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III. TRADE POLICIES AND PRACTICES BYMEASURE
(1) Overview
1. Under Paraguay 'strade liberalization programme, initiated in1989 andcarried forward in
the1991fiscal reform, theuseofnon-tariff measures hasbeensubstantially scaled back, while tariffs
havebeenreduced andrationalized. Membership ofGATT/WTO andMERCOSUR hasstrengthened
theframework fortrade inanumber ofareas.
2. Thesimple average tariff, based ontheMERCOSUR CET, is9.6percentin1997, down from
14.8percentin1992. Theprocess ofconvergence totheCET hasresulted inasmall increase in
theaverage tariff from 9.1percentin1995, andfurther increases areexpected through totheyear
2006when theaverage willreach 11.1percent. These increases intheapplied tariff, apartial reversal
ofthetariffreforms, alsorequired anadjustment ofParaguay 'sbinding commitments. Since Paraguay
hasarelatively undeveloped manufacturing sector, thetariff isessentially asource ofgovernment
revenue, butunder MERCOSUR commitments itnowalsoprovides protection forregional partners '
industries intheParaguayan market.
3. Under thetrade reforms, import surcharges were eliminated andprohibitions were replaced
bytariffs. Legislation allowing fortheadoption ofimport restraints foreconomic reasons remains
inforce, buttheWTO hasnotbeennotified thatanymeasures inconsistent withtheprovisions ofGATT
1994 arebeing applied. Consular fees, almost equivalent totheaverage tariff, arelevied onan
advalorem basis. Storage feesarealsocalculated onanadvalorem basisandarecharged atahigher
rateforimports thanforexports. Preshipment inspection requirements havebeenintroduced tohelp
fightfraud, while customs valuation andclearance procedures havebeenrecently modified inlinewith
MERCOSUR andmultilateral commitments. Theenforcement ofsanitary measures hasbeen
strengthened. Improvements arebeing made intheenforcement oflegislation particularly inthearea
oftheprotection ofintellectual property rights.
4. Paraguay hasnoexport subsidies, andexport incentives remain insignificant; VAT paidon
imported inputs iscredited ontheexport offinalgoods. Legislation providing forfiscal incentives
forfirms established infree-trade zones hasbeenrecently enacted. Nomajor export restrictions apply
except forun-processed andsemi-processed wood.
5. State trading persists insteel, cement, hydrocarbons, electricity, telecommunications,
transportation andportservices, while provisions forobliging usebytheState andState-owned
enterprises ofdomestic orsub-regional suppliers under cargo reserve requirements andinthearea
ofinsurance remain inforce. Domestic support toagriculture isprovided through various programmes
tomeetseveral objectives, including cropconversion, contingency protection andemergencies. Public
utilities arestillpriced below marginal costsbutaprogramme toachieve fullcostrecovery hasstarted;
concessional tariffs areavailable forindustries which areintensive users ofelectricity. Transparency
ingovernment procurement procedures isexpected toimprove following therecent introduction of
registration requirements forsuppliers.
6. Inthenearfuture Paraguay 'strade policies aretobefurther adapted toMERCOSUR and
multilateral commitments. Newlegislation isunder preparation inareas suchasthedutycollection
system andintellectual property rights, including patents.Paraguay WT/TPR/S/26
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(2) Measures Directly Affecting Imports
(i) Registration anddocumentation requirements
7. In1995 theMERCOSUR Customs Code, containing guidelines onseveral aspects offoreign
trade operations within andoutside theregion, wasadopted andisbeing applied byParaguay.1Each
member Statemaydecide andregulate the(compulsory oroptional) involvement ofcustoms brokers
incustoms clearance procedures (including dutypayment) atthedomestic level; thisisthecasefor
Paraguay, where customs clearance requires theintervention ofacustoms broker. Customs brokers
areauthorized tomake payments ofcustoms duties andother charges.2
8. Allimporters (andexporters) mustberegistered withtheCustoms. Importers, distributors,
manufacturers andprocessors offoodproducts needtoregister withtheMinistry ofPublic Health and
Social Welfare, while importers (andimports) ofrawvegetable items andagri-chemicals must be
registered withtheMinistry ofAgriculture andLivestock (MAG).
9. Basiccustomsclearancedocumentationrequirementscompriseanimportstatement,acommercial
invoice, asworn declaration, acustoms value declaration, acertificate ofpre-shipment inspection,
thebilloflading orairwaybillandthepacking list.Requirements foritems subject tohealth, security
orother controls include, interalia,import licensing (e.g., priorauthorization) andsanitary orhealth
certificate (sections (2)(iii) and(2)(v)). Acertificate oforigin mayalsoberequested, forexample,
tobenefit from anLAIA preference. Thecommercial invoice andshipment billissued byforeign
authorities mustbeauthenticated ataParaguayan consulate orattheParaguayan Customs. Asingle
MERCOSUR customs document (DUAM) maybeoperational bytheendof1997.
10. Fines relating todiscrepancies (ofmorethan50percentoftheresulting import duties) between
theoriginal description ofgoods andtheactual shipment, cannot belessthan30percentofthetotal
amount ofcharges onthemerchandise normorethanthreetimes thisamount.3Anyaction ofdefrauding
customs, resulting inalossofcustoms revenue, issubject todouble theamount ofcustoms duties.
(ii) Tariffs andother price-based measures
(a) General features
11. Since 1988Paraguay hasusedtheHarmonized Commodity Description andCoding System.4
TheParaguayan customs tariff (HS96 version) isbased onMERCOSUR 'sCETandpublished inthe
Official Journal aswellasbyprivate firms. Itcontains 9,105 eight-digit tariff lines.5
1MERCOSUR Decision 25/94 citedinMinisterio deIntegración (1995), p.16, andadopted byLaw621/95,
4August 1995. However, thecode wasnotratified byother MERCOSUR members andiscurrently being
renegotiated.
2MERCOSUR Decision 16/94 cited inMinisterio deIntegración (1995), p.16.
3Dun&Bradstreet (1996).
4Thiswasfirstadopted under Decree 1663, 28December 1988.
5TheMERCOSUR CET wasfirstimplemented through Decree 7144, 30December 1994; itsmost recent
version wasadopted byDecree 12056, 29December 1995. Calculations ontariff lineandother aspects ofthe
CET arebased ondatasupplied bytheParaguayan authorities indiskette form.Paraguay WT/TPR/S/26
Page 33
56.5percentandthenominal average tariff ratestood at14.8percent. Under these reforms tariff
protection wasreduced andrationalized, withthree main tiers, 3,5and10percent, except for
automobiles (above certain value) which weredutiable at15and20percent.7Thereforms wereintended
toimprove theallocation ofresources andwerepartoftheeffort tocurtail "informal" trade.8Asnoted
insection (4)(ii), tariff revenues haveincreased under theprogramme, except in1992.
15. Thetariff reform process waspartly reversed withtheadoption oftheMERCOSUR CETin
January 1995.9Theadoption andgradual convergence toCET ratesistoleadprogressively toan
increase inParaguay 'snominal average tariff protection from 9.1percentin1995 to11.1percent
in2006.
16. UndertheCET,Paraguay'sessentiallythree-tierstructure,hasbeentransformedtoaneleven-tier
CET, withratesof0,2,4,6,8,10,12,14,16,18and20percent. Exceptions tothese ratesconsist
ofsome 2,004 eight-digit items based ontheHS96, or22percentofthetotal, where rates areto
converge gradually tothehigher CET levels by1January 2006, and288items or3.2percentoftotal
where ratesaretofallprogressively.10These consist of:
- common(allMERCOSURpartners)exceptions,coveringcapitalgoods(1,142eight-digit
items or12.5percentofthetotal), informatics andtelecommunications products
(435eight-digit items or4.8percentofthetotal);
- national (country-specific) exceptions. ForParaguay these comprise 427eight-digit
items (or4.7percentofthetotal) products. These products arecertain semi-processed
agricultural items, tobacco, chemicals, medicines, fertilizers, dyes, cosmetics, paper,
textiles, footwear, ironandsteelandcopper articles, electrical apparatus (including
audiovisual equipment), watches, games andtoys;
- national(country-specific)exceptionsduetothe(intra-MERCOSUR)adjustmentrégime
(Chapters IIandIV), comprising 288eight-digit items sensitive forParaguay
(convergence toCET through progressive cuts). These include meat, milk, honey,
eggs, tomatoes, carrots, bananas, processed rice,vegetable oil,jam,coffee, cigarettes,
cement, hide, wood andproducts thereof, paper items, bags, items made ofcotton,
footwear, containers andfurniture;
7Decree 14003, 24June 1992.
8World Bank (1994b), pp.3and5.
9Exceptionstotheduty-freetreatmentofimportsfromotherMERCOSURcountriesarecoveredinChaptersII
andIV.
10Decree 7144, 30December 1994 asamended byDecree 12056, 29December 1995; Decree 15512,
22November 1996.WT/TPR/S/26
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- aseparate national schedule ofrates fortheautomobile industry (duetotechnical
difficulties andlackofsufficient information these ratesarenottaken intoaccount in
Charts III.1andIII.2andTable AIII.1).11
- atemporary (1995, 1996 and1997) 30percentrateforsugar.12
17. Tariffs forcertain agricultural items havebeenapplied onaseasonal basis since 1995 when
import restraints ofasimilar typewereeliminated (section (iii)). Imports forthese items havebeen
dutyfreefortheperiodsJanuary-April(tomatoes,carrots,bananasandoranges),January-August(onions
andgarlic) andMay-August (pineapples).13
(c) Tariff escalation
18. Under theapplied tariff structure in1997, tariff escalation ispronounced inallsectors except
forfoodmanufacturing, where semi-processed items benefit from higher protection thanfinished
(Table AIII.1); leather andchemicals, where average protection forunprocessed material ishigher
thansemi-processeditems;andnon-electricalmachinery,wherefinishedproductsaremuchlessprotected
thansemi-manufactures (Chart III.2andTable AIII.1). Nosignificant change tothispattern, except
fortheintroduction oftariff escalation tothenon-electrical machinery processing chain, isforeseen
untiltheyear2006 when allMERCOSUR CET ratesaretobeapplied byParaguay.
(d) Tariff bindings
19. Upon accession totheGATT, Paraguay bound itscustoms tariffatanacross-the-board ceiling
rateof35percent,except forcertain products which werebound atlower rates.14Thesame binding
commitments constituted Paraguay 'scontribution totheUruguay Round.15Market access commitments
foragricultural products arefreefrom anyquota limitations. InDecember 1996, Paraguay invoked
Article XXVIII:(5) andthusreserved itsright tomodify itsschedule during thethree-year period
beginning 1January 1997.16
11Annexes I-AandI-BofDecree 7306, 13January 1995; Annexes I,IIandIIIofDecree 12056,
29Decemb er1995.AsstatedinChapterII,theautomotivesectorisexemptfromCETconvergencecommitments
under awaiver until theestablishment ofaCommon Automotive Régime.
12Decree 7306, 13January 1995; Decree 12168, 17January 1996; Decree 16357, 19February 1997. As
discussed inChapter II,ascheme forconvergence ofthesugar sector toCET rates wastobeexamined by
MERCOSUR members byMay 1997.
13Decree 12059, 29December 1995.
14These rates, setat10,15,20,25and30percent, cover 82agricultural products (including liveanimals,
meat,powdermilk,vegetables,nuts,fruit,grains,seeds,vegetableoils,sugar,juices,alcoholicbeverages,tobacco
products) and369industrial items (including chemicals, medicines, fertilizers, insecticides, pesticides, dyes,
cosmetics, plastics, wood pulp, paper, printed material, wool, fabrics, textiles, glassware, articles ofprecious
andother metals, engines, industrial machinery andparts, electrical appliances, transport equipment, various
instruments andscientific equipment) atHSeight-digit level. Australia, Canada, theEC12, Finland, Japan,
Norway, Sweden, Switzerland andtheUnited States have initial negotiating rights (List XCI, 30June 1993).
15Schedule XCI, 15April 1994.
16WTO document G/MA/50, 23January 1997.WT/TPR/S/26
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20. Since December 1995 Paraguay 'sbinding commitments have been waived toallow the
introduction ofthechanges oftheHarmonized System (HS96), intoitsSchedule; thewaiver was
extended until31October 1997.17InOctober 1996, theinformation onthese changes wassubmitted
totheWTO Secretariat; inthiscontext, theauthorities provided theassurance thatthechanges had
notledtoParaguay failing tofulfilitsbinding obligations.18ByApril 1997, theprocess hadnotbeen
finalizedbecausecertainWTOmembersexpressedreservationsconcerningthedocumentationprovided.
21. Theprogressive application ofMERCOSUR CETuntil2006, hasalready affected ormayyet
affect items bound atratesof10or15percent,representing 37percentofinitial bindings atalevel
lower thantheacross-the-board rate,andimports ofUS$246 million fortheperiod 1992-94.19In
November 1996, MERCOSUR countries communicated totheWTO theirintention toconsult with
interested parties, withaviewtoexamining thechanges introduced bytheCETandthemaintenance
ofthegeneral levelofconcessions, asprovided forinparagraph XXIV:6 andtheEnabling Clause.20
Theyemphasized thatdueaccount should betaken forcompensation already afforded bythereductions
brought about inthecorresponding dutyoftheother MERCOSUR members. Consultations wereto
beheldjointly bytheMERCOSUR member countries ondates tobeagreed withinterested parties.
(e) Duty concessions, drawbacks andexemptions
22. Thetariff exemption régime wassubstantially revised inthe1989-92 tariff reform, andmany
exemptions wereeliminated.21Tariff exempt imports currently include capital goods, inputs andraw
materials (related totheinvestment incentives régime); material required fortheoperations ofcertain
publicenterprises(ANNP,ANTELCO,ANDE,FerrocarrilCentralCarlosAntonioLópez,section(iv));
certain goods intended forre-export within aspecific period oftime(temporary admission); imports
under thefree-zone régime (section (3)(vii)); goods exempt inaccordance withinternational treaties;
baggage ofinternational travellers; baggage andhousehold effects ofimmigrants andrepatriated
Paraguayans; goods intended forcultural purposes; samples without commercial value, certain
17WT/L/124, 16January 1996; WT/L/173, 25July1996; Draft Decision (G/MA/W/12, 4April 1997),
adopted atthemeeting oftheGeneral Council heldon24April 1997.
18WTO document G/MA/TAR/2/Rev.5, 19December 1996.
19Theseincludefoodpreparations,beer,wine,unprocessedtobacco,medicines,dyes,essentialoils,cosmetics,
paper,cottonfibres,textileitems,ironandsteelarticles,tools,industrialmachinery,transportequipment,medical
apparatus andmusical instruments.
20WTO document WT/COM/TD/1/Add.5/Rev.1, 6November 1996. Adifferent approach hadbeen
communicated totheGATT inDecember 1994, prior totheintroduction oftheCET. Atthattime thefour
MERCOSUR countries intended towithdraw their national schedules toGATT andtopresent anequivalent
MERCOSUR schedule. They were toconsult withinterested delegations under paragraph 4oftheEnabling
Clause; andtoconduct consultations andnegotiations under Article XXVIII (GATT document L/7615,
23December 1994).
21World Bank (1994a).Paraguay WT/TPR/S/26
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medicines (e.g., insulin), printed material (books, magazines, newspapers), etc.22Nostatistics ontariff
exempt imports (e.g., forgone dutyrevenue, share intotalimports) areavailable.
23. Nochanges wereintroduced inthetariff exemption régime atthetimeofimplementation of
theMERCOSUR CETin1995. However, MERCOSUR provisions, intended toensure regular supplies
ofrawmaterials andinputs byallowing forthetemporary (oneyear,renewable) reduction ofCET rates
down to2percenton20eight-digit HSitems (tobefreely selected byindividual members), were
adopted in1995. Members maymake suchreductions provided thatsupplies ofsuchitems arenot
available attheregional level; andthetariff cutsdonotdistort trade flows andaffect competition
within theregion. Paraguay hasmade useofthese provisions forJapanese mintandpolyester film
in1996, andforphosphate fertilizers in1997; imports under thereduced ratesaresubject toquantitative
limitations.23
24. Until 1992, imports tobeusedbythetourism industry intheborder towns ofCiudad delEste,
Pedro JuanCaballero andEncarnación weresubject toasingle dutyof6percentadvalorem which
replaced allother taxes andduties.24Thisrégime wasreplaced bythetourism régime discussed in
section (4)(ii).
(f) Customs valuation, preshipment inspection, andcustoms clearance
Customs valuation
25. InJanuary 1995Paraguay adopted provisions implementing theWTO Agreement onCustoms
Valuation inconformity withrelevant MERCOSUR regulations, thusupdating domestic legislation
dating from 1975.25Inaccepting theWTO Agreements, Paraguay invoked thedelayed application
ofcertain provisions oftheCustoms Valuation Agreement forafive-year period andthereservation
concerning theutilization ofminimum values.26
26. In1995 theinstitutional structure wasreinforced withthecreation ofaTechnical Unitof
Valuation toassist intheapplication ofthenewprovisions (including investigations onappeals), as
wellasthrough theestablishment oflocal Customs Valuation units entrusted with operational
aspects (e.g., valuation, litigations).
22Law 60/90 onPromotion ofInvestment forEconomic andSocial Development, Law1095/84, Customs
Code Law1173/85 andtheregulations established byDecree 15813/86 allcited inGATT document L/7210,
30April1993;Article41ofLaw1286/67asamendedbyLaw102,24Decemb er1990;Article51ofLaw966,
12August 1964; Article 14ofLaw1079, 30August 1965; Article 41ofLaw1066, 23August 1965;
Decree 28075, 28April 1988; Law77,3December 1992; Law94,24December 1994.
23MERCOSUR GMC Resolutions 22/95 and37/95 cited inMinisterio deIntegración (1995), pp.32-33;
MERCOSURGMCResolution69/96andDecree15417,8November1996;andDecree12169,17January1996;
andDecree 14141, 15July1996.
24Bureau ofNational Affairs (1996); IMF (1995), p.385.
25Ministry ofFinance Decree 7403/95, 19January 1995; Decree 7143 (30December 1994) adopting
MERCOSUR/CMC/DEC 17/94.
26WTO documents G/VAL/2/Rev.3, 15April 1996 andWT/Let/1/Rev.2, 2May 1995.WT/TPR/S/26
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Preshipment inspection
27. In1996, preshipment inspection (PSI) wasintroduced withtheobjective ofboosting customs
receipts, clamping down onunder-invoicing andstrengthening thechecking ofcertificates oforigin.27
InJanuary 1996, prior totheissue ofPSIlegislation, theMinistry ofFinance wasauthorized bythe
President todirectly grant contracts (based ontheexamination ofdocumentation) totwospecialized
PSI agencies, the SGS (Société Générale deSurveillance )ofSwitzerland and
BIVAC International (Bureau Veritas Group) ofFrance.28
28. Since 1August 1996PSI,covering product description, state(neworused), quantity, quality,
origin andpriceverification, hasbeenusedforallimports withanf.o.b. value higher thanUS$3,000.
Items exempt from inspection include: artobjects, explosives, fireworks, arms, ammunition, war
material, newspapers, periodic publications, household andpersonal items, postal shipments and
donations. Inspection costs areborne bytheauthorities.
29. ThePSIlegislation, inforce since August 1996, wasnotified totheWTO inFebruary 1997.29
Customs clearance
30. Allimports mustbestored inpublicly owned warehouses forcustoms clearance which must
beinitiated notlaterthan60daysafterarrival. Ifdelays occur incustoms clearance, storage feesincur.30
31. Allshipmentshavingcompliedwithpreshipmentinspectionrequirementsarestillfullyinspected
bytheCustoms despite pledges thatonlyrandom controls would becarried outaftertheintroduction
ofthePSIsystem. According totheauthorities, thisisatransitional measure which willenable the
smooth implementation ofthePSIrégime.
(g) Other levies andcharges
32. Portfeesandother charges forshipping services levied bythestate-owned National Shipping
andPorts Administration (ANNP) donotdifferentiate between imports andexports, except forhandling
charges. Exports stored inANNP-owned warehouses benefit fromrates, setonanadvalorem basis,
50percentlower thanimports; in1992 thefullrates(applicable toimports) ranged between 0.75
and3percentdepending ontheproduct.31
33. Since 1972, aconsular tax,currently atarateof7.5percentontotalmerchandise value (stated
intheinvoice), hasbeenlevied onallimports except forwheat (including flour), fuels, salt,certain
27Thisdecision wasprompted bytheresults obtained using aprivate verification company (CIVECA) for
container traffic through Ciudad delEstesince mid-1995 (EIU, 1996c, p.36).
28Decree 12311, 31January 1996.
29Ministry ofFinance Resolution 1171, 3July1996.
30Dun&Bradstreet; andLaw1173, 17December 1985.
31Article 7ofDecree 12499, 13February 1992.Paraguay WT/TPR/S/26
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printed material, goldorsilver coins, vessels, airplanes andrailway equipment.32Inaddition, special
consular feesaffect compulsory document registration, additional copies andairmailcharges forsending
thedocumentation toParaguay; thefeesarelevied atfixedratesranging fromUS$10 (copies) tomore
thanUS$100 (registration). In1994and1995theauthorities raised G/15billion (orUS$8 million) per
yearfrom these charges.33
(h) Regional tariff preferences andrules oforigin
Preferences
34. Asdiscussed inChapter II,imports originating inLAIA countries enjoy preferential treatment
which permits reductions from them.f.n. rateofbetween 10and100percent.
35. Most imports from MERCOSUR partners arenowdutyfree,being subject onlytoborder
adjustments fordomestic taxes (Chapters IIandIV,andsection (4)(ii) ofthischapter). Exceptions,
covered bytheRégime ofFinal Adjustment, aretobeeliminated byParaguay by31December 1999.
Rules oforigin
36. Paraguay 'spreferential rulesoforigin aresetwithin thecontext oftheLAIA 'sGeneral Rules
ofOrigin (Resolution 78,24November 1987, andDecision 91oftheCommittee ofRepresentatives),
thespecific Rules ofOrigin oftheLAIA Partial-Scope Agreements or,where appropriate, the
MERCOSUR Rules ofOrigin (alsowithin theLAIA framework). These rules oforigin havebeen
notified totheWTO.34
37. Tobenefit from preferential tariff treatment, MERCOSUR rules require a60percentlocal
orregional content foritems originating initsmembers; Paraguayan exports ofitems contained in
itsnational exceptions list(section (2)(ii)(b)) toother MERCOSUR partners aresubject toa50percent
domestic orregional content untiltheyear2001.35
(iii) Import prohibitions andlicensing requirements
38. Since 1995, Paraguay hasnotmade useofanynon-tariff restrictions intheformoftemporary
andseasonalprohibitionsoncommercialgrounds;suchprohibitions,lastappliedin1994,mainlyaffected
arange ofdomestically produced agricultural items (e.g., dairy products, cereals, cotton, fruit,
vegetables).36These were converted intotariffs with theadoption ofcommitments under the
MERCOSUR CET andincluded intheconvergence lists.
32Decree Law46,11February 1974, asamended by: Decree 16060, 7January 1993; Law133,
18March 1993; Decree 5367, 25August 1994. Theconsular taxratewasraised in1993.
33Rates asindicated inDun&Bradstreet (1996). Figures contained inMinisterio deHacienda (1996).
34WTO document G/RO/N/12, 1October 1996.
35Presidencia delaRepública/Ministerio deRelaciones Exteriores (1996), p.85.
36Decree 11151 of1995.WT/TPR/S/26
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39. Upon accession totheGATT, Paraguay committed itselftothegradual elimination ofimport
prohibitions, restrictive import licences, andother quantitative restrictions thatwereinconsistent with
theprovisions oftheGeneral Agreement.37Paraguay wastoensure thatremaining restrictions and
import permit requirements were applied inamanner consistent withArticle XIIIoftheGeneral
Agreement andinaccordance withtheprinciple ofnon-discrimination. Allimport restrictions remaining
ineffect after31December 1994weretobenotified withreference, where applicable, totherelevant
provisions oftheGeneral Agreement, inparticular Articles XI,XII,XVIII, XIX, XXandXXI, within
sixmonths. Thisnotification hadnotbeensubmitted totheWTO Secretariat atthetimeofcompletion
ofthisreport inApril 1997; theauthorities assured theSecretariat thatthisnotification istobepresented
shortly.
Import prohibitions
40. According tolegislation stillinforce, import prohibitions orrestrictions foreconomic reasons
canbeintroduced forthepurposes ofimport substitution, economic development, balance-of-payments
orsafeguard, aswellastoprotect thedomestic production from harmful imports.38Theauthorities
confirmed totheSecretariat thatnorestraints arecurrently applied foreconomic reasons.
41. Atpresent imports ofanumber ofproducts thatmayjeopardize national security, public order,
public morals, public health oranimal andplant health areprohibited.39Prohibitions orrestrictions
maycover items subject tocommitments under certain multilateral agreements (section (4)(v)(a)).
42. Imports ofAfrican bees(Apismellífera adansonil ),hormonal substances forthefattening of
animalsforhumanconsumption,dangerousindustrialortoxicwaste,andchloramphenicolareprohibited
onhealth grounds.40Imports ofswine aswellassemen, products, sub-products andderivatives of
domestic orwildpigorigin fromareas where thereisAfrican swine fever andvesicular swine disease,
areprohibited.41In1994, Paraguay adopted MERCOSUR 'ssanitary regulations withrespect to
disease-free areas fortheimportation ofanimals, semen, embryos and(fertile) eggsfrom countries
outside thesub-region.42
Import licensing
43. Paraguay hasnotnotified totheWTO concerning itsimport licensing orprior authorization
procedures.
37GATT document L/7210, 30April 1993.
38Article 9ofLaw1095, 14December 1984.
39Articles 1,6and9ofLaw1095, 14December 1984.
40Decree 25045, 19October 1987; Decree 22444, 8June 1987; Law42,18September 1990; and
Decree 3265, 1October 1989 (GATT document L/7540, 26October 1994).
41Article 1ofMAG Resolution 175, 21June 1978.
42MAG Resolution 888, 5October 1994.Paraguay WT/TPR/S/26
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44. Imports ofcertain items require prior authorization, intheform ofnon-automatic licensing
from theappropriate government agency, depending ontheproduct.43Authorizations required for
national security reasons cover firearms, explosives andthelike. Authorizations forhealth andsafety
reasons (section (v)(b)) cover medicines, beauty andsanitary products, medical andorthodontic
instruments; drugs, narcotics andpsychotropic substances, aswellasproducts thatcould serve as
abasisfortheirproduction ingeneral44;livestock, seedstock (e.g., cotton seeds) andplants45,queen
bees, swarms oranyother living material; insecticides andfungicides.
(iv) State trading
45. Onitsaccession toGATT, Paraguay committed itself toapplying, from 31December 1994
onwards, thelawsandregulations governing theactivities ofState-trading enterprises, inconformity
withtheprovisions ofArticle XVII, including provisions fornon-discrimination, theapplication of
commercial criteria fortrade transactions, notification andother procedures. Anotification onthe
activities ofState-trading enterprises inParaguay (Table III.1) hasyettobesubmitted totheWTO.46
46. During thenegotiations forParaguay 'saccession, other delegations requested information on
theactivities, existence ofcompetition andimport restrictions benefiting firms likeACEPAR, INC
andFERTIPAR, andthescope andnature oftheportcharges applied byANNP. Theauthorities stated
thatnospecial privileges weregranted toStateentities orenterprises except forPETROPAR. APAL,
ACEPAR andINCwereself-financed andcompetitive firms which didnotreceive anypublic funds.
They stated thatimports ofcement werenotprohibited, thatAPAL wasnotinvolved inimport orretail
saleofother alcoholic beverages, andthatnoratediscrimination wasapplied byANNP.
47. Although theprivatization ofcertain State companies wasauthorized in1992, specific laws
were tobeissued forindividual cases.47Atthetime, theprivatization ofACEPAR, APAL,
FLOMERES, LAPandFerrocarril Central Carlos Antonio López wasenvisaged. However, since
thenonlyLAPhasbeenfullyprivatized, inAugust 1996. Furthermore, PETROPAR 'smonopoly rights
were waived in1992.48
43Law581,6Decemb er1923;Law672,7October1924;Decree2001/36;DecreeLaw8051,31July1941;
Decree 10189, 22December 1941; Decree 23459, 16June 1976; Law1340, 22November 1988; and
Decree 25045, 19October 1989, cited inGATT document L/7540, 26October 1994.
44Thelatest listofthese items iscontained inDecree 2824, 23March 1994.
45Authorization fortheimportation ofcotton seeds isrequired because oftheriskofimporting serious diseases
which donotexist inParaguay (Decree 10748, 28January 1942).
46WTO document G/L/35, 14November 1995.
47Law 126/91, 9January 1992.
48Article 21ofDecree 14003, 24June 1992, derogating Decrees 1663/88 and4522/90.WT/TPR/S/26
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Table III.1
State enterprises inParaguay, April 1997
Firm Activity Situation inprivatization programme
GOODS
Mining andEnergy
Petróleos Paraguayos (PETROPAR) Monopoly forimport, production andsaleof
crude petroleum, petrol anddiesel oilwith
obligation toensure adequate supplies and
price stability; alsomanufactures
petroleum-derived fuels.Monopoly status abolished in1992.
ITAIPU Binacional Exploitation ofhydro-electric resources;
jointventure withBrazilian Government.Currently under consideration
(Chapter IV).
Entidad Binacional Yacyretá Exploitation ofhydro-electric resources;
jointventure withArgentinian Government.SeeChapter IV.
Aceros Paraguayos Sociedad Anónima
(ACEPAR)Steel company (ACEPAR tookover
Siderurgia Paraguaya (SIDEPAR) in1990).Plans initiated in1992; privatization
under way.
Administración Nacional de
Electricidad (ANDE)Energy generation, transmission and
distributionDemonopolization plans announced in
1996 (Chapter IV).
Manufacturing
Industria Nacional delCemento (INC) Cement enterprise SeeChapter I.
Administración Paraguaya de
Alcoholes (APAL)/now Cañas
Paraguayas SA(CAPASA)aAlcohol company producing andexporting
sugar-cane-based alcohol.Plans initiated 1993; theState retains
29%share (privatization questioned on
constitutional grounds in1996).
FERTIPAR Fertilizer enterprise ...
SERVICES
Communications
Administración Nacional de
Telecomunicaciones (ANTELCO)State telecommunications corporation Plans fortransformation toajoint-stock
company in1997 (Chapter IV)
Radio Nacional delParaguay Government radio station ...
Transport
Administración Nacional de
Navegación yPuertos (ANNP)Responsible forensuring thenavigability of
rivers andmaintaining portfacilities.SeeChapter I.
Flota Mercante delEstado
(FLOMERES)Inland waterways andocean shipping
company (boats, barges, coldstorage ships)Plans initiated 1993; splitinto5firms
(Flota Mercante Paraguaya SA/largely
privatized, Compañía Marítime
SA/privatization inprogress, Compañía
deTransport Fluvial SA/privatized,
Astilleros yTransporte deCargas
Generales SA/privatization underway,
Compañía deTransporte dePasajeros y
Cargas SA/privatization underway).
Líneas Aéreas Paraguayas (LAPSA)aAirline services 80percentequity soldtoprivate
investors in1994; fullypassed to
private sector in1996 (Chapter IV).
Ferrocaril Central delParaguay Railway company Plans initiated in1994
Ferrocarril Central Carlos Antonio
LópezRailway company Plans initiated in1993; privatization
underway (needs US$8 m.investment)
Financial Services
Banco Nacional deFomento Development bank ...
Other
Corporación deObras Sanitarias
(CORPOSANA)Water supply, sewage disposal anddrainage. SeeChapter I.
... Noinformation wasavailable totheWTO Secretariat.
a Mixed-ownership firm(capital participation oftheprivate andpublic sector).
Note: Listisnotexhaustive aslittleinformation wasmade available onthescale ofoperations andpractices ofthese enterprises.
Source: GATT document L/7210, 30April 1993; Government ofParaguay.Paraguay WT/TPR/S/26
Page 43
(v) Standards andother technical requirements
48. Paraguay iscurrently participating theprocess ofharmonization ofstandards andthepreparation
offramework regulations atMERCOSUR level, including those relating toWTO consultations and
notification (prior toimplementation) procedures.
(a) Standards, testing andcertification
49. TheNational Institute forTechnology andStandardization, anautonomous entity oftheMIC,
isincharge ofstandardization atnational level.49TheInstitute which, interalia,aimstopromote the
utilization ofdomestic rawmaterials orcomponents, elaborates andapproves Paraguayan standards;
italsoprovides advice andassistance totheprivate sector. TheINTN, which isalsothenational
metrology institute, hasnolaboratory-accreditation powers.
50. Compulsory technical standards forsafety andquality purposes apply onanon-discriminatory
basis. These affect, interalia,fooditems, medicines, electrical constructions andpetrol stations.
51. Since 1991 efforts toeliminate orharmonize standards (including animal andplant health
standards) considered astechnical barriers totrade havebeenundertaken byMERCOSUR countries.
Thiswork isbeing carried outbysubject areaincommissions, sub-commissions andworking groups,
inparticular, Sub-Group 3onTechnical Standards, which deals withstandards affecting foodstuff,
health, automotive andveterinary items aswellasmetrology.50Itswork onfoodstuff andanimal and
vegetable health wasduetobefinalized inJune1997. Inthiscontext, anumber ofagreements are
being negotiated among MERCOSUR partners:
- Agreement onharmonization andrecognition ofcertification andtesting services;
- Agreement onthesystem certifying quality inspectors;
- Agreement ontheconditions formutual recognition ofstructures forcertification, accreditation
oflaboratories andinspection bodies;
- Bases forthepreparation ofasingle listofenterprises certified bythecertification structures
oftheMERCOSUR countries;
- Mutual recognition ofcalibration services;
- CalibrationservicesprovidedbyMERCOSURcountrieseligibleforrecognitionbytheEuropean
Community.
52. Atthetimeofcompletion ofthisreport Paraguay wasexpecting tonotify itsstandards body
andnational enquiry point totheWTO Committee onTechnical Barriers toTrade shortly.
49Law 862, 26June 1963.
50GATT document L/7540, 26October 1994; WTO document WT/COMTD/1/Add.2, 9October 1995;
Ministerio deIntegración (1995), p.35.WT/TPR/S/26
Page 44Trade Policy Review
(b) Sanitary andphytosanitary regulations
53. Sanitary andphytosanitary regulations arelaiddown indomestic legislation51aswellasthe
WTO SPSAgreement. TheMERCOSUR Sanitary andPhytosanitary Agreement (ACSAFIM) which,
prior totheadoption oftheUruguay Round Agreements, incorporated therights andobligations of
theWTOAgreementinthisfieldhasbeensuperseded.52Theharmonizationofsanitaryandphytosanitary
measures istobebased ontheWTO SPSAgreement. Since 1January 1995, MERCOSUR provisions
havewaived phytosanitary requirements onintra-trade incertain products.53InOctober 1996, Paraguay
adopted aseries ofMERCOSUR harmonized sanitary andphytosanitary standards forseeds and
agrochemicals.54
54. Several Government agencies areinvolved intheareaofsanitary andphytosanitary measures,
includingtheNationalInstituteforTechnologyandStandardization.TheNationalAnimalHealthService
(SENACSA),anautonomousregulatorygovernmentagency,isresponsibleforthecontrolanderadication
ofdiseases aswellashealth inspections attheborder.55TheLivestock Secretariat oftheMinistry
ofAgriculture andLivestock (MAG) protects andmaintains animal health, including forimports and
exports, through anetwork oflaboratories; these laboratories alsoundertake diagnosis andquality
control ofproducts inthesector. TheDirectorate ofVegetable Defence ofthesame Ministry inspects
plants andcertifies thequality offoodstuffs ofanimal origin; ithasalsobeennotified totheWTO
asParaguay 'senquiry point forsanitary andphytosanitary measures.56
55. Animals andproducts ofanimal origin, particularly imports ofbeeffordomestic consumption,
mustmeetspecific health andhygiene standards. Compulsory (description-related) standards onmeat
andmeatproductswereapprovedbytheNationalInstituteforTechnologyandStandardizationin1995.57
56. Sanitary orphytosanitary certificates, authenticated bytheauthorities inthecountry oforigin
andbyaParaguayan Consulate, arerequired forallshipments ofliveanimals oranimal products,
seeds, liveplants, andgrains. Forseeds, liveplants, parts of(dried orlive)plants andprocessed
vegetables, anadditional permit, issued afterinspection byMAG 'sVegetable Sanitation section, is
necessary forcustoms clearance.58Shipments ofdrugs orpharmaceuticals aresubject tomedicinal
certificate andpermit requirements from theMinistry ofPublic Health, similar tothose relating to
animal andplant imports. Shipments ofusedlinen require acertificate ofdisinfection.
51Law 836(Código Sanitario ),15December 1980; andLaw123/91, 9January 1992.
52WT/COMTD/1/Add.2, 9October 1995; andMERCOSUR Decision 6/96, 17December 1996.
53These include vegetable oils,essences, vacuum-packed andcanned products, chocolate, maté herb, cocoa
butter andpaste, coffee, packed glucose andsugar, cigars, cigarettes andhandicrafts ofvegetable fibres.
(Decree 7143, 30December 1994 adopting MERCOSUR/CMC/RES 118/94.)
54Decree 15000, 4October 1996.
55WTO document IMA/INV/3, 20June 1995; andLaw99/91, 16December 1991.
56WTO document G/SPS/ENQ/4, 15May 1996.
57Law881/81,Law494,10May1921,andMAGResolution400,23August1989,allcitedinGATTdocument
L/7540, 26October 1994. MAG Resolution 840, 20October 1993; andDecree 8648, 27April 1995.
58Dun&Bradstreet (1996).Paraguay WT/TPR/S/26
Page 45
57. InSeptember 1993, incompliance withrecommendations oftheRegional Committee on
Vegetable Sanitation (COSAVE)59,Paraguay adopted thesystem ofPhytosanitary Accreditation for
Imports(AFIDI)ofvegetableproducts.60Theseproductsareclassifiedindifferentcategories(established
byCOSAVE andMERCOSUR) according tothepestriskthattheyrepresent. TheMAG authorizes
orprohibits theirimportation, within five(COSAVE countries) or15(third countries) working days
following thesubmission ofapplication. Thedecision isbased ontheresults ofaprior pestrisk
evaluation undertaken inthelightofcriteria agreed atsub-regional level.
58. Theauthorities indicated totheWTO Secretariat thatthenotification procedures onsanitary
andphytosanitary requirements hadbeenadopted.
(c) Marking, labelling andpackaging
59. Regulations require thatthecountry oforigin bedesignated inSpanish ondomestic andimported
products. Since November 1994, labelling andmarking requirements, based onhealth protection
considerations aswellasonimplementation ofharmonized MERCOSUR standards, haveapplied to
imports offruitandvegetables.61InMay1995, MERCOSUR (content-related) labelling requirements
were adopted.62Expiry dates arerequired onmedical products andsome consumer goods. Health
warnings onhazardous products suchascigarettes mustbemarked inavisible place. Specific marking
andlabelling requirements affect containers forpesticides andfertilizers aswellasdangerous narcotics
ordrugs.63
(vi) Government procurement
60. Asstated inChapter II,Paraguay isnotasignatory totheWTO Agreement onGovernment
Procurement.
61. While itisdifficult tobeprecise, Paraguay 'scentral government procurement market forgoods
andservices appears tohaveattained G/300billion (orUS$153 million) in1996 (Table III.2).64BCP
dataindicate thatfrom1988to1995thevalue ofcentral Government purchases ofgoods andservices
hasdoubled inrealterms.65Nodetailed operational data(e.g., expenditure byitem, supplier and
purchasing method, public sector agency orenterprise) inthisareaareavailable inParaguay.
59Paraguay, asaMERCOSUR country, andChile aresignatories to:theConvention fortheEstablishment
ofaRegional Committee onVegetable Sanitation, adopted byLaw21/90, 9August 1990) aimed atreducing
andpreventing therisksandimpact ofplant health problems affecting production andmarketing intheregion;
andtheConvention establishing theRegional Committee onAnimal Health (CORESA, 1991) (WTO document
G/SPS/W/38, 6December 1995).
60AFIDI (adopted byDecree 139, 3September 1993) hasapplied asfrom 1January 1994.
61MAG Resolution 1085, 11November 1994.
62Decree 8734, 8May 1995.
63Article 197ofLaw836(Health Code), 15December 1980, andLaw1340, 22November 1988 (GATT
document L/7540, 26October 1994).
64Banco Central delParaguay (1996a), p.36.
65Estimates based on1982 constant prices cited inBanco Central delParaguay (1996b).WT/TPR/S/26
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Table III.2
Threshold values forselecting procurement procedures andexpenditure
(Inmultiples oftheminimum daily wage, unless specified otherwise)
Public bidding Price competitionDirect
contracting/
purchaseProcurement
expenditure forgoods and
services in1994 and1995
Government (central,
local) andpublic
enterprises other than
those listed below
including Corporación de
Obras Sanitarias
(CORPOSANA),
Industria Nacional del
Cemento (INC)More than10,000 More than2,000 to
10,000Lessthan2,000 Central Governmenta:
G/105bn.andG/174bn.or
1percentofGDP
CORPOSANA: G/13bn.and
G/20bn.or0.1percentof
GDP
INCb:G/45bn.andG/56bn.
or0.3percentofGDP
Administración Nacional
deElectricidad (ANDE)More than
G/3millionMore thanG/300,000
toG/3millionUptoG/300,000 ANDE: G/81bn.andG/52bn.
or0.5percentand
0.3percentofGDP Administración Nacional
deNavegación yPuertos
(ANNP)
Administración Nacional
deTelecomunicaciones
(ANTELCO)10,000 ormore More than3,600 to
lessthan10,000Upto3,600 G/44bn.andG/53bn.or
0.3percentofGDP
Petróleos Paraguayos
(PETROPAR)More than8,000 4,000 to8,000 Lessthan4,000 G/426bn.andG/440bn.or
2.9percentand2.5percent
ofGDPb
a Figures reflect procurement ofgoods (materiales ysuministros )only.
b Figures include goods purchased tobeprocessed forordirect re-sale (falling under State-trading activities) thusnotclearly
forGovernment consumption.
Note: In1996 theminimum monthly wage stood atG/469,157 orUS$235.
Source: Article 1ofLaw25/91, 2September 1991; Article 44ofLaw1182, 18December 1985, inforce asfrom 9January 1986;
Articles 44and45ofLaw1296/67 asamended byLaw102,24December 1990; Articles 53to55ofLaw966,12August
1964; figures indicated inMinisterio deHacienda (1996), Boletín Fiscal Anuario 1995,January; Banco Central del
Paraguay (1996), Estadísticas Económicas ,December.
62. Government procurement provisions require apublic tendering process when thevalue ofthe
purchase exceeds US$60,000. Foreign suppliers mayparticipate onlythrough theirdulyregistered
representatives (e.g., acommercial firminthesame lineofbusiness, legalattorney). Inbidsforthe
supply ofgoods andservices, a"Buy Paraguay" requirement obliges government agencies andpublic
enterprises togivedomestic contractors a15percentpreference orpremium overforeign competition;
a5percentpreference isgranted forgoods assembled inParaguay.66Public works arereserved for
national firms; when foreign participation isrequired thecontractors havetobeassociated withdomestic
firms.67
63. Public procurement ofgoods andservices aswellasthecontracting ofpublic works iscarried
outthrough: public tendering; pricecompetition; anddirect contracting/purchase. Table III.2indicates
thethreshold values forselecting aprocurement procedure. Outside thisframework, direct contracts
maybeawarded incases of:emergency orexceptional circumstances; special operations; patent
66Decree 31609/82 cited inDun&Bradstreet (1996); Bureau ofNational Affairs (1996); andArticles 1
and2ofDecree 4880, 27July1994.
67Shareholding conditions forthese associations aresetinArticle 2ofLaw1045 of1983.Paraguay WT/TPR/S/26
Page 47
protected goods; artistic orexclusive professional services; testing samples; shortage ofsupplies
andabsence ofbidders; equipment, machinery andpartssubject tospecific technical requirements.68
64. Inprinciple, PETROPAR 'ssupplies ofoilandoilderivatives arepurchased through public
tenders only. Inaddition, itsimports (andexports) must beshipped invessels belonging tothe
State-owned shipping company (FLOMERES), currently subject totheprivatization process, andonly
inexceptionalcircumstancescanaprivate(preferablynational)shippingcompanybeused(section(5)(v)).
Theauthorities indicated that,despite FLOMERES 'privileges, PETROPAR hasusedinternational
tenders toobtain thelowest bidsinallcontract components.
65. Allfirms interested inproviding goods orservices tothepublic sector orundertaking public
works must beincluded intheRegistry ofSuppliers andContractors oftheState oftheMinistry of
Finance (Directorate General ofNorms andProcedures). ThisRegister wascreated inAugust 1996
toimprove thetransparency ofprocedures andtherational useofresources, aswellastocollect
information onpublic procurement activities.69Thedeadline forregistration wastheendof1996;
bylateOctober 1996, itwasestimated thatoutofatotalof5,000 firms involved inpublic procurement
contracts onlya100hadbeenregistered.
(vii) Anti-dumping, countervailing dutyandsafeguard actions
66. Accordingtorecentnotifications,Paraguayhasnothadrecoursetoanti-dumping,countervailing,
or(Article XIX) safeguard measures.70Paraguay retained therighttousethetransitional safeguard
mechanism under theprovisions oftheWTO Agreement onTextiles andClothing71,andhassubmitted
itslistoftextile andclothing products, covering about 17percentofthevolume ofimports in1990,
thatareincluded inthefirstphase ofintegration intoGATT 1994.72Thelistcomprises 42six-digit
HSitems, mainly sanitary articles, fibrefabrics, yarns andcarpets.
67. During itsprocess ofaccession totheGATT, Paraguay indicated thatanymeasures taken against
other contracting parties foranti-dumping/countervailing purposes would beinconformity withthe
provisions ofArticle VI,anditssafeguard measures inconformity withArticle XIX, including the
serious injury test.73Forthesameeconomic reasons allowing fortheintroduction ofimport prohibitions
orrestrictions (section (2)(iii)), thelegislation authorizes theExecutive toraise such tariffs to
70percent74,butthisshould beeffectively superseded bytheWTO rules(asaninternational treaty).
68Law 25/91, 2September 1991.
69Decree 14587, 29August 1989.
70WTO documents G/ADP/N/2/Add.1, 12July1995; G/ADP/N/9/Add.1, 19April 1996; G/L/31,
10November 1995; G/SCM/M/2, 25September 1995; andG/SCM/N/12 Add.1 Rev.1, 25July1996.
71This was notified pursuant toArticle 6paragraph 1oftheWTO Agreement onTextiles and
Clothing (G/TMB/N/31, 6March 1995).
72Article6,andparagraph7(b)ofArticle2oftheWTOAgreemen tonTextilesandClothing(G/TMB/N/56,
28April 1995; andG/TMB/N/56/Add.1, 1July1996).
73GATT document L/7210, 30April 1993.
74Article 9and10(c)ofLaw1095,14 December 1984.WT/TPR/S/26
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68. InMay1995, Paraguay notified theWTO Committees onAnti-Dumping Practices, Subsidies
andCountervailing Measures, andSafeguards thatitdidnotcurrently haveanylawsorregulations
inforce relating toanti-dumping duties, subsidies andcountervailing measures, andsafeguards, other
thanthose oftheAgreements themselves which hadbeenincorporated intodomestic legislation under
Law444/94.75InOctober 1996, domestic legislation wasadopted toimplement theprovisions ofthe
WTO Agreement onSubsidies andCountervailing Measures; inaddition todefinitions andprocedural
matters, thelegislation provides fortheestablishment ofaCommittee ofTrade Defence consisting
ofrepresentatives oftheMinistries ofIndustry andCommerce (MIC), Finance, Agriculture and
Livestock, External Relations, andIntegration, toformulate recommendations ontheintroduction of
measures. TheMIC, entrusted withcarrying outinvestigations, andtheMinistry ofFinance are
responsible fortheimplementation ofmeasures.76
69. ThepreparationofcommonMERCOSURregulationsoncountervailingdutiesandanti-dumping
measures, inlinewiththeWTO provisions, istobefinalized in1997. Until theiradoption, national
legislation applies.77Anintra-regional Safeguards Clause wasended on31December 1994.78
(3) Measures Directly Affecting Exports
(i) Export taxes, charges andlevies
70. Noexport taxes havebeenlevied since 1992.
(ii) Export prohibitions, licensing andpermit requirements
Export prohibitions
71. In1994, inlinewithdomestic forestry policy objectives (Chapter IV),export prohibitions were
expanded tocover allunprocessed andsemi-processed wood (i.e., logs, pieces, beams).79Upon
Paraguay 'sGATT accession, prohibitions offourtypes oftropical (sawn) woods atriskofextinction
weremaintained under GATT Article XX.80Theuseofthesetimbers bythelocalindustry isconditional
onplans forforest management andconservation.
75WTO document G/ADP/N/1/PRY/1, G/SCM/N/1/PRY/1, G/SG/N/1/PRY/1, 7June1995. Responses
have been given toquestions raised bytheUnited States andHong Kong inthecontext oftheCommittees on
Anti-Dumping Practices andonSubsidies andCountervailing Measures concerning theParaguayan legislation
(G/ADP/W/372, G/SCM/W/382, 23April 1996; andG/ADP/W/373, G/SCM/W/383, 22April 1996).
76Decree 15286, 28October 1996, notified totheWTO (G/ADP/N/1/PRY/2, G/SCM/N/1/PRY/2,
3March 1997).
77WT/COMTD/1/Add.2, 9October 1995.
78WT/COMTD/1/Add.2, 9October 1995.
79Law 515, 9December 1994.
80Decree 8463, 28January 1991; anddocument L/7210, 30April 1993.Paraguay WT/TPR/S/26
Page 49
Export licensing andpermits
72. Temporary restrictions related todomestic supply considerations mayapply torawmaterials
(e.g., unprocessed forestry products, rawhides, cotton, soybeans, sugar andwheat).81Exports ofthe
essence PetitGrain areallowed upto60percentofdomestic production; 40percentoftheexports
must beinprocessed form.82
73. Anexport licensing régime affecting wood exports isaimed atensuring compliance with
re-afforestation obligations bythelogging companies; therégime isnotrestrictive (Chapter IV).
74. Prior authorization isrequired forexports ofcertain items toensure themanagement ofscarce
resources andadequate supplies fordomestic industry aswellastofulfilconservation andenvironmental
protection requirements; thelatter arecovered byinternational aidprogrammes andtheprovisions
oftheConvention onInternational Trade ontheProtection ofEndangered Species ofWildFauna and
Flora CITES).83Prior authorization isalsorequired forgoods covered bytheBasel Convention on
theControl ofTransboundary Movements ofHazardous Wastes andtheirDisposal (section (4)(v)(a)).
Voluntary restraints, surveillance, retention schemes andsimilar measures
75. Bovine meat exports totheEUarerestricted duetoquota arrangements (Chapter IV); for
1997 Paraguay istobeallocated 2,000 tonnes under theHilton meatquota.
(iii) Export subsidies
76. Paraguay doesnotgrant subsidies thataffect tradeand,uponaccession totheGATT, itpledged
toobserve theprovisions ofArticle XVI:1.84Nonotification (oranegative response) concerning
subsidies notifiable under thisArticle hasbeensubmitted totheWTO.85
(iv) Duty andtaxconcessions
77. Since 1990, ataxexemption scheme forindirect taxes affecting specific manufactured and
non-traditional exports hasbeeninforce.86Atpresent, afiscal credit scheme covering allitems allows
forthereimbursement oftheVAT paidoninputs andrawmaterials, acquired inthelocalmarket and
usedfortheproduction ofanexport item(section (4)(ii)). Thesystem isoperated through taxcredit
81According toinformation cited inTable 9ofValdés (1996).
82Law 268, 30July1971.
83Law422,Decree672andDecree8463,28January1991,citedinGATTdocumentL/7210,30April1993.
84GATT document L/7210, 30April 1993; andWTO document WT/COMTD/1/Add.2, 9October 1995.
85WTO document G/SCM/N/3/Add.1/Rev.2/Corr.1, 24July1996.
86AtthetimeofParaguay 'saccession totheGATT, fiscal concessions onanumber oftaxes, including those
under theincome taxwithholding scheme, were available forspecific manufactured andnon-traditional exports.
(Law 60/90, 3December 1990, cited inGATT document L/7210, 30April 1993.)WT/TPR/S/26
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certificates issued aftertheexportation hastaken place; these certificates canbeusedforthepayment
oftaxes. Amounts arecalculated onthebasis ofinvoices submitted bytheexporter.87
(v) Export finance, insurance andguarantees
78. TheNational Development Bank provides export (andimport) finance; nopreferential export
finance conditions areavailable.88Local commercial banks provide exporters withdirect financing,
pre-financing ofexports forupto180days(renewable) backed byaletter ofcredit, anddiscounting
ofletters ofcredit upon shipment ofthemerchandise. Reportedly, most exporters (andimporters)
obtain overseas financing while many entrepreneurs involved inthere-export trade buyandsellin
foreign currency andoften shipbanknotes through localbanks totheiraccounts intheUnited States.89
Letters ofcredit arethenissued, based onthese overseas accounts.90
79. In1993and1994 export finance granted bytheNational Development Bank, responsible for
about 0.4percent(1994) ofcredit available toexport operations, grew by430percent.91
(vi) Export promotion andmarketing assistance
80. TheDirectorate-General forthePromotion ofExports andInvestments isincharge ofexport
promotion, including organization oftrade fairsandmissions abroad, andassistance toexporters on
export procedures.
(vii) Free-trade zones andexport-processing zones
81. Legislation allowing fortheestablishment ofprivately runfreezones fortrade, industry
(processing orassembly) andservices (equipment andmachinery repairs andmaintenance), wasfirst
passed inJanuary 1995. Further regulations were passed inlate1996. Neither thelegislation nor
theregulations hadbeennotified totheWTO atthetimeofcompletion ofthisreport.92Concessions
ofaduration notexceeding 30years aregranted fortheinstallation andadministration offreezones.
Beneficiaries must meet specific investment requirements andobserve provisions onenvironmental
protection andsafety.
82. General fiscal concessions available toin-zone firms include exemption from national,
departmental andmunicipal taxes (i.e.,direct andindirect taxes); taxesontheremittance ofearnings;
royalties, commissions, interest orother charges affecting payments forservices, technical assistance,
87Law 125/91, 9January 1992; Resolution 98,17August 1992.
88United States Trade Promotion Coordinating Committee/United States Department ofCommerce, National
Trade Data Bank, September 1996.
89United States Trade Promotion Coordinating Committee/United States Department ofCommerce, National
Trade Data Bank, September 1996.
90United States Trade Promotion Coordinating Committee/United States Department ofCommerce, National
Trade Data Bank, September 1996.
91Banco Central delParaguay (1995), p.33.
92Law 523, 16January 1995; andDecree 15554, 29November 1996.Paraguay WT/TPR/S/26
Page 51
technology transfer, loans andtheleasing ofequipment orservices fromabroad. Asingle freezone
taxislevied atarateof0.5percentonthegross revenue from exports; exports totheParaguayan
customs territory mayattain amaximum amount of10percentofthefirm'stotalexport revenue each
year.93
83. Theestablishment ofthefirstfreezonewasagreed inearly 1997. Thezone, located inthe
Department ofItapúa, istoberunbyaprivate company, theParaná River Mill, which istomake
aUS$500 million investment; theproject, consisting ofacellulose plantand-atalaterstage-chemicals
andforestry goods processing plants, isexpected tocreate 8,000 jobs(mainly intheconstruction phase).
84. Under Article 3andAnnex IoftheWTO Agreement onSubsidies andCountervailing Measures
thefiscal exemptions available under thisrégime areclassified asprohibited export subsidies. However,
asadeveloping country, Paraguay hasuntiltheyear2003tobring itslegislation intolinewithWTO
provisions.
85. Under theMERCOSUR Agreement re-exports fromfree-trade zones inanymember Stateinto
thenational territory orintotheterritory ofanyother MERCOSUR partner aresubject totheagreed
CET rate.94
(4) Measures Affecting Production andTrade
(i) Forms ofdomestic support
86. Agricultural production benefits fromcertain fiscal concessions, subsidized credit, provisions
forwriting offbaddebts andascheme forthefreedistribution ofseeds (Chapter IV).These benefits
areprovided inanunsystematic manner foranumber ofreasons: toboost domestic production, to
encourage conversion, tooffset fallsininternational prices andtheappreciation oftherealexchange
rate,aswellastocover emergency situations (e.g., adverse climatic conditions).
87. IntheUruguay Round, Paraguay didnotmake anyspecific commitments toreduce financial
support toagricultural producers; itthushastoabide bythegeneral rules ondomestic support and
exportsubsidiesoftheWTOAgreementonTradeinAgriculture(ChapterIV).Accordingtoinformation
accompanying Paraguay 'sWTO Schedule XCI, thecostofassistance provided toagriculture bythe
MAG invarious forms (research, action against pestsanddiseases, technical assistance) wasestimated
atanaverage annual amount ofUS$1.7 million intheperiod 1986-88.95Thistypeofassistance to
producers isexcluded from reduction commitments under theWTO Agreement onAgriculture.
88. Since 1994, theIndustrial Development Fund (FDI) runbytheMICincooperation withthe
BCPandtheMinistry ofFinance, hasprovided soft-loan finance forindustrial development withfunding
93Articles 37to45ofDecree 15554, 29November 1996. During theGATT accession process, Paraguay
confirmedthatallimport-relatedtaxes(includinginternaltaxes),chargesandrestrictionsthatarenormallyapplied
toimports intoParaguayan customs territory would alsoaffect theimported component ofgoods produced in
free-trade zones when exported intothenational customs territory (GATT document L/7210, 30April 1993).
94Article 2ofMERCOSUR/CMC/DEC 8/94.
95Annex Table 4contained inWTO document G/AG/AGST/PRY.WT/TPR/S/26
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frommultilateral development agencies (e.g., theInter-American Development Bank).96Inprinciple,
loans areprovided atcommercial interest ratesinUSdollars orthenational currency fortheacquisition
offixed assets orworking capital. Theamount ofsuchloans canreach upto70percentofthecost
ofaninvestment project; theymaybereimbursed within amaximum period of10years; andthey
mayalsobenefit from periods ofgrace ofuptothree years. From October 1994 totheendof1996
theFDIprovided totalloans ofUS$59.3 million to17companies, creating 6,672 jobs.97
89. Mostpublic services (utilities), supplied byStateenterprises, areavailable atgovernment-fixed
orgovernment-authorized prices; theadjustment oftariffs seems tohavelagged considerably behind
inrecent years butthese donotseem tocover marginal costs forwater, local telephone calls, or
electricity.98Tofoster thedevelopment ofindustries thatareintensive users ofelectricity (e.g., metal
industries), concessional electricity tariffs were established in1994.99
(ii) Direct andindirect taxation
Direct taxation
90. Paraguay 'staxburden isamong thelowest inSouth America, withnopersonal income tax
andlimited business taxes.100Taxlawswere simplified in1991, andcorporations nowpayonlya
corporate earnings taxof30percent. Ifprofits arere-invested, however, thetaxratedrops to
10percent. Small enterprises areexempt from VAT payment buthavetopaya3percent"sole"
taxonthegross value oftheirsales.101
Indirect taxation
91. Avalue-added tax,established in1992, islevied atageneral rateof10percentongoods and
services.102Onimports, theVAT iscalculated onthec.i.f. value pluscustoms duties, other charges
(e.g., portfees)prior toclearance andother domestic taxes. Under theso-called tourism régime, the
VATforabout 800items (including whisky, perfume, electronic items, fooditems, tableware, footwear,
tools) islevied ononly15percentoftheinvoice value; thisrégime applies totheentire Paraguayan
territory. Ithasasubstantially lower incidence thantheVAT applied toother goods.
96Decree 1562, 14December 1993; Decree 7123, 29December 1993; andEIU(1996d) p.33.
97Data supplied byFDI'sUnidad Técnica Ejecutora deProgramas .
98World Bank (1994a) p.iv; World Bank (1996) pp.40and46.
99Decree 2109, 24January 1994.
100Law 90/90, 3December 1990, cited inGATT document L/7210, 30April 1993.
101World Bank (1994a), p.29.
102Law 125of9January 1992established anewtaxsystem comprising anincome tax,acapital tax,theVAT,
theselectiveconsumptiontax,alivestocktaxanddocumentstax;italsopartiallyorwhollyrepealed35tax-related
laws anddecrees (GATT document L/7210, 30April 1993).Paraguay WT/TPR/S/26
Page 53
92. Exemptions fromVAT include crude petroleum, fuelsproduced frompetroleum, agricultural
products intheirnatural state, small enterprises andproducts imported under Investment Promotion
Law60/90 andthefree-zones régime.
93. Aselective consumption taxislevied onsome 30categories ofproducts atthefollowing rates:
tobacco products (including cigarettes), 5-7percent; carbonated beverages, beer, wineandliquors,
andalcohol, 5-10percent; forpetroleum fuels, 5.5-50 percent. Thetaxiscalculated onthecustoms
value plusduties (imported items) andservices taxes, orthefactory price minus theVAT (domestic
goods).
94. Since 1987 several municipal taxes, including aservice taxandavehicle licensing tax,have
beenlevied.103
95. Inrecent years theimportance ofboththeVAT andthecustoms duties astaxcollection
instruments hassignificantly grown, while thatoftheselective consumption taxhasrisenmoderately
(Chart III.3). Apart fromadecline in1992duetothecutinimport tariffs discussed insection (2)(ii)(b)
(tariff levels), theshare offiscal revenue from foreign trade (i.e., customs duties andconsular fees)
hasrisenbecause ofanumber offactors, including theimplementation oftheAgreement onCustoms
Valuation, theentry intoforce oftheCETandtheoperation oftheSOFÍASystem.104Between 1994
and1995, theaverage effective tariff rate(i.e,share ofcollected tariff revenue totaxable imports)
rosebyabout 32percentto6.2percent; ontheother handthesameindicator forVAT hasremained
stable at5.5percent.105Table III.3illustrates thestructure ofalltaxes andcharges affecting imports
intoParaguay ofrepresentative products.
(iii) Competition policy
96. Until theformation ofMERCOSUR, Paraguay hadfewprovisions ondomestic competition;
some basic principles, dating from 1983, cover issues suchascompetition-restricting arrangements
andfraudulent trade practices.106
97. Since June1995, aConsumer Protection Office hasbeenentrusted withthecoordination of
efforts inthisareaatnational level, aswellasthenegotiation oftheharmonization ofconsumer
protection policies atMERCOSUR levelsothatthesedonotconstitute atradebarrier fortheintegration
process.107
103Municipal Lawcited inWorld Bank (1994b), pp.76-77.
104Ministerio deHacienda (1995), p.7.
105These figures areindicated inMinisterio deHacienda (1996).
106Law 1034, 16December 1983; andLaw1183, 23December 1985.
107WTO document WT/COMTD/1/Add.2, 9October 1995; Informe delExcelentísimo Señor Presidente
ConstitucionaldelaRepúblicadelParaguayJuanCarlosWasmosyalHonorableCongresoNacional,1July1996,
p.49.WT/TPR/S/26
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Table III.3
Structure ofcharges onimports ofselected products, 1997
Milled rice Laminated steel Passenger carsa
Rate (%) Value Rate (%) Value Rate (%) Value
1.Value f.o.b 100.0 100.0 100.0
2.Freight 10.0 10.0 10.0 10.0 10.0 10.0
3.Insurance 5.0 5.0 5.0 5.0 5.0 5.0
4.Value c.i.f. 115.0 115.0 115.0
5.Import duty(onc.i.f. value) 10.0 11.5 3.0 3.5 20.0 23.0
6.Consular tax(onf.o.b. value) 7.5 7.5 7.5 7.5 7.5 7.5
7.Other charges (customs agent,
portfees, consular fees, etc.)... ... ... ... ... ...
8.Final value ofimport 134.0 126.0 145.5
9.VAT (on8.) 10.0 13.4 10.0 12.6 10.0 14.5
10.Selective consumption tax n.a. n.a. n.a. n.a. n.a. n.a.
11.Wholesale costinParaguay 147.4 138.6 160.0
n.a. Notapplicable.
... Notavailable.
a Calculations forapassenger carwith1,300cc engine andac.i.f. value oflessthanUS$22,000.
Source: WTO Secretariat estimates.Paraguay WT/TPR/S/26
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98. MERCOSUR'sCompetitionProtectionProtocolwasagreedattheFortalezameetingofDecember
1996; domestic implementation procedures were under preparation byApril 1997 inParaguay.108
Theprotocol defines thepractices which mayaffect competition, andauthorizes national administrations
toinitiate action; evidence must besubmitted toaCommittee forConsumer Defence, within
MERCOSUR 'sTrade Commission. Sanctions mayinclude fines, prohibition toparticipate inbids
ortodealwithpublic financial institutions.
(iv) Enforcement ofintellectual property rights
99. Paraguay isasignatory tocertain major international conventions onintellectual property
rights (IPR) and, since 1987, ithasbeen amember oftheWorld Intellectual Property
Organization (WIPO).109Itisalsoparty toanumber ofbilateral treaties containing provisions for
theprotection ofIPRs.110
100. Apart from theratification oftheUruguay Round Agreements, nolegislation hasyetbeen
introduced tobring domestic legislation intoconformity withtheprovisions oftheAgreement onTRIPS.
Taking intoconsideration Brazil 'sexample ofnotmaking useofthegrace period offered bythe
Agreement, andrecognizing thatpiracy intheareas ofintellectual property andindustrial processing
procedures doesnotformpartofmodern development patterns, theauthorities studied thepossibility
andbenefits ofasimilar approach forParaguay; thiswasseenasameans ofpromoting thedevelopment
oftechnology andindustry.111Reportedly, theauthorities were alsoconcerned about thepossible
departure from Paraguay offoreign investors orpatent-holders orproducers established inParaguay
forcountries where IPRs arebetter protected.
101. Patent, trademark andcopyright lawsneedsignificant revision tobring themintoconformity
withinternational obligations and,in1996, anewlegal framework inthese areas inthree separate
billswassubmitted totheCongress. Theintroduction ofmodern IPRlegislation (inaccordance with
WIPO guidelines) isaprior condition forthegranting ofthesecond US$30 million tranche ofa
US$70 million investment sector loanbytheInter-American Development Bank (IDB), which isto
work closely withtheauthorities onstrengthening theIPRrégime.112
102. Theestablishment inSeptember 1996 ofaNational Council fortheProtection ofIntellectual
Property Rights, composed ofrepresentatives oftheMIC, theMinistries ofInterior, Finance, Education
108MERCOSUR GMC Decision 18/96, 17December 1996.
109Since 1969 thefollowing conventions havebeen signed: theInternational Convention fortheProtection
ofPerformers,ProducersofPhonogramsandBroadcastingOrganizations(Law138/69),theUniversalCopyright
Convention,theGenevaPhonogramConvention(Law703/78),theBerneConventionfortheProtectionofLiterary
andArtistic Works (Law 12/91) andtheParis Convention fortheProtection ofIndustrial Property (Law 300/94).
110TheAgreement between theFederal Republic ofGermany andtheRepublic ofParaguay ontheGranting
ofMost-Favoured-Nation Treatment onIndustrial Property Rights, inforce since 6March 1959 (IP/N/4/DEU/1,
31January 1996); Convention (ofSpain) withParaguay relating toLiterary, Artistic andScientific Property,
ratified on15September 1926 (IP/N/4/ESP/1, 21February 1996); andTrade Agreement withFrance, inforce
since 1956 (IP/N/4/FRA/1, 29January 1996).
111Statement ofMinister ofIndustry andCommerce tothepress on23October 1996.
112United States Trade Promotion Coordinating Committee/United States Department ofCommerce, National
Trade Data Bank, September 1996.WT/TPR/S/26
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andWorship, Justice andLabour, aswellasoftheMunicipalities ofAsunción, Ciudad delEsteand
Encarnación, constitutes asignificant stepinimproving theprotection ofIPRs inParaguay.113The
Council istoimplement theNational Campaign Against theViolation ofIPRs. Other tasks include
thecoordination ofIPR-protection-related activities atnational andlocal level; thenegotiation of
cooperation andtechnical assistance agreements; thesubmission ofbillsorlegislative amendments;
andtheimplementation ofaconsciousness-raising campaign aimed atvendors andconsumers.
103. While theMIC hasanenforcement programme, including raids oncounterfeiting facilities
(section (iv)(b)), itisconstrained bythelackofresources aswellaslegislative limits onitspowers.
Reportedly, there-export trade, thelackofeffective enforcement ofexisting IPRlawsandtheslow
paceofthejudicial system inissuing timely andclear decisions haspermitted thedevelopment ofa
sizeable andsophisticated business ofcounterfeiting, particularly software, sound recordings andvideo
movies.114Theauthorities indicated thatalargepartofthejudicial problems isduetooutdated claims
orrecourse byaffected companies; inseveral cases theauthorities haveintervened infavour ofsuch
companies.
104. Bymid-1996, Paraguay hadyettonotify totheWTO national contact points onIPRs other
thanthose relating topharmaceutical patents.115
(a) Industrial property
Patents
105. Law773(September 1925) established theOffice ofPatents andInventions aswellastherules
andprocedures forobtaining patents. Patents areregistered andgranted bythisOffice foraperiod
of15years (non-renewable). Foreign anddomestic patents aretreated inthesame manner provided
thatthecountry oforigin oftheapplicant grants similar treatment toParaguayan patents.116
106. Incooperation withWIPO andtheIDB, newpatent legislation, containing a20-year patent
exploitation right fornewinventions andtransition clauses (onpatentable chemical andmedicinal
substances, products orprocesses), wassubmitted toCongress in1997. Thelawdoesnotmake use
ofthegrace period provided under theAgreement onTRIPS, butwould neither apply retroactively
noraffect acquired rights. Private sector representatives, particularly those ofthepharmaceuticals
industry, have expressed concern overthepotential negative impact ofthenewlawondomestic
industries, employment andpublic health costs, claiming thattherewasaneedforanadjustment period
113Decrees 14870, 26September 1996, and15276, 26October 1996.
114United States Trade Promotion Coordinating Committee/United States Department ofCommerce, National
Trade Data Bank, September 1996. Since 1992 Paraguay has,onseveral occasions, been onthe"watch list"
under the"Special 301" provisions oftheamended Trade Actof1974 (USTR, 1996). InMarch 1997, during
thevisitofamultisectoral USdelegation (including representatives oftheUSTR andtheInternational Intellectual
Property Association), closer co-operation andmutual commitments were agreed intheareaofIPRs.
115WTO documents IP/N/1/PRY/1, 21September 1995 andIP/N/3/Rev.2, 22July1996.
116Article 36ofLaw773cited inDun&Bradstreet (1996).Paraguay WT/TPR/S/26
Page 57
uptotheyear2005andthatnoprotection fortheprocessing procedure wasrequired117;nevertheless,
theadoptionoflegislationcoveringandobservingtheentiresetofprovisionsundertheTRIPSAgreement
hasbeengenerally welcomed.
Trademarks
107. DomestictrademarklegislationwasharmonizedwithMERCOSURprovisionsin1996byadopting
therelevant protocol. TheMERCOSUR provisions areintended toimprove trademark protection while
observing WIPO- andWTO/TRIPS-related commitments.118Registered trademark protection isgranted
forten-year periods andcanbeextended forperiods ofsimilar duration indefinitely. Foreign trademarks
enjoy thesame guarantees asthose ofdomestic origin. Trademark rights mayberenewed before
expiration while ownership ofatrademark maybetransferred bycontract orinheritance. Illegitimate
useoftrademarks issubject topenalties ofupto15months imprisonment.
108. Anyone mayregister atrademark andtheprocess isrelatively simple andinexpensive. The
Directorate ofIntellectual Property oftheMICisresponsible fortheTrademarks Register. Registered
trademarks arepublished intheIndustrial Property Review (Revista delaPropiedad Industrial ).
(b) Other intellectual property
109. Protection ofintellectual property rights (scientific, literary andartistic works) iscurrently
based ondomestic legislation passed in1951, aswellastheinternational conventions citedearlier.119
Itincludes ancillary rights which, inaddition toprotection fortheauthor orcreator ofacopyright
work, cover therights pertaining totheinterpreter ortranslator ofacopyright work. Authors rights
areprotected fortheauthor 'slifetime plus50years. Registration procedures arecarried outbythe
Public Registry ofIntellectual Rights oftheMinistry ofEducation andWorship. Toenjoy similar
protection, foreign works arenotsubject todomestic registration requirements, provided thatthese
areproperly registered inthehome country andaccredited inParaguay. Penalties forcopyright
infringement consist offinesanduptooneyearimprisonment. Reflecting itsage,thelegislation does
notexplicitly refertocomputer software programmes orvideo recordings.
110. Legislation ontheprotection ofindustrial designs andmodels dates from1981.120Tobenefit
from thisprotection, suchdesigns andmodels mustberegistered withtheDirectorate ofIntellectual
Property oftheMIC.
111. TheGovernment isworking withother governments intheregion totrack-down andeliminate
illicit copying ofsound recordings andentertainment software. Illegal production isthought tobe
carried outattheborder zones withArgentina andBrazil, andpirated goods originating inChina are
alsosaidtobetransshipped through Paraguay toother markets intheregion.121Tocounter these
117StatementsofthePresidentoftheAssociationofProducersofChemicalsandPharmaceu ticals(ASOQUIMFA)
tothepress on13November 1996; andviews oftheParaguayan Industrial Union.
118Law 751,20July1979; Decree 10732, 23October 1979; Resolution 244, 25October 1979; Law1258,
13October 1987; andLaw912, 1August 1996.
119Law 94,10July1951; Decree 6609, 4September 1951.
120Law 868, 2November 1981.
121USTR (1996).WT/TPR/S/26
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practices, acampaign bytheFederation oftheLatin American Phonographic Industry inParaguay
andotherLatin American countries, involves thetraining ofcustoms officers andthegathering ofpiracy
evidence (against manufacturers andvendors).
112. Since 1992, raids carried outbytheParaguayan authorities have intensified andseizures
increased. In1996, thevolume ofseizures wastwo-and-a-half times higher thanintheperiod 1993-95:
atotalof446raids tookplace from1993 toSeptember 1996.122Seizures ofpirated video andaudio
tapes grew tenfold, amounting toatotalof20,106 and368,906 units, respectively. Laser disks and
several types ofcopying equipment (worth US$1.2 million in1996) havealsobeenseized.
(v) Other measures
113. Since 1981, cargo reserve requirements forallimports andexports haveapplied infavour of
Paraguayanvessels(ChapterIV).123Thiscargorequirementislimitedto50percentofthetotalshipment
directed toororiginating inborder LAIA nations. Asstated earlier, allPETROPAR 'sshipments have
tobetransported bytheState-owned firm, FLOMERES; nevertheless, duetoFLOMERES 'lackof
capacity, these requirements donotappear tohavebeenapplied.
114. PETROPAR 'sproperties must beinsured withnational insurance firms.124
115. Paraguay isasignatory toanumber oflegally binding environmental agreements thatmay
affect production andtrade.125Anyactivity which isdetrimental totheenvironment isprohibited.
Thelimits forpollution tolerance aresetbytheMinistry ofHealth andSocial Welfare which isentrusted
withenvironmental protection programmes.126Thelegislation contains provisions against water, air
andindustry pollution (including toxicanddangerous waste) aswellasprovisions topromote ecological
stability innational parks.
116. Paraguay hasputinplace aNational System ofProtected Forest Areas (SINASIP) which,
interalia,requires acompulsory study ontheenvironmental impact prior totheauthorization ofany
public orprivate works bylocal authorities. Thelegislation streamlines theimplementation of
environmentalcommitments(coveringwildfaunaandflora)undertakenatinternationallevelandincludes
certain penalties fornon-compliance.127
122Figures supplied byMIC.
123Law 295, 24November 1971, anditsimplementing Decree 27371, 19August 1981.
124Article 56ofLaw1182, 18December 1985, inforce from 9January 1986.
125These include the1989 Montreal Protocol onSubstances thatDeplete theOzone Layer (UNEP) (Law 61,
26October 1992); the1961 UNSingle Convention onNarcotics; the1971 UNConvention onPsychotropic
Substances; the1988 UNConvention Against Illicit Traffic inNarcotic Drugs andPsychotropic Substances;
the1989BaselConventionontheControlofTransboundaryMovementsofHazardousWastesandtheirDisposals,
adopted byLaw567, 1June 1995 (WTO document WT/CTE/W/6, 31March 1995).
126Articles 66to68ofLaw836(Código Sanitario ),15December 1980.
127Articles11and12ofLaw352,21June1994;Law294,31Decemb er1993;Law96,24Decemb er1992;
Law716, 26September 1995). Paraguay hassigned andratified theFramework Convention onClimate
Change (Law 251,15February 1994), theConvention onBiological Diversity (Law 253,4November 1993).