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Uruguayan Senate debates US BIT, looks for common Mercosur posture on BITs

INVEST-SD: Investment Law and Policy News Bulletin, August 22, 2005

Published by the International Institute for Sustainable Development

Uruguayan Senate debates US BIT, looks for common Mercosur posture on BITs

By Damon Vis-Dunbar

The Uruguayan Senate remains deeply divided on whether to move forward with the ratification of a US-Uruguayan Bilateral Investment Treaty (BIT) following a heated three-hour senate session requested by the opposition National Party (PN).

It was thought that ratification of the investment treaty would be one of the new government’s first major tests in parliament. But there has been little movement on the treaty since the Progressive Encounter-Broad Front (EP-FA), a left-leaning coalition government, took power in March. A vote on the treaty, which was negotiated last year, now appears unlikely before 2006.

Fractions of the EP-FA are fiercely opposed to the investment treaty which was concluded under the previous administration of Partido Colorado (PC) leader Jorge Batlle.

During the senate debate on August 4, 2005, the governing EP-FA said they were “analyzing” the treaty and proposed creating a working group made up of Mercosur member countries in order to form a joint stance on BITs.

Strengthening relations with Mercosur, the Southern Cone customs union, is one of the administration’s top foreign policy objectives, as they find themselves ideologically aligned with the centre-left governments of Brazil and Argentina.

So far Argentina is the only Mercosur member to have entered into a bilateral investment treaty with the United States, a decision unpopular with the present Argentine administration which has seen the 1990s-era treaty used by foreign investors in order to skirt around local courts in the aftermath of the Argentine financial crisis.

But the decision to consult Mercosur is interpreted by some as a delay tactic, says Francesco Panizza, a professor of Latin American Politics at the London School of Economics. The government encompasses a wide range of political groups, from the far left to more centrist factions, and this treaty is stressing the coalition.

“This is less a matter of foreign relations than it is a matter of internal division within the ruling coalition,” says Panizza.

While the coalition government quarrels, the opposition is growing increasingly impatient. Senator Julio Sanguinetti (PC), a two-term president who held office for a decade, said failure to ratify the US investment treaty would be a “major political mistake”, according to Uruguayan media reports.

Determined to push the process forward, the PN has proposed another senate session for September 22 to once again discuss the US-Uruguay BIT.


Text of US-Uruguay BIT is available at:

“US Launches BIT negotiation with Uruguay; Pakistan Next in Queue?”, By Luke Eric Peterson, INVEST-SD News Bulletin, May 24, 2004

“US-Uruguay BIT text released; new Uruguayan govt may review text”, By Luke Eric Peterson, INVEST-SD News Bulletin, November 18, 2004

“Uraguay buscara modelo similar de tratados de inversion en el Mercosur”, La Republica, August 5, 2005

Gobierno Uruguayo no define posicion sobre tratado de inversiones con EEUU”, El Pais, August 5, 2005

 source: INVEST-SD