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111th Congress 
 1st Session                COMMITTEE PRINT                     S. Prt.
                                                                 111-21
_______________________________________________________________________



 
                       URUGUAY TRADE PREFERENCES:
                        A STRATEGIC OPPORTUNITY
                          IN THE SOUTHERN CONE

                               __________

                           STAFF TRIP REPORT

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                     One Hundred Eleventh Congress

                             First Session

                             June 29, 2009

                                     




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                     COMMITTEE ON FOREIGN RELATIONS

           JOHN F. KERRY, Massachusetts, Chairman            
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       Republican Leader designee
BARBARA BOXER, California            BOB CORKER, Tennessee
ROBERT MENENDEZ, New Jersey          JOHNNY ISAKSON, Georgia
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   JIM DeMINT, South Carolina
JIM WEBB, Virginia                   JOHN BARRASSO, Wyoming
JEANNE SHAHEEN, New Hampshire        ROGER F. WICKER, Mississippi
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                David McKean, Staff Director            
      Kenneth A. Myers, Jr., Republican Staff Director            

                                  (ii)




                            C O N T E N T S

                              ----------                              
                                                                   Page
Letter of Transmittal............................................     v


Introduction.....................................................     1


Background.......................................................     2


Recommendations..................................................     4


Conclusions......................................................     5


                               Appendixes

Appendix I.......................................................     6


Appendix II                                                           7


Appendix III.....................................................     9


Appendix IV......................................................    11


                                 (iii)

                                     

                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                     Washington, DC, June 29, 2009.
    Dear colleagues: My senior Senate Foreign Relations 
Committee (SFRC) staff member for Latin America, Carl Meacham, 
visited Uruguay at my direction from May 26-28, 2009, to 
examine ways to deepen our trade relations.
    As Congress debates renewal of trade preferences for 
several South American countries, which are set to expire this 
year under the Andean Trade Promotion and Drug Eradication Act 
(ATPDEA), it should also consider granting preferences for 
Uruguayan exports that currently face high U.S. tariffs. 
Uruguay has proved to be a reliable partner in the Southern 
Cone, and the United States would benefit politically by 
strengthening ties with a small but strategically important 
neighbor of the two largest economies in South America.
    I am strong believer in free trade and the power of markets 
to strengthen the growing political and economic relationship 
between our nations and help bring new jobs and goodwill to the 
region. The ultimate goal of expanding commercial ties with 
Uruguay should be a free trade agreement, which I have 
advocated since 2002. Nevertheless, given the current domestic 
obstacles to bilateral trade deals, a trade preference 
arrangement is an interim step that would advance U.S. 
interests. Trade preferences are usually designed to promote 
economic growth in our poorest trading partners. Uruguay does 
not fall into that category, but I believe that preferences 
should also be used strategically to advance foreign policy 
goals. In the case of Uruguay, the clear U.S. objective is to 
strengthen a bilateral relationship that has important 
political implications for the wider region, as Mr. Meacham's 
report illustrates.
    I hope you find the report helpful as the U.S. Congress 
reviews trade preference programs. I look forward to continuing 
to work with you on these issues, and I welcome any comments 
you may have on this report.
            Sincerely,
                                          Richard G. Lugar,
                                                    Ranking Member.


                       URUGUAY TRADE PREFERENCES:
                        A STRATEGIC OPPORTUNITY
                          IN THE SOUTHERN CONE

                              ----------                              

    From May 26-28, 2009, Senate Foreign Relations Committee 
minority staff traveled to Montevideo, Uruguay, on an official 
visit. During this trip, staff met with senior officials of the 
Government of Uruguay (GOU), Members of the Uruguayan Senate, 
Uruguayan economists, representatives of the apparel and 
textile industries, and the American Chamber of Commerce in 
Montevideo (see Appendix I for complete list of meetings). At 
the request of Senator Lugar, the purpose of the trip was to:


   Explore ways to expand trade relations with Uruguay.

   Assess the implications of deeper commercial relations, 
        with a particular focus on the political, strategic, 
        and regional benefits for the United States.

                              Introduction

    Unilateral U.S. trade preference programs aim to increase 
trade with beneficiary countries in order to foster economic 
development and promote various U.S. foreign policy objectives. 
Currently, the United States offers the Generalized System of 
Preferences (GSP) and three regional programs, the Caribbean 
Basin Initiative (CBI), the Andean Trade Promotion and Drug 
Eradication Act (ATPDEA), and the African Growth and 
Opportunity Act (AGOA).
    U.S. Trade Representative Ron Kirk has indicated a 
willingness to work with Congress to reform these programs, 
though preference reform legislation is unlikely to be 
considered before next year.\1\ Nevertheless, a review of trade 
preferences is timely because several preference programs are 
scheduled to expire during the current calendar year. In South 
America, preferences for Colombia and Peru will expire on 
December 31, 2009. Preferences for Ecuador will remain in 
effect until the end of the year unless President Obama 
determines by July 1, 2009, that Ecuador does not satisfy 
certain requirements. Bolivia's preferences would expire on 
June 30, 2009, but the Bush Administration suspended its 
designation as a beneficiary country in November 2008.
---------------------------------------------------------------------------
    \1\ ``Reif Signals Preference Program Reform May Spill Into New 
Year.'' Inside U.S. Trade. 8 May 2009.
---------------------------------------------------------------------------
    As Congress debates the expiring trade preference programs 
and as the Administration considers a new model for free trade 
agreements, it should also consider new or expanded trade 
preference opportunities. In the U.S. Congress, Members have 
already introduced the U.S.-Paraguay Partnership Act of 2009, 
which amends the ATPDEA to include Paraguay on the list of 
countries eligible for unilateral duty-free treatment. But, 
despite its strategic importance to the United States in South 
America, one country that 
has been missing from the current debate on trade preferences 
is Uruguay.

                               Background

    Uruguay is a relatively small U.S. trade partner, 
accounting for less than 1 percent of U.S. exports and imports. 
It is the 79th largest export market for the United States and 
the 108th largest importer of U.S. merchandise goods. The 
United States exports intermediate and capital goods to 
Uruguay, such as machinery, computers, and perfume; the United 
States imports from Uruguay mostly primary goods or simple 
manufactured goods, such as meat, leather, wood, and frozen 
fish.\2\ As a GSP beneficiary country, Uruguay mainly uses 
duty-free treatment to export raw hides and skins; in 2008, 
exports through GSP accounted for 23 percent of Uruguay's total 
exports to the United States.\3\
---------------------------------------------------------------------------
    \2\ Office of the United States Trade Representative, http://
www.ustr.gov/countries-regions/americas/uruguay.
    \3\ Donnelly, J. M. (22 June 2009). Congressional Research Service 
Memo on United States Tariff Treatment of Imports from Uruguay. 
Requested by minority staff of the Senate Foreign Relations Committee.
---------------------------------------------------------------------------
    Uruguay's top three trade partners and their respective 
share of total trade are: Argentina (19 percent), Brazil (18 
percent), and the European Union (12 percent), with the United 
States at 5 percent.\4\ Although Uruguay is a member of the 
MERCOSUR customs union, it has expressed a strong interest in 
pursuing closer bilateral trade relations with the United 
States. \5\
---------------------------------------------------------------------------
    \4\ .U.S. Embassy in Montevideo, data from Central Bank of Uruguay. 
22 June 2009.
    \5\ MERCOSUR was established by Argentina, Brazil, Paraguay, and 
Uruguay in 1991. Uruguay's sales to MERCOSUR have declined since 1998, 
when they accounted for about half of Uruguay's exports. MERCOSUR 
currently buys about one-fourth of Uruguay's exports. (Source: U.S. 
Embassy in Montevideo.)
---------------------------------------------------------------------------
    We enjoy a longstanding positive commercial relationship 
with Uruguay that has grown over the past decade, beginning 
with the creation of a Joint Commission on Trade and Investment 
(JCTI) in 2002. This led to more formal arrangements, including 
a bilateral investment treaty (BIT) providing greater 
protections for U.S. investors operating in Uruguay, especially 
in the area of dispute settlement.\6\ On January 1, 2007, 
Uruguay and the United States signed a Trade and Investment 
Framework Agreement (TIFA), which established the U.S.-Uruguay 
Council on Trade and Investment as the formal mechanism for 
pursuing means for liberalizing bilateral trade and investment. 
In October 2008, Uruguay and the United States signed two 
protocols to the TIFA on trade facilitation and public 
participation in trade and environment.\7\ Most recently, the 
Council held its third meeting in Washington, DC on June 5, 
2009, to discuss full implementation of these protocols.
---------------------------------------------------------------------------
    \6\ Hornbeck, J.F. (8 April 2009). Congressional Research Service 
Memo on U.S.-Uruguay Trade Relations. Requested by minority staff of 
the Senate Foreign Relations Committee.
    \7\ Ibid.
---------------------------------------------------------------------------
    Uruguay's ties with the United States help diversify its 
trade and balance its economic dependence on its two large 
neighbors, Argentina and Brazil (a key goal since the economic 
crisis in 2001-2003). Membership of the regional bloc MERCOSUR 
provides Uruguay with preferential trade access to the markets 
of Brazil, Argentina, and Paraguay (as well as to other South 
American countries with associate membership), yet some GOU 
officials have expressed frustration with the dominance of the 
two larger members and with the limitations this organization 
places on Uruguay's ability to pursue trade relationships 
outside of MERCOSUR.\8\ In addition, bilateral disagreements, 
such as the ongoing dispute with Argentina over the 
construction in Uruguay of a cellulose pulp mill, have weakened 
Uruguay's relations with MERCOSUR. According to officials at 
the U.S. Embassy in Montevideo, the United States now has a 
historically high favorability rating among the Uruguayan 
populace, much higher than in other countries, and it is viewed 
as a strategically important relationship. In this context 
especially, the United States is as an increasingly attractive 
economic partner for Uruguay.
---------------------------------------------------------------------------
    \8\  Uruguay also has a free trade agreement with Mexico since 
November 2003. It is based on a larger agreement, the MERCOSUR-Mexico 
Economic Complementation Agreement signed in July 2002 to establish a 
legal framework for trade relations between Mexico and MERCOSUR as well 
as for bilateral negotiations between Mexico and individual MERCOSUR 
countries. Mexico has become an important market for specific Uruguayan 
goods; it is the second largest market for Uruguayan apparel exports 
(at 23 percent) and the fifth largest market for fabric exports (at 5 
percent), according to data provided by the U.S. State Department.
---------------------------------------------------------------------------
    Nevertheless, Uruguay is now losing markets and jobs to 
countries that have free trade agreements with the United 
States. Staff found that the GOU is particularly concerned 
about the situation of the Uruguayan textiles and apparel 
industry, which has shrunk over the last decade, with a slight 
recovery since 2003 (see Appendix II). Heavily based on wool 
production, this sector employs about 21,000 workers, though 
its unemployment rate remains above 20 percent--almost three 
times the national average.\9\ Uruguayan textile and apparel 
producers face high tariffs in the U.S. market (17.5 percent 
for wool-based apparel and 25 percent for wool fabrics), as 
well as strong competition from FTA signatories with the United 
States (mainly Chile, Mexico, and Peru). Uruguay also faces 
difficulties in exporting fabric to these countries since the 
FTAs require that apparel be produced with U.S.-sourced or 
local fabrics. According to the President of the Apparel 
Chamber in Uruguay, the combination of MERCOSUR restrictions, 
high entry tariffs, and rules of origin specifications has 
caused Uruguay to lose its market share in the United 
States.\10\
---------------------------------------------------------------------------
    \9\ U.S. Embassy in Montevideo, Uruguay. 15 June 2009.
    \10\  Ibid.
---------------------------------------------------------------------------
    According to several GOU officials, U.S. trade preferences 
for textiles and apparel would help Uruguayan exporters regain 
market access in the United States and have a dramatic positive 
economic impact on Uruguay. These industries are key sources of 
employment in Uruguay that have been hurt by both U.S. tariffs 
and the economic downturn.
    According to the Congressional Research Service, the 
marginal costs to U.S. industries of allowing these Uruguayan 
textile products to enter duty free would be small and unlikely 
to hurt U.S. industry's global competitiveness.\11\ 
Furthermore, Uruguay does not produce any cotton or cotton-
based products, which are the main concern for the United 
States. Preferences for textile exports from such a small 
economy would not likely affect U.S. producers, though they 
would represent significant economic benefits for Uruguay, thus 
accruing political benefits for the United States.
---------------------------------------------------------------------------
    \11\ Hornbeck, J.F. (8 May 2009). Congressional Research Service 
Memo on Proposed Special Trade Treatment for Uruguayan Exports. 
Requested by minority staff of the Senate Foreign Relations Committee.
---------------------------------------------------------------------------

                            Recommendations

    Both the United States and Uruguay have expressed interest 
in deepening trade ties via some type of trade agreement, 
including a free trade agreement (FTA). In 2002, Senator Lugar 
sponsored a bill to authorize an FTA with Uruguay, yet after 
many attempts during the Bush Administration a commitment was 
never reached (see Appendix III). Nevertheless, it is important 
to ``keep the fire'' of a bilateral FTA ``alive,'' as one 
former GOU official told staff.
    In the short-term, Congress should consider granting 
unilateral tariff preferences for Uruguayan textiles and 
apparel, thus complementing recent efforts by the executive 
branch to expand commercial ties through the U.S.-Uruguay 
Council on Trade and Investment. Negotiation of an FTA appears 
politically impossible during the global recession, but 
unilateral tariff preferences might be an appropriate 
intermediate step towards deepening our relations with Uruguay. 
As the case of Peru proves, unilateral trade preferences can 
lead to the negotiation of a reciprocal FTA.
    Approval of a unilateral trade preference arrangement for 
Uruguay could occur through the expansion of ATPDEA, 
petitioning to add products to the GSP, or a Miscellaneous 
Tariff Bill (MTB).\12\ The most feasible strategy could be to 
add Uruguay to the U.S.-Paraguay Partnership Act of 2009, which 
was already introduced in both chambers of Congress, in order 
to make a joint case for including both countries in ATPDEA.
---------------------------------------------------------------------------
    \12\ The ATPDEA would need to be expanded to include wool-based 
textiles in addition to a geographic expansion to include Uruguay.
---------------------------------------------------------------------------
    Although Uruguay has one of the higher per capita incomes 
in the region, there is precedent for including a country with 
Uruguay's level of per capita income in unilateral preferential 
arrangements established by Congress for countries in both Sub-
Saharan Africa and Latin America. Certain Caribbean countries, 
for example, have higher real per capita incomes than Uruguay 
yet retain eligibility for trade preferences (see Appendix 
IV).\13\
---------------------------------------------------------------------------
    \13\ Hornbeck, J.F. (8 April 2009). Congressional Research Service 
Memo on U.S.-Uruguay Trade Relations. Requested by minority staff of 
the Senate Foreign Relations Committee.
---------------------------------------------------------------------------
    Regarding Uruguay's commitment to MERCOSUR, a reciprocal 
FTA with the United States could be seen to violate the common 
external tariff (CET) on which MERCOSUR was founded, but GOU 
officials argue that the CET would not represent a barrier to 
an FTA. A unilateral preference arrangement is a different 
matter because there is no reciprocal treatment required of 
Uruguay 
and, therefore, no potential violation of the CET.\14\ The 
potential 
for trade preferences to lead to the negotiation of an FTA 
remains, however, for MERCOSUR is a highly fluid arrangement 
that 
has allowed for a number of bilateral arrangements between its 
member countries, some of which fall outside the MERCOSUR 
guidelines.
---------------------------------------------------------------------------
    \14\ Ibid.
---------------------------------------------------------------------------

                              Conclusions

    The United States would benefit from deepened trade 
relations with Uruguay in several ways. Despite Uruguay's small 
size, a 
U.S. initiative to expand commercial ties could afford an 
opportunity for the United States to constructively extend its 
influence in the Southern Cone, a sub region historically given 
less attention by U.S. foreign policymakers compared to other 
areas of Latin America.
    By granting Uruguayan goods expanded access to the U.S. 
market, the USG would solidify its image as a reliable and 
strategically important partner, thereby strengthening the 
bilateral relationship with Uruguay. According to senior GOU 
officials, U.S. trade preferences would be viewed as a vote of 
support for the GOU, which finds itself in a difficult 
situation within MERCOSUR. In this regard, staff believes that 
MERCOSUR perpetuates trade asymmetries with Brazil and 
Argentina, resulting in Uruguay's interest in diversifying its 
markets and commercial ties.
    At the same time, promotion of trade on a bilateral basis 
is an important option for the United States given the failure 
of full regional commercial integration, as seen by the 
collapse of negotiations for a Free Trade Area of the Americas 
(FTAA). Free trade is an engine of job creation and social 
mobility, and it would contribute to creating a more stable 
environment for U.S. investors in Uruguay.
    Regionally, the United States would signal its clear 
commitment to free trade, an important marker given the anti-
free trade rhetoric of many governments in the region. Most 
importantly, for the United States, a trade arrangement with 
Uruguay could increase opportunities for deepening support for 
our hemispheric agenda, as expressed bilaterally or regionally 
through organizations such as the Inter-American Development 
Bank or the Organization of American States. There is no 
guarantee that Uruguay will agree with U.S. positions, but the 
door may be open for greater collaboration and support through 
deeper institutional relations.
    A closer trade relationship with Uruguay could encourage 
some heretofore reluctant countries to expand their trade 
relations with the United States; U.S.-Brazil trade, for 
example, is far from reaching its full potential. Stronger 
U.S.-Uruguay relations could spur greater development of 
commercial relations between the United States and Brazil.
    The United States and South American countries would stand 
to gain from expanded access to each other's markets. A 
unilateral trade preference program for Uruguay would reinforce 
our message that we value Uruguay as a strategic partner within 
our broader policy towards South America and signal the United 
States is not ceding its interests in the Southern Cone.

 
                               APPENDIX I

                              ----------                              


Contributor

    Kezia McKeague, Legislative Assistant, Committee on Foreign 
Relations, United States Senate

                  Meetings With Individuals in Uruguay


Uruguayan Government Officials

    Senior Trade Officer, Alvaro Ons
    Foreign Minister, Gonzalo Fernandez
    National Party Senator, Sergio Abreu
    Frente Amplio Senator, Alberto Couriel
    Minister of Industry, Energy, and Mining, Daniel Martinez
    Director of Industry, Roberto Kreimerman
    Minister of Economy and Finance, Cr. Alvaro Garcia

                      Other individuals and groups

    Frente Amplio Economist, Fernando Lorenzo
    Uruguayan Textile Association President, Norberto Cibils
    Apparel Chamber of Commerce President, Elbio Fuscaldo
    American Chamber of Commerce
    Binational Center (Alianza) Montevideo facilities 
representatives
    Welcolan (Apparel manufacturer) representatives
    HISUD (Wood/Textile manufacturer) representatives


                              APPENDIX II

                              ----------                              


                          Table 1.--Key Figures
------------------------------------------------------------------------

------------------------------------------------------------------------

Textile/apparel exports (2008)---------------$290 million (including----
                                              wool), 4.8% of total
                                              exports (Of which wool
                                              exports were $206 million,
                                              or 3.5% of total exports
                                              (2008)).
Exports of textiles/apparel to the U.S.      $7.4 million, 3.4% of total
 (2008)                                       exports to the U.S. (Of
                                              which wool is $2.7
                                              million, apparel $2.7
                                              million, and other
                                              textiles $2.0 million.
                                              (2008)).
  Total textiles and apparel production      $372 million (about 4% of
   (2004)                                     total industrial
                                              production)
------------------------------------------------------------------------
Employment in T&A (2008)                     21,000 jobs
------------------------------------------------------------------------


                  Table 2.--Wool Exports by Destination
------------------------------------------------------------------------

------------------------------------------------------------------------
Total                                                        205,988,542
------------------------------------------------------------------------
China                                                         77,624,918
Germany                                                       33,561,121
Italy                                                         20,728,576
Brazil                                                        11,538,695
Japan                                                          7,526,220
Iran                                                           5,636,471
India                                                          5,095,274
Bulgaria                                                       5,084,848
United Kingdom                                                 4,526,009
Mexico                                                         4,417,789
Turkey                                                         3,928,133
Argentina                                                      2,959,220
Philippines                                                    2,914,661
Czech Republic                                                 2,846,254
United States                                                  2,704,704
Hong Kong                                                      2,216,438
Colombia                                                       1,536,936
Spain                                                          1,337,469
Thailand                                                       1,317,779
Morocco                                                        1,273,774
Switzerland                                                    1,023,636
Rest                                                           6,189,617
------------------------------------------------------------------------


                      Table 3.--Exports of Apparel
------------------------------------------------------------------------

------------------------------------------------------------------------
Total                                                         63,872,099
------------------------------------------------------------------------
Argentina                                                     29,022,934
Mexico                                                        14,464,388
Brazil                                                        10,243,937
United States                                                  2,639,393
Chile                                                          2,534,023
Tariff Free Zone Montevideo                                    1,712,797
Rest                                                           3,254,627
------------------------------------------------------------------------


                      Table 4.--Exports of Fabrics
------------------------------------------------------------------------

------------------------------------------------------------------------
TOTAL                                                          9,730,122
------------------------------------------------------------------------
Argentina                                                      5,126,617
Brazil                                                         4,455,317
United States                                                  2,044,357
Hong Kong                                                      1,522,822
Mexico                                                         1,072,267
Rest                                                           5,508,742
------------------------------------------------------------------------


 
                              APPENDIX III

                              ----------                              


                             107th CONGRESS


                               2d Session


                                S. 2796



    To authorize the negotiation of a free trade agreement with 
Uruguay.


                   IN THE SENATE OF THE UNITED STATES


                             July 25, 2002


   Mr. LUGAR (for himself, Mr. BREAUX, Mr. CHAFEE, Mr. GRASSLEY, Mr. 
    NICKLES, Mr. GRAHAM, Mr. HAGEL, Mr. SPECTER, Mr. HATCH, and Mr. 
   COCHRAN) introduced the following bill; which was read twice and 
                 referred to the Committee on Finance.


                                 A BILL

    To authorize the negotiation of a free trade agreement with 
Uruguay.

    Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``United States-Uruguay Free 
Trade Agreement Act.''

SEC. 2. FINDINGS.

    Congress makes the following findings:
          (1) Economic growth in the United States has been 
        considerably enhanced by bilateral agreements to lower 
        barriers for United States exports.
          (2) Free trade agreements facilitate economic growth 
        which enhances the welfare and quality of life of all 
        citizens of the countries which are party to the 
        agreements.
          (3) Countries that open their domestic markets, 
        remove barriers to foreign direct investment, and 
        promote free enterprise, empower their citizens to 
        escape poverty and maintain social and environmental 
        values.
          (4) Since the mid-1970's, Uruguay has implemented 
        successfully a number of economic and legal reforms, 
        including opening its markets and strengthening the 
        rule of law.

SEC. 3. UNITED STATES POLICY WITH RESPECT TO TRADE.

    It is the policy of the United States to seek the 
elimination of tariff and non-tariff barriers in order to 
achieve more open market access through bilateral free trade 
agreements. The free trade agreements should address the 
following:
          (1) National treatment and market access for 
        agricultural and industrial products.
          (2) Rules for determining which goods originate in 
        the territory of the United States and which goods 
        originate in the territory of the other party to the 
        agreement.
          (3) Customs procedures that facilitate trade and 
        collection of trade statistics, while ensuring the 
        validity of claims for preferential treatment.
          (4) Science-based, nondiscriminatory sanitary, 
        phytosanitary, and technical standards, including 
        voluntary standards.
          (5) Safeguard provisions consistent with 
        international law.
          (6) Government procurement procedures.
          (7) National treatment and rights of establishment 
        for foreign direct investors.
          (8) National treatment and market access for traded 
        services, including consumption of services abroad, 
        cross-border provision of services, rights of 
        establishment of commercial presence, and the movement 
        of natural persons.
          (9) Protection of intellectual property.
          (10) Transparency of legal and regulatory regimes.
          (11) Measures to promote electronic commerce.
          (12) Adherence to internationally recognized core 
        labor standards.

SEC. 4. NEGOTIATION OF A FREE TRADE AGREEMENT WITH URUGUAY.

    The President is authorized to enter into an agreement with 
Uruguay consistent with the policy described in section 3.

 
                              APPENDIX IV

                              ----------                              

    Staff requested from the Congressional Research Service 
(CRS) the following comparisons of Uruguay's per capita income 
with other countries that receive unilateral tariff 
preferences.






           *       *       *       *       *       *       *
    One simple measure of development is per capita income 
(PCI). The first comparison presented in Table 3 is a list of 
per capita incomes for 2006 of selected countries eligible to 
receive tariff preferences under one of the regional programs 
(AGOA, ATPA, CBERA, CBTPA, HOPE Act), and average PCI for Latin 
America and Sub-Saharan Africa. Sub-Saharan Africa, the poorest 
region on average, has a 2006 PCI of $648. Although Uruguay's 
per capita income is much higher than Sub-Saharan African 
countries on average, the three highest PCIs in the region, 
Botswana, Mauritius, and South Africa, are all comparable to 
Uruguay's. Ghana is a major outlier at $27,390. Estimates from 
Latin America and the Caribbean are also presented. In 
addition, annual growth rates for PCI are included for 20

                                 Table 3. Comparisons of 2006 Per Capita Income
----------------------------------------------------------------------------------------------------------------
                                                                       2006 Per Capita
                          Region/Country                                    Income           Growth in PCI 2006
----------------------------------------------------------------------------------------------------------------
Uruguay...........................................................            5,310                    6.7
----------------------------------------------------------------------------------------------------------------
Sub-Saharan Africa................................................              648                    3.0
  Botswana........................................................            5,570                    0.9
  Mauritius.......................................................            5,430                    8.7
  South Africa....................................................            5,390                    3.9
  Lesotho.........................................................              980                    6.4
  Senegal.........................................................              760                   -0.3
  Tanzania........................................................              350                    3.3
----------------------------------------------------------------------------------------------------------------
Latin America & Caribbean.........................................            4,785                    4.2
  Trinidad & Tobago...............................................           12,500                   11.6
  Panama..........................................................            5,000                    6.3
  Colombia........................................................            3,120                    5.3
  Ecuador.........................................................            2,910                    2.8
  Paraguay........................................................            1,410                    2.2
  Bolivia.........................................................            1,100                    2.7
  Haiti...........................................................              430                    0.7
----------------------------------------------------------------------------------------------------------------
Source: World Bank. World Development Indicators, 2008. Washington, D.C. April 2008. p. 14-16.

    A second comparison is presented in Table 4, which provides 
2007 PCI in real terms (adjusted for market prices) for Latin 
American and Caribbean countries that are eligible for tariff 
preferences under regional programs (not all Caribbean 
countries are included). In real terms, Uruguay's per capita 
income is well above the average for Latin America and the 
Caribbean. It actually ranks right below oil-rich Trinidad and 
Tobago among countries eligible for U.S. trade preferences in 
the Western Hemisphere. Nonetheless, there are certain 
Caribbean countries that retain eligibility for trade 
preferences that do have higher real per capita incomes. 
Trinidad exports to the United States under predominantly the 
CBTPA program, which extends tariff preferences on a temporary 
basis to energy products that, are excluded under the CBERA. 
The Bahamas is another high PCI country because of its 
financial services industry; it has little merchandise trade 
with the United States. For the most part, the Caribbean 
countries have developed into service economies, with some 
still producing in the agricultural sector, making comparisons 
with Uruguay more difficult. Preliminary estimates of PCI 
growth rates for 2008 are also included, a statistic that 
highlights Uruguay's recent strong economic growth.

                    Table 4. Real Per Capita Income for Latin America and the Caribbean, 2007
----------------------------------------------------------------------------------------------------------------
                                                                       2007 Per Capita
                          Region/Country                                Income ($2000)      Growth in  PCI 2008
----------------------------------------------------------------------------------------------------------------
Uruguay...........................................................            7,255                   11.2
----------------------------------------------------------------------------------------------------------------
Latin America & Caribbean.........................................            4,732                    3.3
----------------------------------------------------------------------------------------------------------------
Latin America.....................................................            4,723                    3.3
Caribbean.........................................................            5,530                    1.9
----------------------------------------------------------------------------------------------------------------
  Bahamas.........................................................           18,393                    0.3
  Trinidad & Tobago...............................................           10,916                    3.1
  Barbados........................................................            6,706                    1.2
  Panama..........................................................            5,205                    7.5
  Jamaica.........................................................            3,028                   -0.5
  Colombia........................................................            2,853                    1.7
  Ecuador.........................................................            1,624                    5.0
  Paraguay........................................................            1,467                    3.1
  Bolivia.........................................................            1,090                    3.7
  Guyana..........................................................              910                    5.1
  Haiti...........................................................              392                   -0.2
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Source: United Nations. Economic Commission on Latin America and the Caribbean. Statistical Yearbook for Latin
  America and the Caribbean, 2008. Santiago, February, 2009. p. 86 and 88.

                                 

      
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