European Union External Action

Uruguay and the EU

10/05/2016 - 15:24
EU relations with Country

Relations between the European Union (EU) and Uruguay have become stronger since the Framework Cooperation Agreement was signed in 1992, improving political and economic dialogue. Uruguay is also an active participant in relations between the EU and Mercosur.

The EU and Uruguay signed the Framework Cooperation Agreement in 1992 to promote bilateral relations with the aim of increasing cooperation with regard to trade, finance and technology, among other things.

The agreement sets up regular meetings through Joint Committees for the purposes of sharing information and discussing topics of interest. Specifically, the ninth Joint Committee meeting between Uruguay and the EU took place in Montevideo on 5 June 2014.

Following the 1992 agreement, bilateral relations have been extended, and fostering relations with the EU has been established as a priority in Uruguay's foreign policy.

Bilateral relations have taken on a new dimension with the EU's support for the Mercosur regional integration process and with the progression of EU-Mercosur negotiations aimed at strengthening political, trade and cooperative relations between the two blocs.

At a regional level, relations with Uruguay are also developed within the context of the Community of Latin American and Caribbean States (CELAC), through discussions together with other countries and regional groups. 

The EU's economic relations with Uruguay have continued to strengthen in recent years. Despite the difficult international situation, flows of capital and direct investment from Europe to Uruguay have been growing. Companies such as UPM (cellulose), Montes del Plata (cellulose), Katoen Natie (logistics/port operations), Glencore (agriculture), Sofitel (tourism), Bayer (pharmaceuticals), Banco Santander, BBVA (banking) and Movistar (telecommunications), among others, are active participants in Uruguay's economy. This is testament to the great potential for growth that exists for Uruguay's economic relations with the EU. The EU is Uruguay's biggest investor. In 2014, European investment stock in Uruguay exceeded €6 billion (source: Eurostat). 

Trade relations between the EU and Uruguay form part of the Framework Cooperation Agreement.

The EU is Uruguay's third-biggest trade partner, with an 11 % share of the Latin American country's exports and a 15 % share of its imports in 2015, putting it behind only China and Brazil. In 2015, the volume of goods exchanged between the two blocs exceeded €3.6 billion, up 30 % from the previous year.

Exports to Uruguay are dominated by machinery and chemical products, while imports are mainly agricultural products and raw materials.

In particular, the EU is a key market for high-quality Uruguayan beef and the destination for almost 21 % of exports of this product, as Uruguay benefits from a specific high-quality quota (Hilton quota: 6 300 tonnes) and is one of the few countries in the world that has access to the EU High-Quality beef quota (Regulation EU 481/2012, 48 200 tonnes).

Exports of services to Uruguay have also grown considerably in recent years, increasing from €800 million in 2010 to almost €1.3 billion in 2014.

The EU and Mercosur

In the context of regional integration, following the Framework Cooperation Agreement of 1995, the EU and Mercosur began preparing an Interregional Association Agreement, which is currently under negotiation. The difficulty of this process, which was relaunched in 2010, reflects the significance of managing to bring the two regions together and create the largest free-trade area in the world, with more than 750 million residents. The agreement will strengthen political dialogue and cooperation and expand economic and trade relations between the regions. On 11 May 2016, for the first time since negotiations were restarted, proposals were exchanged in the areas of access to goods, services and government procurement.

The EU remains Mercosur's main trade partner and the biggest investor in the region. In 2015, trade between the two blocs amounted to €93 456 billion (€49 267 billion in exports from the EU to Mercosur and €44 189 billion in imports). European investment stock in Mercosur exceeded €410 million in 2014.

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Between 2007 and 2013, the EU's cooperation with Uruguay focused on three priority areas: social and territorial cohesion, technological innovation, research and development, and justice.

The rapid growth of the Uruguayan economy (which grew by 5.2 % per year on average between 2004 and 2014) and significant improvements in social indicators have set Uruguay apart from its Latin American neighbours as an egalitarian society with a high per-capita income, a low level of inequality and an almost complete absence of poverty. In relative terms, it has the largest middle class in Latin America.

As a result of these advances, in 2013 Uruguay began to be considered a high-income country, meaning that, as of the 2014-2015 financial year, it was no longer eligible for bilateral cooperation with the EU. However, Uruguay is still able to take part in other cooperation programmes, such as regional programmes for Latin America, thematic programmes (for civil society organisations or the European Instrument for Democracy and Human Rights) and other EU programmes open to other countries, such as the Horizon 2020 programme and Erasmus+.

The EU has a strategic plan for humanitarian aid for Uruguay through the disaster preparedness programme (DIPECHO).

Through its humanitarian aid, the European Commission not only provides assistance in emergencies, but also seeks to ensure that advance preparation is in place for the risk of natural disasters.

The range of projects includes training, awareness-raising, risk mapping, emergency plans, early-warning systems and mitigation projects.

Through DIPECHO, the EU allocated €47.5 million to risk prevention in South America between 1998 and 2011.

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