The first roundtable discussion of the National Academy of Economics’ Annual Series took place on Thursday, September 10, 2015, at the School of Business and Social Sciences at Universidad ORT Uruguay.
The event, titled “Uruguay: Challenges for the 2015–2020 Period,” featured presentations by Dr. Gabriel Oddone, a partner at CPA Ferrere; Carlos Pérez del Castillo, a special advisor to the Minister of Foreign Affairs on trade negotiations; and Juan Labraga, an associate professor of international trade at the university.
The conference focused on how to prepare the country to address challenges related to international integration.
Goods and services
Labraga said that, in Uruguay's exports and imports, goods and services have grown dramatically. As for the breakdown of trade in services, there are several modes: cross-border trade, tourism, and direct trade.
As for goods, “the Central Bank doesn’t yet have the 2014 figure; it’s using the 2013 figure again, and this is a category that changes significantly when you look at backward revisions,” he said, adding: “Therefore, when we look at goods, we’re only seeing 60% of the picture.”
Regarding the share of global GDP, Labraga noted that the second half of the 20th century was marked by stability. Countries such as the United States and Japan, along with the European Union, held the lead from the 1960s until 2003, when several countries, including China, began to emerge.
For Labraga, the conclusion of the Doha Round negotiations marked the final confirmation of the shift away from the old balance of the multilateral trading system and the beginning of a transition toward a new balance that we do not yet know.
TISA According to Labraga
Uruguay had little to gain from this agreement in economic terms, but not so little in terms of its standing and national brand, Labraga noted.
“These types of agreements tend to reinforce the status quo rather than lift existing restrictions on market access,” he explained.
According to Labraga, Uruguay had nothing to lose in the TISA (Trade in Services Agreement), provided that negotiations were conducted professionally and appropriate safeguards were established. “The country has the capacity to handle this type of negotiation,” he said.
Outlook for Uruguay
Next to speak was Carlos Pérez del Castillo. “If we are going to discuss foreign investment, the starting point for Uruguay is its growth and development, which are linked to the expansion, diversification, and modernization of its external sector.”
He added that a fundamental shift in foreign trade policy should serve as an irrefutable foundation for the government to bring together political parties, the business sector, labor unions, and civil society, along with the academic community, in order to develop a genuine national policy.
“A country like Uruguay cannot single-handedly set its own agenda for external integration, but rather must explore opportunities to join existing integration frameworks in various spheres: regional, hemispheric, plurilateral, or multilateral,” said Pérez del Castillo.
According to the speaker, Uruguay has experienced many setbacks and is currently facing a crisis of identity and credibility, with stalled negotiations and widespread paralysis.
The multilateral trading system is the framework he considers most suitable and least costly for the country's integration into the global economy.
“It allows us to negotiate, in a single forum, a wide range of issues, rules, and regulations that apply to all countries.”
Lessons, dilemmas, and challenges for external integration
Gabriel Oddone said that the country's place in the international community has not changed significantly over the past 40 years.
He explained that Uruguay grows more when it looks outward. “Trade helps overcome ‘diseconomies’ of scale and encourages learning and innovation,” he said. “Diversifying markets means concentrating products, and vice versa.”
“The lack of tools to address imbalances prevents Mercosur from being a source of dynamism,” Oddone said.
He also said that there are policies that distort trade and investment flows, which primarily affect smaller countries.
“There’s a naive debate about whether or not to join Mercosur. We’re part of a regional agreement; it doesn’t make sense for us to say we don’t want to be part of it.”
The TISA for Oddone
For Oddone, the TISA was a tool worth using because external integration is crucial. He also pointed out that the discussions on the subject were superficial.
“It would have provided access to key information needed to develop a strategy based on the international agenda for the liberalization of trade in services, which accounts for more than 50% of GDP,” he said.
Finally, he stressed that the issue of international integration is crucial for the country. “Uruguay made a decision that, in my opinion, is very, very bad, and I get the feeling that no one is aware of it.”