentrated in = meat, oil products, leather and dairy products.

Prelim= inary 2006 import figures show that total imports (CIF) amounted to $4.1 billion. The U.S. came = in fifth with an 8 percent market share, just below China. Top markets are Brazil (21%), Argentina (20%), Venezuela (14%) and China (8%). U.S. sales are highly concen= trated on high-tech goods.

Please refer to Chapter 2 or the following links for further economic information:= http://uruguay.usembassy.gov; http://uruguay.gub.uy; http://www.bcu.gub.uy; http://www.ine.gub.uy; http://www.presidencia.gub.uy; = http://www.uruguayxxi.gub.uy; http://www.mercosur.org.uy<= /p>

Market Challenges &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

· The challenges Uruguay fa= ces in promoting its local market are its small size (3.3 million) and the lack of trade-related financing. Urug= uay is largely unknown to U.S. companies, and local business has traditionally tur= ned to MERCOSUR. U.S. exporters need to be flexible in their minimum sales requirements.

· The left-of-center government that took office in March 2005, has shown a keen interest in promoting expanded trade and investment, and the business community has been encouraged by a strong economic recovery and pro-investment signals from the government. Still, clashes do= occur within the ruling coalition at times, as more radical leftist members and t= rade unions have challenged the market-oriented economic team on some of its policies. A clear example is = the opposition to a Free Trade Agreement with the U.S. yet, the Government has = not deleted the idea of negotiating an agreement with the U.S. as well as with other countries.

· While the current Adminis= tration recognizes the importance of U.S. investment and the U.S. market, it places very close attention to the regional markets. The leftist parties have tradition= ally opposed further privatization of the state sector.&nbs= p; However, they are open to certain private sector participation in state-owned firms (i.e., AFE, ANCAP, PLUNA).

· Government procurement and bidding processes are transparent yet slow.

· Tax reform has been the priority in 2006, and the reform submitted by the Executive Office only faced minor adjustments at the Parliament since t= he ruling party had a vast majority. It was originally expected to be in place as of January 1, 2007 but = has been moved forward to July 1, yet timelines are still to be clearly defined. The business communi= ty is a fervent opponent to the changes but the opposition has not been able miti= gate their fears.

· The level of labor conflicts was high in 2006, in comparison with previous years due to national budget discussions in Parliament, wage negotiations, union opposition to negotiations of an FTA with the U.S., and the death of several construction workers in labor accidents.

Market Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

· Information technology, telecommunication equipment, and chemicals are the top U.S. exports to Urug= uay, followed by fertilizers, medical equipment and supplies, and agricultural machinery. The U.S. is Uruguay’s first provider for hardware and telecommunication equipment, second for fertilizers, and third for chemicals.

· Taking advantage of the small si= ze of the market as well as the stable conditions, Uruguay offers good opportunities as a test market for the region.

· The major infrastructure project= s in the pipeline are:

· Paran&aacut= e;-Paraguay River Transportation System

· Energy Projects (combined power plant, transmission, wind)

· Railway Rehabilitation

· New Airport Terminal

· Port Projects

· Cellulose and Wood Chipping Plants=

For detailed information regard= ing these projects, please refer to Chapter 4.

Market Entry Strategy= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

· All import channels exist -- agents, distributors, importers, trading companies, subsidiaries, and branches of foreign firms. Sales outlets and supermarkets are traditional storefronts. Ther= e are no discount general merchandisers.

· U.S. suppliers should be thorough in their selection of a local agent or representative. The contractu= al relationship (employer-employee or commission-based) should be made clear.<= span style=3D'mso-spacerun:yes'> Failure to do so could result in supplier liability for severance if the U.S. company decides to end the business relationship.

· The best strategy recommended to enter the local market is to visit Uruguay, interview potential partners, and name a representative/agent. Business relationships and creative financing terms are very important.

· = U.S. exporters are encouraged to take advantage of the export promotion services provided by the Commercial Section in the U.S. Embassy in Montevideo. Please check in http://www.buyusa.gov/uru= guay/en/10.html for the full list of services provided. Another useful site for U.S. expor= ters is http://www.export.gov.

Return to table of contents

Return to table of= contents

= Chapter 3: Selling U.S. Products and Services

Using an Agent or= Distributor &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

A helpful way to find a local agent is to take advantage of the export promot= ion services provided by the U.S. Department of Commerce through the Commercial Section in the U.S. Embassy in Uruguay.&nb= sp; One of the services provided is a free a C= ontact List with up to 10 potential Uruguayan agents, distributors, and importers = of the company’s product. = This free list contains basic information, such as company name, address, and phone/fax numbers. For a fee,= post will provide a Customized Conta= ct List with up to 10 potential partners with additional information, such as a contact name, e-mail, a brief description of the fir= m, approximate number of employees, products/services, foreign companies represented, year established, and sales revenue if available.

Another service is the Gold Key Ser= vice (GKS) that allows U.S. executives to travel to Uruguay efficiently and effectively for face-to-face meetings with potential business partners. The Commercial Section will prepar= e a customized schedule of appointments with pre-screened potential agents, distributors, or other business contacts according to the company’s needs.

In addition, The ICP (International Company Profile)= is an in-depth confidential background report on the local firm. The report includes: local company= 's contact information, its size/approximate number of employees, products/services, financial and business references, company's reputation, Commercial Section’s comments/evaluation.

For the full list of services provided, please check in http://www.buyusa.gov/uru= guay/en/10.html

Establishing an Office = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; Return to top

A new enterprise or the acquisition of an existing Uruguayan company can be done freely. Shell corporations al= ready formed but with no operations are also available for acquisition and can be purchased for about $2,500. I= t is advisable to contract an experienced attorney who can provide guidance in c= ompleting the necessary legal paperwork. The foreign investor is free to adopt any desired legal organization structure. Corporations or br= anches are most common forms, but a personal partnership is also possible. = Return to top

Fra= nchising in Uruguay has to date been largely limited to food-related outlets, hotels, and car rental companies. The= re are no legal restrictions on operating a franchise in Uruguay. For information on the Uruguayan Franchising Association, please check in http://www.mtgroup-uy.com. For more information or assistance, please e-mail montevideo.office.box@mail.doc.gov.

Direct Marketing &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

U.S. exporters may sell and ship directly to Uruguayan consumers. Courier packages containing CDs, D= VDs, books, and personal items valued at $50 or less are exempt from import tari= ffs. The relevant regulations, however,= are not always uniformly applied and are changed periodically. Telemarketing and e-mail campaigns= are on the rise. Direct marketing= is also popular in heavily transited street corners and during the summer at b= each resorts, where hired promoters distribute flyers and samples of all types of products and services. Insert= s in the Sunday edition of major newspapers are also a popular form of direct marketing. Catalog sales are = not common as Uruguayans prefer to window shop and personally choose the goods = to be purchased.

Joint Ventures/Licensing &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; <= span lang=3DEN style=3D'font-weight:normal'>Return to top

Bot= h joint ventures and licensing are common in Uruguay and generally involve procedur= es similar to those practiced in most other countries.

Sellin= g to the Government &nb= sp; = &nb= sp; = &nb= sp; Return to top

Although U.S. companies may sell directly to the Uruguayan government, a local addre= ss is required for all correspondence. It is advisable to have a local representative duly registered as a government supplier. Companies should consider providing product literature and price quotations to selected government purchasing offices and the different state-owned entities; these offices and entities frequently refer to literature on hand when drafting the specifications for their procurement tenders. Government entities usually do their own procurement. Uruguayan law requires bids for purchases above $ 100,000. Nevertheless, procurement by negotiation is permitted in certain cases.

A G= 2B website, http://www.compras= estatales.gub.uy, has been established to increase transparency and reduce government procure= ment costs. Thus, due to severe bu= dget cutbacks, however, most government procurement has been put on hold. Government agencies issue tenders = for the purchase of the products and services.

Distribution and Sales Channels &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

All= customary import channels exist in Uruguay -- agents, distributors, importers, trading companies, subsidiaries, and branches of foreign firms, among others. Sales outlets are usually traditio= nal storefronts and supermarkets. No discount general merchandisers operate in Uruguay.

Selli= ng Factors/Techniques &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

For= eign manufacturers with sustained sales in Uruguay generally use the services of= an agent or distributor. Nearly = all importers/distributors are based in Montevideo, although some maintain sales networks in the Interior as well. A U.S. firm with a local representative has the advantage of keeping up-to-da= te with local market conditions as well as changes in policies affecting trade= .

Uru= guay is a good market for both new and used equipment and machinery. Equipment often considered obsolet= e in the U.S. may still be marketable to local industry. When making purchase decisions, Uruguayan consumers consider quality, price, payment terms, delivery time, after-sales servicing and compatibility with existing systems.

U.S. manufactured products are regarded as high in quality but occasionally lose price competitiveness vis-à-vis regional products. Also, they are sometimes rated poo= rly when it comes to financing, which is an important factor in sales in Urugua= y. American manufacturers offering flexible, innovative, and competitive credit terms will overcome a difficult hurdle in achieving export sales to Uruguay.

Electronic Commerce = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; Return to top

Uruguay has the highest Internet de= nsity level of Latin America, yet its e-commerce figures tend to be very low.

According to a local study dated 20= 04, only 11 percent of Uruguay’s 600,000 Internet users have purchased products on-line. Of these 11 percent,= 40 percent tend to be one-time shoppers while the remaining 60 percent have sh= opped on-line more than once.

Between 2001-2002, Uruguayan retail= ers began launching their websites and sales campaigns on-line. However, they soon discovered that= they were unable to attract on-line business due to the ongoing recession and the lack of interest among their clients. Because the costs of maintaining their websites became too expensive, many of these companies subsequently removed their websites from the Intern= et. As the economy is recovering, comp= anies are starting to go back to using websites and trying to increase sales on-line. Local supermarkets a= nd home appliances sales have been the first to pick-up their sales over the Internet. The items most freq= uently purchased on-line from overseas include books, CDs, clothing, hardware, spo= rting goods, home appliances, toys, games/DVSs, and software. In most cases, the items purchased= are unavailable locally. Other fa= ctors include lower prices, convenience, and the items’ novelty.

The growth of e-business from abroa= d has also been negatively impacted by the Government of Uruguay’s attempts= to impose taxes and measures that affect the door-to-door delivery of goods arriving via international couriers.

Trade Promotion and Advertising &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

It = is advisable to work with a local advertising agency.&n= bsp; "El Pais" and "El Observador" are the leading newspapers in terms of circulation followed by Cronicas Economicas” ; "Busqueda" is a highly respected weekly journal. Several major international advert= ising agencies maintain offices in Montevideo.&n= bsp; Television and radio advertising are also popular. During the summer months of December-March, light aircrafts with banners are commonly used to promote n= ew products along the coast. Sev= eral local ad agencies produce TV commercials for clients abroad.

The= Embassy periodically hosts industry-specific catalog exhibitions and trade missions. It also participate= s with a commercial booth in some trade fairs.&nb= sp; Details concerning these fairs may be obtained from the Commercial Section, U.S. Embassy Montevideo, Tel: (5982) 418-7777, ext. 2325, Fax: (5982) 418-8581or by e-mail at montevideo.office.box@ma= il.doc.gov.

Catalogs may be sent via regular U.S. mail to American Embassy Montevideo, Econ R= 11; Unit 4510, APO AA 34035.

Pricing &nb= sp; = &nb= sp; = &nb= sp; = &nb= sp; Return to top

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

A t= ypical price structure for an item imported from the U.S. is as follows

(i.e., safety boxes HS code 83.03.00.00):

Price (CIF)		500
Import tariff	10.0%	50.00
IMADUNI	6.0%	30.00
Bank Charges	2.5%	12.50
VAT (recoverable on sale)	33.0%	191.40
Import surcharge (COFIS)	3.0%	21.18
Consular tax	2.0%	10.00
TSA Transit Guide		1.00 2.92
Total Surcharges	<= /p>	319.00<= /p>
Final equipment price		819.00
Profit margin:	10.0%	82.00
Final Sale price:		901.00<= /p>

Sales Service/Customer Suppo= rt &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Uru= guayans consider sales support and customer service important factors when deciding which products to buy. U.S. manufacturers should seriously consider using an agent in Uruguay to provide customer support services. Co= mpany representatives resident in neighboring countries are less effective. A local U.S. firm is selling warra= nty protection that supplements that provided by the original equipment manufacturer.

Protecting Your Intellectual Property = ; &n= bsp; = ; <= /span>Return to top

Uruguay is a member of the World Intellectual Property Organization (WIPO), and a party to the Bern and Universal Copyright Conventions, and the Paris Convention for the Protectio= n of Industrial Property. In 2003, coordinating closely with U.S. and international IPR organizations, Uruguay passed new TRIPS-compliant copyright legislation. In 1998 and 1999, Uruguay also pas= sed trademark and patent

legislation.

The 2003 copyright law represented= a significant improvement over the 1937 law and led the United States Trade Representative (USTR) to upgrade Uruguay from the "Priority Watch List" to the "Watch List."&= nbsp; However, IPR enforcement remains ineffective and the GOU fails to provide adequate TRIPS consistent protection for confidential test data.

Uruguay signed the WIPO C= opyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) in 1997. Parliament ratified the= WCT in August 2005, but WPPT was filed in February. In its 2005 Special 301 Report, US= TR commended the passage of implementing regulations on copyrights that "= have been largely put into effect and appear to be contributing to the strengthe= ning of Uruguay’s copyright regime", but noted that Uruguay still "fails to provide adequate protection of confidential test data from unfair commercial use as required by TRIPS." Various IPR chambers, which founded an umbrella organization in 2004, have implemented aggressive anti-piracy campaigns, resulting in several successful prosecutions<= span lang=3DEN-US style=3D'font-family:"Courier New"'>.

Due Diligence = &nb= sp; = &nb= sp; = &nb= sp; Return to top

It is advisable to obtain a local attorney before setting up operations in Urugua= y or carrying-out substantial amounts of business. Local attorneys can be very helpfu= l in sorting through the red tape and bureaucracy, which may otherwise be frustrating for a newcomer. A= free list of local attorneys may be obtained from the Embassy's website at http://uruguay.usembassy.gov, un= der American Citizen Services. For questions or further assistance, please contact montevideo.office.box@ma= il.doc.gov

Credit reports on Uruguayan firms may be obtained from the Commercial Section thro= ugh the International Company Profile (ICP).&n= bsp; For more information, please click on http://www.buyusa.gov/uru= guay/en/11.html

Local Professio= nal Services = ; &n= bsp; = ; &n= bsp; = ; Return to top

Equifax: http://www.clearing.com.uy, http://www.equifax.com/

Commercial Defense: http://www.lideco.c= om.uy/online/html/index.php

D&B Uruguay: http://www.mr.com.uy

For additional services, please cli= ck on http://www.buyusa.gov/uru= guay/en/17.html

Web Resources = &nb= sp; = &nb= sp; = &nb= sp; Return to top

Government Procurement: http://www.comprasestatales.gub.uy,

Uru= guayan Chamber of Industry: http://www.ciu.com.uy

Uruguayan Chamber of Commerce and Services: <= span lang=3DEN-US style=3D'layout-grid-mode:line'>http://www.camaradecomercio.com.uy

Uruguayan IT Chamber: http://www.cuti.org.uy

= Newspapers:

Bus= queda: e-mail busqueda@adinet.com.uy Web site = not available.

El Observador: http://www.observa.com.uy.

El = Pais: http://www.diarioelpais.com.=

Cr&= oacute;nicas Económicas: http://www.croni= cas.com.uy.

T.V.

Channel 4

http://www.canal4.com.uy/

noticieros@montecarlo.com.uy

Channel 5 (TVEO):

tveo@hotmail.com

Channel 10:

http://www.canal10.com.uy/

subrayado@canal10.com

Channel 12:

http://www.teledoce.com/

telemundo@teledoce.com

VTV Uruguaya:

= http://www.vtv.com.uy/

prensa@vtv.com.uy

Major AM radios

1410 AM Libre

http://www.1410amlibre.com/

690 AM Radio Sarandí<= /p>

http://www.sa= randi690.com.uy/scripts/am/template.asp

810 AM Radio El Espectador

http://www.espectador.com= /index_home.php

850 AM Radio Carve

http://www.carve.com.uy/

870 AM Radio Universal

http://www.22universal.com/

770 AM Radio Oriental

http://www.oriental.com.uy/

930 AM Radio Montecarlo

http://www.radiomontec= arlo.com.uy/index.asp

Return to table of contents<= /a>

Return to table of= contents

= Chapter 4: Leading Sectors for U.S. Export and Investment

Agricultural Sector

&= nbsp;

Com= mercial Sectors

Agricultural Machinery

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

	2004	2005	2006 *
Total Market Size	n/a	n/a	n/a
Total Local Production	n/a	n/a	n/a
Total Exports	0	0	0
Total Imports	60.8	76.3	51.1
Imports from the U.S.	7.7	9.3	6.2 *

Source: Trans= action database

Preliminary figures, J= anuary – November 2006

The market for agricultural equipme= nt is virtually 100 percent supplied by imports. In 2006, the top three suppliers of agricultural equipment were Brazil (49%), Argentina (14%), and= the U.S. (12%). Imports of agricultural equipment are exempt from all imp= ort tariffs. Largest import categories were HTSUS 8701 (tractors) 31%, and HTSUS 8433 (harvesting, threshing and sorting equipment) 25%.

Due to their proximity, Brazil and Argentina are expected to continue their lead of agricultural machinery exp= orts to Uruguay. Notwithstanding, it is U.S. brands manufactured in those countr= ies that are sales leaders in Uruguay. John Deere, Massey-Ferguson and Case/New Holland are market favorites. Uruguayan farmers are becoming more technologically conscious and prefer U.S.-made technology to that of i= ts giant neighbors. The use of high-tech equipment such as GPS and infra= red is beginning to catch on among local farmers.

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Forestry goods will soon become one= of the three top export sectors. In 2006, exports already surpassed the $150 million benchmark. With a 24% market share, the U.S. is the second largest supplier of forestry-related equipment to Uruguay after Brazil (also 24%) and above Sweden (23%) and Argentina (10 %.) Best prospects for = U.S. manufacturers include those producing technology and equipment for the sawi= ng and drying processes – i.e. sawmills, drying sheds, kilns, debarkers, branch saws, log-moving equipment, dryers, (all within HS codes 8465.91 and .92) and chip-producing machinery, mechanized planting and harvesting equipment, and machinery for pulp and cellulose plants.

Advances in farm technology, and we= ather uncertainties are increasing the sales of irrigation systems. In 2006, U.S. exports of irrigation machinery to Uruguay (HS code 8424.81) totaled $= 1.4 million (up from $641,000 in 2005) from a world-wide total of $7 million.&n= bsp; Argentina (42%), Brazil (15%), the U.S. (15%) and Israel (11%) were the top four irrigation suppliers. Total imports of irrigation systems in 2005 were $6.5 million (U.S. 9.9% market share.) In 2004 imports were $8 million (U= .S. 10% market share).

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Given the boom in forestry activity= and the projected construction of major pulp plants by two (and possibly three) European investors (worth well over 1.5 billion dollars), those U.S. manufacturers of pulp, cellulose, and chip-making equipment will have good sales opportunities. U.S.’s Weyerhaeuser, already a major market player, is also planning additional large investments in wood-working plant= s by 2008.

U.S. manufacturers of prefabricated= wooden houses will find a growing market for their products in Uruguay.

U.S. exporters should not discard t= he possibility of selling pre-owned and/or refurbished machinery.

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Embassy Contact: Robert Gorter, Sec= tor Specialist – gorterrh@state.gov

http://www.buyusa.gov/Uruguay/en<= /a>

Ministry of Agriculture

http://www.mgap.gub.uy

Forestry Division

http://www.mgap.gub.uy/For= estal/DGF.htm

Telecommunications Equipment (TEL)

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

	2004	2005	2006 *
Total Market Size	n/a	n/a	n/a
Total Local Production	n/a	n/a	n/a
Total Exports	0	0	0
Total Imports	63	135.5	125.2
Imports from the U.S.	16.3	26.0	13.3 *

Source: Transaction da= tabase.

Preliminary figures, J= anuary – November 2006

The growth of mobile communications= in Uruguay greatly surpasses the growth of fixed communications (which has bec= ome almost stagnant.) In 1997 the= re were 761,000 landline connections and 100,000 cellular subscribers. By mid 2006, there were 998,747 la= ndline connections and 1.5 million cellular subscribers (80% of which are pre-paid= .)

The Uruguayan market is shared by t= hree carriers: the dominant state-owned ANCEL (48% market share), Spain’s Telefónica / Movistar (formerly BellSouth - 36% market share), and Mexico’s América Móvil / CTI (16% market share.) BellSouth began service in 1991, A= NCEL in 1994, and CTI in 2005.

Fueled by aggressive commercial pro= motions, between October 2005 and October 2006 the number of subscribers almost doub= led and Uruguay will end the year with over 1.5 million subscribers (a 47% penetration.)

In December 2005 the three carriers interconnected their systems to allow for the exchange of short message services (SMS.) The subsequent explosion in SMS messages resulted in network saturation and as of November 2006 the problem had not been completely resolved. An average of 115 million SMSs are= sent per month among the three carriers at a cost of $0.04 per message. ANCEL recently reported that messa= ge sending has become one of the principal uses of cell phones among teenagers= -- more time is spent on sending SMSs than in making actual calls.

All three operators agree that the = market will stabilize at 2 million units.

ANCEL and Movistar operate on 1800M= Hz and CTI on 1900MHz frequencies. G= SM leads the market with 58% participation; CDMA follows with 24%, TDMA with 1= 6%, and AMPS with a 2% share. In a recent press conference, CTI reported an average return per user (ARPU) of = $12 per month (against a U.S. industry average of $43,) but consistent with an $11.00 average in the rest of Latin America. According to CTI, this low ARPU co= uld be increased by offering more value-added services (SMS, MMS, mobile TV, etc.) especially to regional tourists during the summer vacation months.

The vast majority (80%) of subscrib= ers are pre-paid. Depending on the ca= rrier and time of day, costs per minute in U.S. Dollars range from $0.16 to $0.60. Plans as those offered= in the U.S. which include 2,000 anytime free minutes, etc., are unheard of in Uruguay even for subscribers with monthly contracts. An average 70 minute contract frac= tioned every ten seconds costs approximately $ 11.

Except for national long distance t= hat remains a state monopoly, Uruguay liberalized the telecommunications market= in 2001. The liberalization also created a new regulatory entity (URSEC = -- the Unidad Reguladora de Servicios de Comunicaciones) to regulate and overs= ee the Uruguayan telecommunications market. However, largely because of = its significant political influence, the state-owned telephone company ANTEL continues to have a stronghold grip on the sector. ANTEL also dominat= es other aspects of the country’s telecommunications market through its = ISP and cellular subsidiaries ADINET and ANCEL respectively.

ANTEL commands a 77% market share in international long distance; the rest is divided among three major and five minor competitors. It commands a similar market share in ISP services= .

Fixed line teledensity is 80%, one = of the highest in Latin America.

Due to its 100% digitalization, adv= anced telecommunications infrastructure, highly trained population, and relatively low salaries, Uruguay is quickly positioning itself as a preferred location= for regional call centers.

HTSUS 8525 (transmitters) and 8517 (telephone sets) command the import charts with 69% and 16% of the total values.

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Overall, the U.S. maintains an approximately 14% market share in telecommunications-related products.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Given the strong entry of CTI in la= te 2004, combining beefy promotion and low prices, the market for cellular phones and transmission antennas and equipment will most likely rise considerably. Both Telefónica and CTI are increasing their network to provide national coverage. Telfónica has announced investments of $ 30 million to update and expand its network and progressively change it from C= DMA to GSM. CTI has announced total investments of approximately $100 mil= lion through mid 2007.

Opportunities may also exist for ne= w cable TV operators in Montevideo (population 1,5 million.) URSEC has announ= ced it will make a call for interested cable operators in early 2007. For= eign ownership of cable TV is allowed by law.

Uruguay is in the process of select= ing a HDTV standard. While the deci= sion was to be taken in conjunction with the other MERCOSUR members, Brazil jump= ed ahead in June 2006 by opting for the Japanese standard. This does not necessarily mean Uru= guay will follow suit. Uruguay will favor the standard which allows it for greater in-house value-added content= .

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Embassy Contact: Robert Gorter, Sec= tor Specialist – gorterrh@state.gov=

http://www.buyusa.gov/Uruguay/en

URSEC – Unidad Reguladora de Servicios de Comunicación

http://www.ursec.gub.uy

Telfónica<= /p>

http://www.movicom.com.uy

CTI

http://www.ctimovil.com.uy

ANCEL

http://www.ancel.com.uy

Fertilizers

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

	2004	2005	2006 *
Total Market Size	n/a	n/a	n/a
Total Local Production	n/a	n/a	n/a
Total Exports	17.0	5.0	3.8
Total Imports	54.4	60.0	56.8
Imports from the U.S.	16.3	4.3	11.0 *

Source: Transaction database

* Preliminary figures, January – November 2006

&nb= sp;

Uruguay is essentially an agricultural country, = and the use of fertilizers is increasingly important to maintain good pastures = and increase soil fertility levels. Within the chemical sector, fertilizers play a significant role in Uruguay’s imports. Urug= uay imports 75 percent of the fertilizers it consumes. Between 1980 and 1990, artificial grasslands increased by 32 percent.

<= o:p>

In 2006, the top four suppliers of raw materials= for fertilizers (HS code 3105) were Russia with a 44 percent market share, the = U.S. with a 20 percent, Lithuania with a 13 percent, and Tunisia with a 10 perce= nt market share. The 61% of HS C= ode 3105 imports were 3105.30.90.00 (diammonium hydrogenorthophosphate, and 31%= were from 3105.40.00.00 (ammonium dihydrogenorthophosphate and mixtures thereof). In 2005, Uruguay= 217;s total imports were $60 million and again Russia had a 74 percent market sha= re followed by Morocco (16%), the U.S. (7%), Brazil (1%), and other countries = (2%).

The poor growth of natural pasture in winter, th= eir medium to low quality, and deficiencies in phosphorus as well as nitrogen in the great majority of soils, has led to the introduction of nitrogen to the ecosystem through the application of inorganic fertilizers.

<= o:p>

The use of fertilizers has increased in pasturel= ands and agricultural crops since the elimination of the 23 percent value added = tax and zero import-tariffs.

In Uruguay, the amount of fertilized land varies according to the world price of livestock products. When beef prices decline, ranchers decrease the quantities of fertilizers used for agriculture.

The cost in Uruguay to adequately fertilize a hectare of land is estimated at $33. However, it is estimated that import of raw material for the product= ion of fertilizers will increase 15 percent in 2006.

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Import of fertilizers from the U.S. = were worth 11 million dollars in 2006 - (period Jan/Nov). Agriculture in Uruguay is experien= cing a favorable situation, and important growth in the fertilizer sector is expec= ted.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Best prospects are for U.S. producers of diammonium hydrogen orthophosphate, which is used in grasslands in an average of 150 to 200 kilograms per hectare. Am= monium sulphate and urea are also considered as two essential fertilizers used by Uruguay’s agriculture sector. The increased rotation of crops generated in 2006 considerably incre= ased the quantity and variety of chemical products imported for the production of fertilizers. U.S. manufacture= s of Urea, ammonium sulphate, (diammonium hydrogen orthophosphate) and many other related products, will have good sales opportunities in the Uruguayan market.

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Embassy Contact: Jorge Balparda, Commercial Assistant – balpardajj@state.gov

http://www.buyusa.gov/Uruguay/en<= /a>

Ministry of Agriculture

http://www.mgap.gub.uy

Chamber of Industry

http://ciu.com.uy

Medical Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

	2004	2005	2006 *
Total Market Size	n/a	n/a	n/a
Total Local Production	n/a	n/a	n/a
Total Exports	0	0	0
Total Imports	21.3	27=	27
Imports from the U.S.	&nbs= p; 9.0	9.9	9.4 *

Source: Transaction Database

* Preliminary figures, January ̵= 1; November 2006

Uruguay’s demographic picture ensures that the demand for medical supplies and equipm= ent is relatively steady and will continue to be so. Compared to other Latin American countries, Uruguay has an aging society.&n= bsp; More than 20% of the population is 65 years and over, and the average life expectancy is 75.

Cardiovascular problems and cancer are the two leading causes of death among Uruguayans ov= er 45 years old. Oncology as wel= l as pediatric care are key priorities. <= /span>

Approximately 35% of Uruguay's t= otal medical equipment imports are for the public sector while 65% are for the private sector. Imports in th= is sector grew by 27 percent vis-à-vis 2004 an the U.S. market share gr= ew by 10 percent.

Customs duties for medical equipment range from 0% to 20%.

All medical products and importers have to be registered and approved by the Ministry of Public Health (MPH). Only local companies approved by the MPH can register equipment, supplies, and pharmaceuticals.

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

The majority of products for local distribution are imported from the U.S., Argentina, Brazil and, the EU and Japan.&n= bsp; The U.S. is the number one origin of total imports for products that fall under HS codes 90.18 (35%), 90.19 (33%), 90.21 (27%) and, second place under 90.22 (39%). These impo= rts include: CT scanners, X-ray equipment, angiography and angioplasty, optical= and dental instruments and supplies, supplies for blood transfusions and IV, all cardiology and surgical equipment and supplies, catheters, probes and scalp= s, prosthesis and implants as well as other medical equipment and supplies in general.

Very little production occurs in Uruguay. Except for low-tech monitors, almost none of the medical equipment a= nd surgical supplies sold in Uruguay are produced locally. There is a demand for new, technologically advanced supplies and equipment, particularly those related= to non-invasive procedures, ultrasound, magnetic resonance imaging and CT scan= s.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

During the past decade, the private sector has been investing in equipment and facilities in an effort to provide better and mo= re competitive services. Both pu= blic and private institutions turn to U.S. sources for supplies and training/management services. U.S. suppliers should take advantage of these opportunities since professionals = and patients value U.S. expertise and equipment. Currently, neither the Inter-Ameri= can Development Bank (IADB) nor the World Bank (WB) have projects in the pipeli= ne that would fund procurement in the medical sector. For project updates please check in Resources.

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Embassy Contact: Lilian Amy, Sector Specialist – lilian.amy@mail.doc.gov=

http://www.buyusa.gov/Uruguay/en<= /a>

Ministry of Public Health: http://www.msp.gub.uy<= /a>

National Fund of Resources (procurement) http://w= ww.fnr.gub.uy

For project updates at the Inter-American Development Bank (IADB) and/or World = Bank check in:

Inter-American Development Bank:

http://www.iadb.org/e= xr/doc98/pro/paisur.htm

http://itsd= c16.iadb.org/idbppi/aspx/ppProcurement.aspx

World Bank:

http://web.worldbank= .org/WBSITE/EXTERNAL/PROJECTS/0,,menuPK:115635~pagePK:64020917~piPK:6402100= 9~theSitePK:40941,00.html

IT - Computer Hardware

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

	2004	2005	2006 *
Total Market Size	60.5	70.8	80.2
Total Local Production	0	0	0
Total Exports	0	0	0
Total Imports	60.5	70.8	82
Imports from the U.S.	37.3	42.7	39

Source: Transaction Database

* Preliminary figures, January – November 2006.

Government and private sector initiatives to develop technological parks, a growing and strong software sector, combined with increasing Internet usage in Uruguay, have maintained hardware imports at high levels. There is no local production of hardware. At the end of 2004,= a company launched the first local brand but it just assembles equipment with imported parts. Until 2002, t= he U.S. accounted for approximately 70 percent of total hardware imports. It still maintains first place but= its share has dropped due to imports from China and Mexico amongst others. In 2= 006, the market share is at 48 percent and China came in as second with over 30 percent.

Various multinationals consider Uruguay as a hub for their data and call centers. Colgate-Palmolive International, S= abre, and Ta-Ta Consultancy Services, for example, are already using Uruguay̵= 7;s centers in direct network with their head offices. The number of call cente= rs is increasing rapidly.

There are no tariffs for items of MERCOS= UR origin; for third countries, the Common External Tariff (CET) ranges from 0= to 16 percent. Information Technologies and Telecommunications fall under a special regime within the MERCOSUR agreement.

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Hardware equipment and accessories have been the number one import from the U.S.

Items under HS code 8471 such as CPUs, monitors, magnetic discs, printers, ATM equipment, hubs, network and digital equipment are key imports. The U.S. remains in first position= with a 49 percent market share yet, imports from China, Mexico, Japan and <= /o:p>

Taiwan are on the rise. For items un= der HS code 8473, the key items are boards, memory cards, ink cartridges, parts and accessories, discs, magnetic heads and cards among others. Due to low cost imports from third markets, U.S. exporters must be albe to offer competitive prices. The drop is also a consequence of = U.S. multinationals shipping from Asia.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Demand for hardware and accessories continues to increase due to educational progr= ams, increased Internet access, and continuing modernization of both the private= and public sectors. Products need= to have competitive prices due to the rise of imports from countries like Chin= a, Mexico, Taiwan and Singapore.

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Embassy Contact: Lilian Amy, Sector Specialist – lilian.amy@mail.doc.gov=

http://www.buyusa.gov/Uruguay/en<= /a>

Uruguayan IT Chamber: http://www.cuti.org.uy<= o:p>

Uruguay in Network: www.uruguayenred.gub.uy

Technological Development Program: http://www.pdt.gub.uy/pdt.html<= o:p>

<= o:p>

Infrastructure Projects

There are major infrastructure proj= ects in the pipeline that U.S. exporters of goods and services should follow-up on. For up-dates and more information, please contact montevideo.office.box@mail.doc.gov.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

q= Par= aná-Paraguay River Transportation System: The governments of Urugua= y, Argentina, Brazil, Paraguay, and Bolivia are working together on what has become the largest Latin-American "regional integration" project,= the joint use of the 2,500-mile long Paraná-Paraguay-Uruguay river system for the transportation of goods from these five countries to the Atlantic Ocean. The ongoing project calls for investment in civil construction, dredging and maintenance, ports (including equipment) and fleet. Furt= her opportunities for U.S. involvement lay in the development of waterway administration.

&nb= sp; = &nb= sp;

q Energy Projects: UTE’s (Uruguay’s state-owned power company) plans to bid for the purchase of a new combined-cycle power plant have been temporarily = put on stand-by. The project for a natural gas-powered plant to replace the existing Batlle y Ordonez plant th= at uses fuel oil and diesel generation equipment is still under consideration,= yet UTE is currently studying other opportunities such as coal. UTE is also focusing on renewable resources. UTE would like to = set-up a wind-generated facility with a power capacity between 5MW and 30MW. Renewable energy sources are starting to play an import= ant role in the future of Uruguay. The country needs to strengthen its energy security in order to avoid another crisis like in 2004-2005. In addition, = the Ministry of Industry and Energy is analyzing a project that would increase = the electrical interconnection with Brazil.&nb= sp; The project foresees the construction of a 500 kV line about 400 kilometers long with a capacity in the range of 500 to 1000 MW. UTE has also b= een authorized to purchase energy from renewable resources generated from wind, biomass and small hydraulic power plants.&= nbsp; Private power generation companies installed in Uruguay will be able= to sell up to 20 MW of each of the three sources of energy.

The Government of Uruguay currently considers convenient to promote the installation of small power plants throughout the country. The total power installed cannot be greater than 60MW, and operations should start with 20MW of each source. The power generation companies wil= l not be able to sell to third parties energy from the plants that supply UTE, but they will not be charged distribution nor transmission fees. Contracts will have a 20-year vali= dity, starting at the time the plant begins to operate. Total in= vestment is estimated at $60 million guaranteed by UTE's purchases. There is still disagreement as to = the prohibition to sell energy to third parties. UTE argues that investors will have purchases guaranteed without any fees.

q&nb= sp; Rai= lway Rehabilitation: The railway system has been in constant decline for several decades. Except for very short stretches of the suburban grid, passenger service was discontinued in 1988. Besides sporadic purchases of cargo wagons, passenger wagons, a= nd signaling systems, the current administration plans to call for the total revamping of the railway system and investors are being actively sought. This would include the rehabilitat= ion and maintenance of approximately 650 miles of Uruguay’s railroad grid= and the association of a private operator for cargo transportation (basically wood.)

-&nb= sp;         Montevideo Metropolitan grid: approximately 16 miles,

-&nb= sp;         Montevideo - Rivera stretch (on the border with Brazil): approximately 350 mi= les, for the transportation of lumber;

-&nb= sp;         Montevideo - Rio Branco stretch (on the border with Braz= il): approximately 280 miles, for the transportation of rice;<= /p>
-&nb= sp;         Montevideo - Minas stretch: approximately 80 miles, for the transportation of minerals (mainly cement).

Calls for expressions of interest were issued in December 2006.

q&nb= sp; Construction = of new Airport Terminal: At an auction held on August 27, 2003, Puerta del Sur, a consortium comprised of American International Airports (U.S.), SEA (Italy), and Grupo Eurnekian (Argentina) won a 20-year concession to remodel and ope= rate Montevideo's Carrasco International Airport and build a brand new terminal.=

The consortium is now seeking proposals from firms interested = in providing a full turnkey operation for the new terminal and/or equipment and supplies. Specifically, it is interested in acquiring such articles as carpeting, passenger lounge seating, luggage belt conveyors, high-tech secu= rity equipment, jet ways, billboards, monitors, etc. It is essential that an attractive financing package accompany the proposal. According to the consortium= 's contract with the Uruguayan Government, the new passenger terminal must be operational by 2008. A Uruguayan architect has completed the design of the new terminal.

q&nb= sp; Construction and outfitti= ng of cellulose and chipping plants: In mid-2005, = two of the largest forestry investors in Uruguay, Spain’s ENCE and Finland’s Botnia, began construction of 1.5 billion-dollar cellulose plants. While ENCE’s plant should have been operational by 2008= and had en estimated investment tag of $500,000, it has been put on hold. Botnia’s operation calls for an investment of $ 1 billion for the construction of its short-fiber cellulose plant. It should be complet= ed in approximately 15 months. U.S.’s Weyerhaeuser, in Uruguay since 199= 7, is currently the largest forestry operator in the country. Weyerhaeus= er completed the construction of a major plywood plant and plans on constructi= ng an additional dozen throughout the country in the next few years. Finland’s Stora-Enso is also planning the construction of a pulp processing plant.

q&nb= sp; Port projects= : The construct= ion of a new fishing dock and forestry terminal in Montevideo, and a passenger termi= nal in Colonia are the Port Administration’s major projects for 2007.&nbs= p; Dredging projects are always being tendered.

Resources            =             &nb= sp;            =             &nb= sp;            =            &= nbsp;           &nbs= p;   Return to top

Embassy Contacts:

Robert Gorter, Sector Specialist – gor= terrh@state.gov

Lilian Amy, Sector Specialist – (Energy projects only) lilian.amy@mail.doc.gov

Chemicals

&= nbsp;

Overview            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =      Return to top

2004

2005

2006 *

Total Market Size

n/a

n/a

n/a

Total Local Production

n/a

n/a

n/a

Total Exports

6.7

5.5

12.5

Total Imports

101.0

127.0

130.0

Imports from the U.S.

9.1

10.2

13.5 *

Source: Transaction database

* Preliminary figures, January –November 2006

In 2006, the four top suppliers of chemicals falling within HS code 3808 were: Argentina (34%), China (29%), Brazil (10%), and the U.S. with (5%) market s= hare. Principal imports corresponded to 3808.30.23.00 (herbicides -- 31%), 3808.30.29.00 (other herbicides – 17%), 3808.20.29.90 (fungicides -- 16%) and 3808.10.29.90=

(insecticides -- 10%).

Principal suppliers= falling within HS code 3907 were: South Korea (31%),

Argentina (26%), Ta= iwan (15%), the U.S. (14%), and China with (6%) market share.<= /p>
Principal imports corresponded to: 3907.60.00.00

(polyethylenetereph= thalate -- 90%) and 3907.20.30.00 (other polyesters and resins10%).

The chemical industry is basically an industry of imported raw material transformation. Companies tha= t are subsidiaries of multinationals firms form approximately 60% of the chemical industry. During the last few years, the chemical sector underwent important transformations in investiga= tion and development of new products, and the use of new technologies.

Uruguay’s chemical industry is composed of three major sub-sectors:=

·         Petrochemical industries (including the production of fertilizers),

·         Fine Chemistry and production of specialties including production of pesticides = for the agricultural sector, pharmaceuticals and hygiene articles, and

·         Production of plastics.

Uruguay has no petrochemical industry. It does not produce basic raw materials such as ethylene, propylene, etc. The Uruguayan industry is only inv= olved in the final processing stages.

Invoicing of chemical products was approximately $70 million; resins and artificial fibers $36 millions, while fertilizers and pesticides invoiced $50 million.=

Fertilizers: ISUSA (Industria Sulfurica Sociedad Anonima) controls Uruguay’s fertilizer production. This c= ompany has plants of sulphuric and oleum with a maximum capacity of 170 tons/day.<= span style=3D'mso-spacerun:yes'> Fifty-five percent of the producti= on of sulphuric acid is for the production of fertilizers, while the other 45 % is for the production of other chemical products.

Chemical industries and specially “fine chemistry” have been particularly dynamic in Uruguay since the 1980’s.= Eighty-five companies integrate Uruguay’s pharmaceutical indus= try. From these, 10 command 47% of= the country’s sales. Howeve= r, none of them has gained more than the 10% of the market. There are 65 laboratories, and sma= ll and medium firms that have 1/3 of the market.&= nbsp; Uruguay’s pharmaceutical industry invoices approximately $250 million per year.

Small and medium companies make up the cosmetic industry. Many multinational companies have = bought small local firms to market their brand perfumes and cosmetics.<= /span>

The plastic sector invoices approximately $180 million per year. Raw material is almost entirely im= ported from different countries and it represents between the 40-50% of the finish= ed product price. Uruguay’s Plastic Association is formed by 60 of the 120 companies acting in the country’s plastics sector. The sector processes 150,000 tons of plastic material; an important = part of that production is for export.

Best Products/Services        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;        Return to top

Regulatory issues:

A special program with the National Environment Office – DINAMA has been implemented for the recycling of plastics.= As Uruguayans become more environmentally conscious, plastic recycli= ng equipment may be a good opportunity for U.S. exports.

Opportunities        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;             = Return to top

In the Plastic Sector, there are good opportunities for U.S. producers of resins f= or the manufacturer of PET containers. Since almost all the raw material used for the production of fertili= zers is imported, there is a 60 million dollar market for U.S. firms in that sec= tor.

Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            = Return to top

Embassy Contact: Jorge Balparda, Commercial Assistant – balpardajj@state.gov

http://www.buyusa.gov/Uruguay/en<= /a>

Chamber of Industry

http://www.ciu.com.uy=

Uruguayan Plastic Association

E-mail: auip@ciu.com.uy

&= nbsp;

Agricultural Sectors        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p; Return to top

MARKET OVERVIEW

As the economy continues to recover, U.S. F&B imports will increase due to:

1)    High sanitary standards c= ompared to European products,

2)    Higher competitiveness be= cause of the depreciation of the Euro as compared to the dollar, and

3)    The influence of U.S. cul= ture, encouraged by cable TV, the Internet, and Uruguayans traveling and studying= in the United States.

Best prospects are for products of well-known brands, commodity-type products th= at are not produced domestically, and ingredients for the food processing industry, especially the meat and dairy sectors. There are also good prospects for = those ingredients that, during the crisis, had been replaced by local inexpensive brands and are again demanded for their higher quality.

Prices of U.S. F&B products are 30-35 percent higher than their counterparts manufactured locally. Price i= s not expected to be an obstacle for imported foods among the most affluent segme= nt of the population.

Uruguay has no quotas or restrictions, and reasonable transparent labeling and sani= tary requirements. Most FDA-approv= ed processed F&B can be imported into the country.

<= /p>
Exports of food products = to Uruguay have good potential. Imported food products for mass consumption are typically purchased = from Argentina, Brazil, and Chile, while imports from Europe and the United Stat= es are aimed at the middle and higher income sectors. U.S. companies with competitive pr= ices should consider tapping the mass market through the development of the priv= ate label concept.

<= /p>
Post foresees increased opportunities for U.S. food ingredients, especially for = the dairy and livestock sectors, as most local companies, after the devaluation= of 2002, have become very competitive in world markets and are focusing on increasing production and expanding exports. In addition, because many food ingredients are not produced locally, they must be imported. Food ingredients from the U.S. are considered as high quality and innovative.

Best High-Value Product Prospects=

Traditionally, Uruguay was, and will continue to be, a net importer of several F&B and food ingredients, which it does not produce domestically. Under the current economic situati= on, which combines a strong dollar compared to the Uruguayan peso, and a weak purchasing power, best prospects are for high-value F&B products and “commodity-type” products which are not manufactured locally, a= nd food ingredients.

I)      =        Imported F&B which are not produced locally or whose production = is not enough to supply the domestic market include:

-      =             &nb= sp;   pepper and other condiments, kiwifruit, grapefruit, chewing gum, can= dy, bonbons, snacks, sauces, food preparations, chocolate, dehydrated potatoes, alcoholic beverages, energy drinks, beverage preparations, pet food.

II)      =       Food ingredients:

-      =             &nb= sp;   pork, frozen, soup preparations, raw nuts, cocoa paste/butter, additives, ingredients for the dairy and meat industries<= /p>

Some well-known brands of F&B, which traditionally have a stable demand in Uruguay, are imported and packaged domestically (e.g., Scotch, which accoun= ts for the highest level of consumption in the region).

Outlo= ok for U.S. Exports of Food and Beverage Products=

ADVANTAGES

CHALLENGES

Most Uruguayan consumers are aware of the wide variety and high quality of U.S. F&B.

Recession and the economic crisis fostered import substitution with domestically produced F&B, whose quality improved significantly as a result of technological investments during the 1990´s.

Influence of U.S. culture is significant and felt through cable TV, the Internet, a= nd Uruguayans traveling or studying in the United States.<= /p>

Weaker purchasing power and a high unemployment rate limit sales of imported F&B.

Supermarkets are willing to have imported F&B on the shelves as a tool to differentiate from other retailers.

In general, MERCOSUR intra-regional trade pays zero import tariffs, which prompts strong competition primarily from Argentina and Brazil. Import tariffs for other countri= es vary between 20-23 percent for most F&B.

During the past few years, the self-serve format and the display of food products have improved remarkably.<= /p>

The relatively small size of the market and small import volumes discourage U= .S. suppliers.

Large supermarket chains are logistically ready to import foods directly.<= /o:p>

There has been a lack of interest/ responsiveness of U.S. F&B suppliers vis-à-vis the Uruguayan market.

Cold storage facilities are good and can easily meet manufacturers´ requirements.

---

After the competitiveness gained with the devaluation of the Uruguayan peso aga= inst the dollar, the expansion of the food processing industry, primarily to supply export markets, creates very good opportunities for U.S. food ingredient imports.

---

There has been greater exposure of local retailers to U.S. exporters and produc= ts through FAS-sponsored marketing activities.

---

Uruguayan official entities regulating F&B imports are as follows:

Municipality of Montevideo – Food and Health Service (Intendencia Municipal de Montevideo – Bromatología)<= /p>
Web: http://www.montevideo.gub.uy<= o:p>

Uruguay’s Technological Laboratory (Laboratorio Tecnológico del Uruguay - LATU)

Web: http://www.latu.org.uy

Ministry of Livestock, Agriculture, and Fisheries (Ministerio de Ganadaeria, Agricultura y Pesca – MGAP)

Web: http://www.mgap.gub.uy

National Meat Institu= te (Instituto Nacional de Carnes – INAC)

Web: http://www.inac.gub.uy

National Wine Institu= te (Instituto Nacional de Vitivinicultura -- INAVI)

Web: http://www.inavi.com.uy=

Ministry of Public He= alth (Ministerio de Salud Publica – MSP)

Web: http://www.msp.gub.uy

Return to table of contents

Animal Genetics (Bovine Semen)

In Thousand US$ (FOB)

2003

2004

2005

Total Imports

514

663

999

Imports from the US/US mkt. Share %

247/48

275/41

391/39

In 2005, Uruguay imported bovine semen for almost $1 million, up 50 percent compared to the previous year.

Uruguay has approximately 390,000 dairy cows (mostly Holstein) and 4.3 million beef cows (roughly 70 percent Hereford and 30 percent Angus). Of the total imported semen, dairy breeds account for about 70 percent (Holstein), and beef breeds account for= the remaining 30 percent, of which 60 percent is Hereford semen and 40 percent, Angus semen. During the past = few years, there has been an increasing demand for imports of Angus semen.=

Return to table of contents

Return to table of= contents

= Chapter 6: Investment Climate

Openness to Foreign Investment

Conversion and Transfer Policies

Expropriation and Compensation

Foreign-Trade Zones/Free Ports

Foreign Direct Investment Statistics=

Web Resources

Openness to Foreign Investmen= t        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

The Government of Uruguay recogniz= es the important role foreign investment plays in economic development and tri= es to maintain a favorable investment climate. Aside from a couple of sectors in = which foreign investment is not permitted, there is neither de jure nor de facto discrimination toward investment by source or origin, and national and fore= ign investors are treated equally.

The left-of-center Frente Amplio administration, which took office in 2005, has stressed the importance of l= ocal and foreign investment for social and economic development. A strong economic team has been implementing an orthodox macroeconomic policy, with the ambitious goal of doubling Uruguay's investment/GDP ratio over the next five years, by attrac= ting direct foreign investment, developing the local capital market and implemen= ting existing legislation. The administration has sent positive signals to investors and is doing its utmo= st to promote foreign investment. Uruguay has acted responsibly in a dispute with Argentina over the construction of pulp mills on a shared river, by defending the right of for= eign investors. However, the gover= nment has also passed labor legislation, which, in the view of most business chambers, overly protects workers’ rights and has led to a few widely publicized labor conflicts. An effort to restrain excesses appears to be underway through regulation of the controversial labor legislation. &nbs= p;

In 1998, the Uruguayan Government (GOU) approved a law (no. 16906) that declares that promotion and protectio= n of national and foreign investment is in the national interest. The law states that (1) foreign and national investments are treated alike, (2) investments are allowed without prior authorization or registration (other than an environmental impact stu= dy in certain cases,) (3) the government does not prevent the establishment of investments in the country, and (4) investors may freely transfer abroad th= eir capital and profits from the investment.&n= bsp; There are no restrictions on technology transfer. The government is perfecting a single-window mechanism to channel all investment requests. One hundred percent foreign owners= hip is permitted, except where restricted for national security purposes.

In general, the GOU does not requi= re that firms receive specific authorization to set up operations, import and export, effect deposits and banking transactions in any currency, or obtain credit. Screening mechanisms = do not apply to foreign or national investments, and special government authorizat= ion is not needed for access to capital markets or to foreign exchange. In privatization and concession programs, foreign investors are treated as nationals and are allowed to participate in any stage of the process.&n= bsp; Bidders on tenders have to be prepared for a lengthy adjudication process.

Uruguay has a history of maintaini= ng state monopolies in a number of areas in which direct foreign equity participation is prohibited by law. While privatization is widely opposed by the population, some progre= ss has been achieved over the past decades in dismantling government-run monopolies and increasing private sector participation in the economy. Several state-owned entities have contracted with foreign-owned companies to provide specific services for a given period of time under Build-Operate-Transfer (BOT) regimes. While basic telephone services rem= ain a monopoly, government-owned ANCEL, SPAIN’s Telefonica, and Mexico̵= 7;s America Movil provide cellular services.&n= bsp; International long distance, the installation and maintenance of pub= lic telephones, data transmission, and some value-added services are also open = to the private sector. Although = the Telecommunication and Postal Services regulatory agency, URSEC, aims to preserve a level playing field for private and public firms, it sometimes l= acks the strength to enforce regulations on government-owned ANTEL.

Other sectors demonstrate varying levels of privatization. For instance, although private power generation is now allowed, the state-owned power company, UTE, still holds a monopoly on wheeling rights. Also, despite various commitments = to the IMF, the state-owned oil company, ANCAP, remains the only importer and refi= ner of petroleum products. The government is planning to associate ANCAP with foreign partners, and negotiations are underway with Brazil’s Petrobras and Venezuela’= ;s PDVSA. Ports are widely priva= tized, with private companies providing most services since 1992. The GOU sold 51% of its airline PL= UNA to Brazilian private airline Varig in 1996, but   Varig recently returned these shares. The GOU is currently looking for interested private sector buyers. The insurance and mortgage sectors= were de-monopolized in 1996, but workers compensation insurance remains a govern= ment monopoly. While there was some private sector provision of water and sewage services in resort areas, an October 2004 constitutional amendment, approved by 64% of voters, declared water a national resource to be controlled exclusively by the State.

The World Bank's "= ;Doing Business" Index, which ranks 175 countries according to the ease of do= ing business in each one of them, ranks Uruguay 64^th globally and 10= ^th within the Latin American & Caribbean region (31 countries). Uruguay gets high scores in the categories "getting a credit" and "dealing with licenses&quo= t;, and low scores in "enforcing contracts" and "starting a business".

Although U.S. firms have not encountered major obstacles in Uruguay's investment climate, some have been frustrated by the length of time it takes to complete bureaucratic procedur= es and tenders, and by numerous changes in tax codes and regulations since 200= 1.

Conve= rsion and Transfer Policies    &n= bsp;            = ;            &n= bsp;            = ;        Return to top

Uruguay maintains a long tradition= of not restricting the purchase of foreign currency or the remittance of profi= ts abroad, even during the 2002 banking and financial crisis. Foreign exchange= can be freely obtained at market rates.

Expropriation and Compensatio= n        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

In the event of expropriation, the Uruguayan Constitution provides for the prompt payment of "fair" compensation.

Following the constitutional amendment on water services, the GOU took over the operations of URAGUA, the Spanish water company that had operated locally f= rom 2000 through 2005. The GOU and URAGUA reached an agreement on a compensation package and renounced any leg= al actions. = ;

Dispute Settlement        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;    Return to top

The investor may choose between arbitration and the judicial system to settle disputes. Uruguay is a member= of the International Center for the Settlement of Investment Disputes since September 2000. Uruguay's leg= al system is based on a civil law system derived from the Napoleonic Code, and= the government does not interfere in the court system. Corruption is not a major problem = and the Judiciary is independent, albeit sometimes slow.

Bankruptcy        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;                  = ;            &n= bsp;           Return to top=

In the case of bankruptcies, credi= tors with preferred shares collect first, followed by the firm's employees and t= he government. Since local firms usually wait too long to initiate bankruptcy proceedings, few firms that en= ter into bankruptcy manage to pay their debts, with the majority closing after = some years. The GOU is working on = an upgrade of Chapter 11 legislation.

= Performance Requirements and Incentives  &nbs= p;            &= nbsp;           &nbs= p;      Return to top

Current investment law treats local and foreign investors equally and does not prov= ide preferential tax deferrals, grants, or special access to credit for foreign investors. Consequently, fore= ign investors are not required to meet any specific performance requirements. Furthermore, foreign investors are= not inhibited by discriminatory or excessively onerous visa, residence, or work permit requirements. The gove= rnment does not require that nationals own shares or that the share of foreign equ= ity be reduced over time. Moreove= r, technology can be freely transferred and the government does not impose conditions on invest permits.

For some activities, the government has established asset, value-added and internal tax benefits as well as tar= iff reductions. Investments in ho= tels and software receive additional incentives. The government provides preferenti= al treatment for capital good imports and tax deferrals for exports. The legislation enables the govern= ment to cut social security payments to certain activities, and ties incentives = to specific criteria such as job creation, export diversification, technology incorporation and geographical de-centralization. In December 2005, the government provided significant tax incentives to the installation of industrial parks= in the interior of the country.

A government decree establishes th= at government tenders will favor local products or services, provided they are= of equal quality and not more than 10% more expensive than foreign goods or services. U.S. and other fore= ign firms are able to participate in government-financed or subsidized research= and development programs on a national treatment basis.

Right to Private Ownership and Establishment     =             &nb= sp;         Return to top

Private ownership does not restrict a firm or business from engaging in any form of remunerative activity, except in two areas -- national security interest, a= nd legal government monopolies (see Openness to Foreign Investment).

Protection of Property Rights        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;           Return to top

Secured interests in property and contracts are recognized and enforced. Mortgages exist, and there is a recognized and reliable system of recording such securities. Uruguay's legal system protects the acquisition and disposition of all property, including land, buildings, and mortgages. Nevertheless, execution of guarantees is usually a slow process. In its 2005 "Doing Business&q= uot; report, the World Bank gave Uruguay low marks in its "Registering Property" and "Enforcing Contracts" categories.

=

In the recent past, there have been several attempts to legislate in order to alleviate the payment burden of Uruguayan dollar debtors adversely affected= by the peso's 2002 devaluation, as well as debtors in the agricultural sector. Several of the propos= als would have forced banks to re-negotiate the terms of their loans. However, the past and the current administration opposed the initiatives and succeeded in negotiating an "administrative solution" with all parties.

-- Protection of Intellectual Property Rights: Uruguay is a member of the World Intellectual Property Organization (WIPO), and a party to the Bern and Universal Copyright Conventions, and the Paris Convention for the Protectio= n of Industrial Property. In 2003, coordinating closely with U.S. and international IPR organizations, Uruguay passed new TRIPS-compliant copyright legislation. In 1998 and 1999, Uruguay also pas= sed trademark and patent legislation.

-- Copyrights: The 2003 copyrigh= t law represented a significant improvement over the 1937 law and led the United States Trade Representative (USTR) to upgrade Uruguay from the "Priori= ty Watch List" to the "Watch List." Uruguay signed the WIPO Copyright = Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) in 1997. Parliament ratified the WCT in Aug= ust 2005, but WPPT was filed in February. In its 2005 Special 301 Report, USTR commended the passage of implem= enting regulations on copyrights that "have been largely put into effect and appear to be contributing to the strengthening of Uruguay’s copyright regime", but noted that Uruguay still "fails to provide adequate protection of confidential test data from unfair commercial use as required= by TRIPS."   Various IPR chambers, which founded an umbrella organization in 2004, have implemented aggressive anti-piracy campaigns, resulting in several successful prosecuti= ons.

-- Patents: Patents are protecte= d by Law No.17164 of September 2, 1999. Invention patents have a twenty-year term of protection from the dat= e of filing. Patents for utility m= odels and industrial designs have a ten-year term of protection from the filing d= ate and may be extended for and additional five. The law provides a lax definition = of compulsory licensing and vaguely defines compensation as "adequate remuneration" to be paid to the patent-holder. Some U.S. industry grou= ps believe that the law's compulsory licensing requirements are not TRIPS consistent. On average, filin= g a medical patent takes two years longer than in the United States.

-- Trademarks: The GOU approved a trademark law on September 25, 1998 upgrading trademark legislation to TRIPS standards. Under this law, a registered trademark lasts ten years and can be renewed as many times as desired. It provides prison penalties of six months to three years for violators, and requires proof of= a legal commercial connection to register a foreign trademark. Enforcement of trademark rights is adequate and has improved in recent years as a result o= f an intense anti-smuggling campaign.

Transparency of Regulatory Syste= m        &= nbsp;           &nbs= p;            &= nbsp;           Return to top

Transparent and streamlined proced= ures regulate foreign investment. However, long delays and repeated appeals can significantly delay the process to award international and public tenders.

Efficient Capital Markets and Po= rtfolio Investment     &nb= sp;            =    Return to top

Foreign investors can access credi= t on the same market terms as nationals. Long-term banking credit has traditionally been difficult to obtain = and became scarcer after the 2002 financial crisis.

Uruguay's capital market is underdeveloped and concentrated in public paper. There is no effective regulatory s= ystem to encourage and facilitate portfolio investment. There are two stock exchanges. An electronic exchange concentrate= s on foreign currency transactions and a traditional exchange focuses on soverei= gn bonds. Only 12 firms are regi= stered in the traditional stock exchange, and trading with shares and commercial p= aper is virtually nil. There are o= nly four investment funds that mostly service domestic clients and invest their funds in Uruguayan public paper. Risk rating firms first came to Uruguay in 1998.

Private firms do not use "cro= ss shareholding" or "stable shareholder" arrangements to restri= ct foreign investment. Nor do they restrict participation in or control of domestic enterprises.

Political Violence        &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;       Return to top

Uruguay = is a stable democracy in which respect for the rule of law is the norm and the v= ast majority of the population is committed to non-violence.

Corruption  &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;            &= nbsp;           Return to top

Uruguay has strong laws to prevent = bribery and other corrupt practices. = In 2006, Uruguay ranked 28th in Transparency International's Corruption Percep= tion Index, and was second only to Chile in Latin America. A law against corruption in the pu= blic sector was approved in 1998, and acceptance of a bribe is a felony under Uruguay's penal code. Money laundering is penalized with sentences of up to ten years (which also apply= to Uruguayans living abroad). De= spite Uruguay's favorable rating and effective legislation, public surveys indica= te a widespread perception of public sector corruption. Several former Uruguayan officials= and one judge were prosecuted in recent years.= Overall, U.S. firms have not identified corruption as an obstacle to investment.<= o:p>

Bilateral Investment Agreements=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;     Return to top

In late 2004, Uruguay and the Unit= ed States signed an Open Skies Agreement, which was ratified in May 2006. In November 2005, Uruguay and the = United States signed a Bilateral Investment Treaty (BIT), which was subsequently ratified by both legislatures and entered into force on November 1, 2006.

Uruguay also has BITs with Austral= ia, Belgium, Canada, Chile, China, Czech Republic, Finland, France, Germany, Gr= eat Britain, Hungary, Israel, Italy, Luxembourg, Malaysia, Mexico, The Netherla= nds, Panama, Poland, Romania, Spain, Switzerland and Venezuela. BITs with Armenia, Portugal and Sw= eden are pending ratification. In addition, Uruguay signed Double Taxation Agreements with Germany, Korea and Hungary.

OPIC and Other Investment Insura= nce Programs      = ;            &n= bsp;     Return to top

The GOU signed an investment insurance agreement with the Overseas Private Investme= nt 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. OPIC programs are currently used in Uruguay.

In 2002, after three years of recession and in the face of devaluations in neighboring economies, Uruguay eliminated its decade-long exchange rate bands and allowed the peso to float freely. There is no black mar= ket for currency exchange and the U.S. Embassy uses the official rate when purchasing local currency.

Labor   =             &nb= sp;            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;       Return to top

The Uruguayan labor force is well educated and the government has instituted technical training programs to help meet industry's skilled labor requirements. At 97%, Uruguay= 's literacy rate is the highest in Latin America and on par with that of the United States.

Social security payments are high and increase employers' basic wage costs by almo= st 50%. A law approved in May 19= 98 provides incentives for companies that hire young people, including a reduc= tion of between 12-18% in employer social security and healthcare contributions.= The social security system current= ly allows for retirement at age 60 for both men and women. Workers who become disabled on the= job receive a monthly payment from the government equal to 70% of their salaries plus free medicine and medical care.

The labor market improved in 2006 with the unemployment rate dropping to 10.9% over t= he first nine months of the year. The government provides six months of unemployment benefits.<= /p>

Uruguay has ratified ILO conventions that protect worker rights, and generally adhe= res to their provisions. The Urug= uayan constitution guarantees workers the right to organize and strike, and union members are protected by law against dismissal for union activities. Labor unions are nominally indepen= dent from the Government. Sympathy strikes are legal.

Congress passed a Law on the Promotion and Protection of Labor Unions on January 2, 2006, which renders illegal any discriminatory action affecting the employm= ent of unionized workers. Among o= ther measures the law provides for the immediate reinstatement of the employee if any infringement of the law is proven.&nbs= p; Business chambers strongly opposed the bill, arguing that it slants labor relations too heavily in favor of unions.

On May 30, 2006 the government approved a decree on the “Prevention of Confl= icts and Regulation of Worker Occupation of the Workplace”, which provides= for obligatory negotiations between employer and employees prior to employees resorting to occupation of the workplace.&= nbsp; Still, the decree validates the occupation of the workplace as a legitimate extension of the right to strike, provided that all previous ste= ps have been followed.

The current administration also set up Salary Councils, something unseen since = 1990 when the government stopped partaking as third party in labor relations with workers and businesses. The government determined the wage increase to be applied in the groups that fa= iled to reach agreement.

The level of labor conflicts was high in 2006, in comparison with previous years due to national budget discussions in Parliament, wage negotiations, union opposition to negotiations of an FTA with the U.S., and the death of several construction workers in labor accidents.

The level of unionization has increased steadily since the governing Frente Amp= lio Party took office on March 1, 2005. In October of 2006, the umbrella labor organization PIT/CNT held its National Congress, at which union leaders sta= ted that 300 new unions had joined the organization since 2003. The PIT/CNT states it has approxim= ately 200,000 active members.

Foreign-Trade Zones/Free Ports=         &= nbsp;           &nbs= p;            &= nbsp;           &nbs= p;      Return to top

Free trade zones permit all types = of commercial, industrial, and service activities. These activities are considered to= take place outside of the national territory.   When goods from a free trade= zone are introduced into the rest of the country, they are treated as "imports."

Law No.15921 of December 17, 1987 regulates the operation of FTZs within the country. The law allows storage and warehou= sing, manufacturing, and financial and data processing, and related activities to take place within FTZs. Nine = FTZs are located throughout the country (one public, one mixed ownership, and se= ven private). MERCOSUR regulations treat products manufactured in all member state FTZs as extra-territorial.<= span style=3D'mso-spacerun:yes'> Products manufactured by Uruguayan= or foreign firms in Uruguayan FTZs are not eligible for MERCOSUR certificates = of origin. Furthermore, these products do not benefit from MERCOSUR customs un= ion advantages and must pay the MERCOSUR common external tariff when entering member countries.

Goods, services, products and raw materials of foreign and Uruguayan origin may be brought into the zones, he= ld, processed, and re-exported without payment of Uruguayan customs duties or import taxes. Goods of Urugua= yan origin entering into FTZs are treated as Uruguayan exports for tax and other legal purposes. Goods that en= ter Uruguayan customs territory from FTZs are subject to customs duties and imp= ort taxes. Industrial or commerci= al government monopolies are not honored within FTZs.

Local and foreign-owned industries alike enjoy several advantages in an FTZ.&= nbsp; They are exempt from all domestic taxes, with exemptions granted exclusively to free trade zone tenants with approved contracts from the Gen= eral Trade Authority. Customs duty exemptions are applicable to the entry and exit of goods. The only additional cost to employ= ers is the contribution to social security for Uruguayan employees. The employer does not pay social s= ecurity taxes for non-Uruguayan employees if those employees waive coverage under t= he Uruguayan social security system. However, Uruguayans must comprise 75% of a company's labor force to qualify for FTZ tenancy.

Foreign Direct Investment Statistics<= span style=3D'mso-tab-count:4'>        &= nbsp;           &nbs= p;            &= nbsp;            Return to top

Foreign Direct Investment (FDI) in Uruguay has been low because of the country's small market, the lack of maj= or privatizations, and the small number of firms that base their MERCOSUR-wide operations locally. Uruguay's FDI/GDP ratio of 1.8% is well below the Latin American/Caribbean average of 3.2%, and that of its Southern Cone neighbors Argentina (2.2%), Brazil (3.2= %) and Chile (6.0%). (All figure= s in this paragraph refer to 2000-2004 averages based on World Bank's Development Indicators)

According to the Centr= al Bank, FDI stock declined from $2.41 billion in 2001 to $1.4 billion in 2002, mostly due to decreased asset values following the sharp 2002 economic contraction and devaluation. = Since then, surging inflows of FDI have led the stock of FDI to above its pre-cri= sis levels ($2.9 billion in 2005). Annual inflows of FDI rose from $332 million in 2004 to $710 million= in 2005, and to $1,045 as of June 2006 (on a 12-month basis), in face of boomi= ng real estate, major purchases of land by Argentines and especially a large investment by Finnish cellulose producer Botnia. Botnia’s construction of a $= 1.2 billion pulp mill in 2005-2007 is Uruguay’s largest-ever foreign investment. Also in 2005-2007, another cellulose producer, Spanish firm Ence, was expected to build another pulp mill worth $500 million but has postponed the project, as of late 2006. A harsh dispute between Argentina and Uruguay over these investments, leading to a significant deterioration of relations between the two countries, may have played a rol= e in Ence’s postponement. Uruguay has acted responsibly in a dispute with Argentina over the construction of = pulp mills on a shared river, by defending the right of foreign investors.

A 1999 governmental st= udy (which has not been updated) concluded that the United States was the large= st single investor in Uruguay (33% of the stock of FDI). In 2001-2003 US-sourced investors invested $78 million, accounting for 9% of total FDI inflows. According to the U.S. Department of Commerce, the 2005 stock of U.S. direct investment in Uruguay amounted to $= 599 million. Although figures on investment by sector are unavailable, most foreign investment in recent yea= rs has gone into forestry-related activities, service industries, construction (i.e. hotels, residences, office buildings), and mining.

Host country contact information f= or investment-related inquiries:

Mr. Roberto Bennett

Executive Director for Uruguay XXI

Direccio= n de Promocion de Exportaciones e Inversiones (Directorate for Export and Investment Promotion)

Yaguaron 1407, Of. 1103

Montevideo, Uruguay

Tel: (5982) 900-2912 / 900-0318; F= ax: (5982) 900-8298

E-mail: rbennett@uruguayxxi.gub.uy;

web page: http://www.uruguayxxi.gub.uy

Web Resources            =             &nb= sp;            =             &nb= sp;            =             &nb= sp;      Return to top

Uruguayan IT Chamber: http://www.cuti.org.uy

Copyright Association: http://www.agadu.com.uy

Software Legal del Uruguay: http://www.softleg= al.org

Uruguayan Chamber of Music Records: http://www.cu= disco.org

Uruguayan Society if Artists and Interpreters: = http://www.sudei.org.uy

University of Montevideo IPR Group: http:= //www.gpi.espaciolibre.net

National IPR Directorate: http://dnpi.gub.uy

Uruguay XXII – (Export and Investment Promotion) http://www.uruguayxxi.gub.uy

= ;

Return to table of contents<= /a>

ADVANTAGES	CHALLENGES
Most Uruguayan consumers are aware of the wide variety and high quality of U.S. F&B.	Recession and the economic crisis fostered import substitution with domestically produced F&B, whose quality improved significantly as a result of technological investments during the 1990´s.
Influence of U.S. culture is significant and felt through cable TV, the Internet, a= nd Uruguayans traveling or studying in the United States.<= /p>	Weaker purchasing power and a high unemployment rate limit sales of imported F&B.
Supermarkets are willing to have imported F&B on the shelves as a tool to differentiate from other retailers.	In general, MERCOSUR intra-regional trade pays zero import tariffs, which prompts strong competition primarily from Argentina and Brazil. Import tariffs for other countri= es vary between 20-23 percent for most F&B.
During the past few years, the self-serve format and the display of food products have improved remarkably.<= /p>	The relatively small size of the market and small import volumes discourage U= .S. suppliers.
Large supermarket chains are logistically ready to import foods directly.<= /o:p>	There has been a lack of interest/ responsiveness of U.S. F&B suppliers vis-à-vis the Uruguayan market.
Cold storage facilities are good and can easily meet manufacturers´ requirements.	---
After the competitiveness gained with the devaluation of the Uruguayan peso aga= inst the dollar, the expansion of the food processing industry, primarily to supply export markets, creates very good opportunities for U.S. food ingredient imports.	---
There has been greater exposure of local retailers to U.S. exporters and produc= ts through FAS-sponsored marketing activities.	---

In Thousand US$ (FOB)	2003	2004	2005
Total Imports	514	663	999
Imports from the US/US mkt. Share %	247/48	275/41	391/39

= Doing Business In Uruguay: A Cou= ntry Commercial Guide for U.S. Companies.

INTERNATIONAL COPYRIGHT, U.S. & FOREI= GN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

Return to table of contents

= Chapter 1: Doing Business In Urugu= ay

Market Overview &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Market Challenges &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Market Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Market Entry Strategy= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

= Chapter 2: Political and Economic Environment

INTERNATIONAL COPYRIGHT, U.S. & FOREI= GN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2004. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

= Chapter 3: Selling U.S. Products and Services

Using an Agent or= Distributor &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Establishing an Office = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; Return to top

Direct Marketing &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Joint Ventures/Licensing &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; <= span lang=3DEN style=3D'font-weight:normal'>Return to top

Sellin= g to the Government &nb= sp; = &nb= sp; = &nb= sp; Return to top

Distribution and Sales Channels &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Selli= ng Factors/Techniques &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Electronic Commerce = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; Return to top

Trade Promotion and Advertising &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Pricing &nb= sp; = &nb= sp; = &nb= sp; = &nb= sp; Return to top

Sales Service/Customer Suppo= rt &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Protecting Your Intellectual Property = ; &n= bsp; = ; <= /span>Return to top

Due Diligence = &nb= sp; = &nb= sp; = &nb= sp; Return to top

Local Professio= nal Services = ; &n= bsp; = ; &n= bsp; = ; Return to top

Web Resources = &nb= sp; = &nb= sp; = &nb= sp; Return to top

= Chapter 4: Leading Sectors for U.S. Export and Investment

Agricultural Machinery

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Telecommunications Equipment (TEL)

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Fertilizers

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Medical Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

IT - Computer Hardware

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Infrastructure Projects

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Resources = &nb= sp; = &nb= sp; = &= nbsp; &nbs= p; Return to top

Chemicals

Overview = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; Return to top

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Resources = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Agricultural Sectors &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

= Chapter 5: Trade Regulations and Standards

Import Tariffs = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Trade Barriers = &nb= sp; = &nb= sp; = &nb= sp; Return to top

Import Requirements and Documen= tation &= nbsp; &nbs= p; &= nbsp; Return to top

U.S. Export Controls &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; = Return to top

Temporary Entry = &nb= sp; = &nb= sp; = &nb= sp; Return to top

Labeling and Marking Requiremen= ts &= nbsp; &nbs= p; &= nbsp; Return to top

Prohibited and Restricted Imp= orts &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Customs Contact Information &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Capt. Luis A. Salvo=

Standards = &nb= sp; = &nb= sp; = &nb= sp; = Return to top

Overview &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Standards Organizations = &nb= sp; = &nb= sp; Return to top

&n= bsp; Product Certification = &nb= sp; = &nb= sp; = Return to top

&= nbsp; Publication of Technical Regulations &= nbsp; &nbs= p; &= nbsp; Return to top

&= nbsp; Labeling and Marking &n= bsp; = ; &n= bsp; = ; &n= bsp; Return to top

Trade Agreements &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; Return to top

Web Resources = &nb= sp; = &nb= sp; = &nb= sp; Return to top

= Chapter 6: Investment Climate

= Chapter 9: Contacts, Market Research, and Trade Events<= /h1>

Contacts

Market Research
Trade Events