Uruguay Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Uruguay’s trade with the EU has reached a level of around EUR 3 billion in recent years, with the EU having an active trade balance. About 80% of EU exports are finished products (chemical products, machinery, cars, etc.), the rest are agricultural products. In imports to the EU, the largest item is cellulose (48%), the import of beef decreased compared to previous years. Leather, soy, wood, fish, rice, wool, citrus are also imported into the EU. The EU is the second largest buyer of Uruguayan exports (17%).

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 1,350.20 1,280.60 1,297.10 1,238.30 1,923.30
Imports into the EU (million EUR) 1,448.10 1,627.20 1,594.50 1,103.20 1,450.40
Balance with the EU (million EUR) 97.9 346.6 297.5 -135.1 -472.9

Source: European Commission

Trade relations with the Czech Republic

Trade relations are relatively small in terms of volume (which is related to the size of Uruguay), but not negligible. This limiting fact is compensated by a stable and transparent environment for exports and investments, and the long-term consistent economic plan of the government.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.3 0.2 0.2 0.2 ON
Imports to the Czech Republic (billion CZK) 0.1 0.3 0.2 0.2 ON
Balance with the Czech Republic (billion CZK) -0.1 0.1 0.1 0 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

Uruguay is part of the MERCOSUR association and at the same time a neighbor of the large economies of Brazil and Argentina. Foreign trade is thus connected precisely with these countries (however, more so with Brazil than with Argentina).

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 5,355.0 5,096.3 5,231.2 4,596.1 6,158.0
Imports to countries outside the EU (million EUR) 5,741.1 5,932.1 5,414.4 5,326.6 7,322.0
Balance with non-EU countries (million EUR) -386.1 -835.8 -183.2 -730.5 -1,164.0

Source: EIU, Eurostat

Foreign direct investment

The Uruguayan government recognizes the important role of foreign investment in economic development and offers a stable investment environment that does not discriminate against foreign investors. Uruguay’s legal system treats foreign and domestic investment equally, most investments are allowed without prior permission, and investors are free to transfer capital and profits from their investments abroad. There are no significant investments by Czech entities in the country.

FTAs and treaties

Treaties with the EU

The EU does not have a preferential trade agreement with Uruguay. Currently, the EU does not apply any safeguard measures to goods from Uruguay.

Contracts with the Czech Republic

Commercial and economic cooperation between the two countries is currently governed by only one international agreement: Agreement on the Support and Protection of Investments (signed on 26/09/1996, entered into force on 29/12/2000) The Czech side negotiated all disputed points of the agreement that were in in violation of Community law, and after the agreement of both parties, the renegotiation of the contract entered into force on February 9, 2012.

Developmental cooperation

Uruguay is the second richest country in Latin America, with relatively egalitarian distribution of wealth and a high degree of redistribution. Therefore, it is not a recipient of development aid from the Czech Republic or the EU. Nevertheless, some programs for the development of civil society, the support of social and regional cohesion, research, economic development and innovation or the reform of criminal law are financed from EU funds.

Prospective fields of study (MOP)

Agricultural and food industry

Agriculture still plays a vital role in the creation of GDP in Uruguay. More than 90% of Uruguay’s land is suitable for agricultural production. There are 1million hectares that can be used. The country is among the main exporters of beef, rice and soybeans in the world. With a population of million inhabitants, food is produced for 30 million people, and in the coming years, Uruguay is expected to produce sustenance for 50 million inhabitants of the planet. However, technologies are still far from reaching European standards. Opportunities arise in the field of fertilizers, agricultural machinery, smart solutions or biotechnologies with added value. The price of land is an indicator that reflects the development of the agricultural sector in Uruguay in the recent period. The price per hectare increased from USD 385 in 2002 to USD 3,305 in 2021. Agriculture is a sector, into which the most investments are directed (especially intended for the incorporation of grain processing technology, as well as the technology used in meat processing). Technology parks (El Parque de las Ciencias, Zonamerica or Aguada Park) operate in the country, where research is carried out at relatively low costs. The National Development Agency of Uruguay has created an advisory program for small and medium-sized enterprises that want to invest in technologies related to agriculture. The use of technology in the processing of rice, for example, has radically increased Uruguay’s position as an exporter of this food. However, the technologies used are still far from reaching European standards. In a situation where the prices of production inputs are rising worldwide, Uruguayan farmers will therefore look for ways to save on production thanks to new technologies. Opportunities for Czech companies arise in the field of fertilizers, agricultural machinery, biotechnology with added value or smart solutions. When considering an investment in this area, it is important to remember that Uruguay is a country with a high level of democracy and freedom, it also has the lowest level of corruption on the continent. Agriculture is a sector that all governments – regardless of ideological orientation – have protected from outside interference. For example, exports are not subject to export duties, as is the case in neighboring Argentina. All commodities are traded in US dollars. Other currencies can be exchanged freely without additional tax restrictions. In addition, VAT does not apply to production or agricultural machinery. The investment environment guarantees stability and the ability to plan for 5 or 10 years, knowing that the rules of the game are clear and do not change over time.

ICT

Only two Latin American countries prioritize developing artificial intelligence and new technologies: Mexico and Uruguay. Artificial intelligence should become a real engine of development. By 2030, Uruguay is expected to contribute approximately US$15 billion to the global economy. There are currently three main areas where artificial intelligence is being developed in Uruguay:

  • Computer vision (interpretation of images or videos to obtain information from them)
  • Natural language processing (develops models that make it possible to interpret and extract relevant information from written texts)
  • Predictive analytics (future events are predicted based on past events)

The government exempts projects involving technological innovation and technology transfer from taxes. General investment incentives were created by the Investment Promotion Act and are regulated by Decree No. 59/998. Since 2016, financial activities aimed at the development of scientific and technological innovations have been subject to the Investment Support Act (they must receive a positive opinion from the National Agency for Research and Innovation). These activities are exempt from personal income tax and non-resident income tax for a period of five years.

Energy industry

Average electricity consumption per capita in Uruguay continues to rise, more than doubling in the last twenty years. Uruguay found a way to limit imports of petroleum products and replace them with domestic sources in the development of renewable energy sources. Today, they account for up to 98% (!) of installed electricity production capacities. c Uruguay’s interest lies in two less traditional sources: wind power plants and biomass. The country is one of the world’s largest producers of cellulose, and waste from its production is the most important raw material for biomass. Among its biggest consumers are industrial enterprises, which buy it and produce electricity from it themselves as part of their operations. Last year, industrial companies produced over fifty percent of the electricity they consumed themselves from biomass. Possibilities are open to Czech companies, which offer (domestic) technologies for the production of electricity from biomass. Uruguay presents itself as a country with very good conditions for the production of green hydrogen. In addition, the Uruguayan government offers tax incentives for companies that intend to invest in the development of renewable resources, up to 100% of income tax. Green hydrogen and its derivatives represent an opportunity to increase energy production and export on a regional and global scale.

Defense industry

Uruguay is one of the like-minded countries in the South American region. The emphasis on democracy and human rights leads to the fact that the participation of Uruguayan troops in UN peacekeeping missions is one of the country’s foreign policy priorities. The missions are funded mainly through the UN. However, equipping the army as such is already a matter for the Ministry of National Defense, which is responsible for the readiness of the Uruguayan forces. The Czech Republic is trying to be as active as possible in this regard and has been supplying the country with weapons and ammunition for a long time through open competitions. Czech companies also regularly participate in tenders for equipment (parachutes, ballistic vests, etc.). Tenders are perceived very objectively in the country, and Czech products have a great chance of success here. Current areas to be addressed are the fight against terrorism, organized crime and drug trafficking. Products in demand are, for example, drones and fraud prevention systems. Considering the increase in the use of technology and the Internet, cyber protection is an important part, which is still not so developed. Due to the fact that the country does not have developed intelligence services, solutions that adapt and cooperate with the intelligence systems of other countries are in demand. Other important topics are protection against natural disasters and biological threats. Protective measures for critical infrastructure such as power plants and factories are also in the spotlight.

Uruguay Trade