PRESS/TPRB/58
18July1997
TRADE POLICY REVIEW BODY
REVIEW OFPARAGUAY
TPRB 'SEVALUATION
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) concluded itsfirst
review ofParaguay 'strade policies on17and18July1997. ThetextoftheChairperson 'sconcluding
remarks isattached asasummary ofthesalient points which emerged during thediscussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairperson 'ssumming-up, together withthesetworeports,
willbepublished induecourse asthecomplete trade policy review ofParaguay andwillbeavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992 &1996), Cameroon
(1995), Canada (1990, 1992, 1994&1996), Chile (1991), Colombia (1990 &1996), Costa Rica(1995),
Côted'Ivoire (1995), theCzech Republic (1996), Cyprus (1997), theDominican Republic (1996),
Egypt(1992),ElSalvador(1996),theEuropeanCommunities(1991,1993&1995),Fiji(1997),Finland
(1992), Ghana (1992), Hong Kong (1990 &1994), Hungary (1991), Iceland (1994), India (1993),
Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 &1995), Kenya (1993), Korea, Rep.
of(1992 &1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989
&1996), NewZealand (1990 &1996), Nigeria (1991), Norway (1991 &1996), Pakistan (1995),
Paraguay (1997), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994),
Singapore (1992 &1996), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden
(1990 &1994), Switzerland (1991 &1996), Thailand (1991 &1995), Tunisia (1994), Turkey (1994),
theUnited States (1989, 1992, 1994 &1996), Uganda (1995), Uruguay (1992), Venezuela (1996),
Zambia (1996) andZimbabwe (1994).
MORE 97-3077PRESS/TPRB/58
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TRADE POLICY REVIEW BODY
Review ofParaguay
CONCLUDING REMARKS BYTHE CHAIRPERSON
ThefirstTrade Policy Review ofParaguay wasconducted on17-18 July1997. These remarks,
prepared onmyownresponsibility, areintended tosummarize thediscussion andnottobeafullreport:
thiswillbecontained intheminutes ofthemeeting.
Thediscussion developed under fourmain themes:
Macroeconomic issues
Members commended Paraguay 'srecent macroeconomic performance, which hadbeenassisted
bywidespread political andeconomic reforms; thereduction ininflation wasspecifically noted.
Nevertheless, itwasalsoobserved thateconomic growth hadbarely keptpacewithpopulation growth
andthatmany challenges related todevelopment remained tobeaddressed. Theroleof"shopping
tourism" intheeconomy andParaguay 'sdependence onexport revenue fromtwocashcrops (soybeans
andcotton) andelectricity wasevident. Concerns wereraised regarding thepossibility ofaninflationary
increase inspending duetopossible increases inpublic expenditure inanelection year.
Questions wereposed ontheroleandincidence ofStateinvolvement intheeconomy andthe
need toaccelerate progress inprivatization. Information wassought onrecent improvements in
transparencyoftherégimeofGovernmentprocurement,andonprovisionsfavouringdomesticsuppliers;
Paraguay wasencouraged bysome members toopen itsprocurement market tostimulate greater
efficiency intheuseofresources.
Members highlighted Paraguay 'ssuccess inimproving thelegal framework forinvestment.
Inthisconnection, questions wereraised ontheindependence ofthejudiciary, aswellastheimpact
ofstrong capital inflows onmacroeconomic management, andother investment-related issues such
asbusiness registration procedures.
Inreply, therepresentative ofParaguay noted thathiscountry wascontinuing itsefforts to
overcome numerous structural problems; tradeliberalization wasakeyfactor inthisprocess. Efforts
todiversifyagriculturalproductionwouldhelpinthealleviationofpoverty.Increasedefficiencythrough
privatization wasoneoftheaimsofthereform ofState enterprises; therepresentative gavedetails
oftheprogramme. Paraguay 'snotification onState-trading enterprises would becompleted assoon
aspossible. Government procurement waspartofthework programme ofMERCOSUR; Paraguay
thusdidnotintend tosigntheGovernment Procurement Agreement inthenearfuture, although it
wasseeking maximum transparency inthisarea. Paraguay sought toencourage foreign investment
tohelpindustrial development; integration waspartofthese efforts. Therepresentative indicated
thatParaguay would continue itspursuit ofdevelopment through balanced andstable macroeconomic
policies anddeepening thestructural reforms.
Inreply toasupplementary question, therepresentative ofParaguay provided details regarding
theRegister ofSuppliers forgovernment procurement; thiswasopentoalllegitimate, taxpaying firms
andwasnotarestrictive device.
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Regionalism andmultilateralism
Members praised Paraguay 'sincreasing integration intotheglobal economy, anditsrôlein
promoting aliberal trade régime forMERCOSUR coupled withastrengthened dispute settlement
mechanism. However, concerns werevoiced thatconvergence totheMERCOSUR common external
tariff would leadtoanincrease inParaguay 'saverage tariff, aswellastogreater tariff escalation.
Itwaspointed outthat,totheextent thisprocess affected Paraguay 'sscheduled WTO commitments,
these should besettled through negotiations under Article XXIV:6 assoonaspossible. MERCOSUR
commitments mayalsoinfluence Paraguay 'sinterest inparticipating inmultilateral liberalization efforts,
among which theInformation Technology Agreement andthenegotiations onfinancial and
telecommunications services werementioned. Aquestion wasraised regarding compliance withthe
provisions ofArticle XXIV andseeking information onParaguay 'sparticipation inother freetrade
arrangements.
Inreply, therepresentative ofParaguay, supported byanumber ofregional partners, noted
thatregional agreements werecompatible withthemultilateralism trading system. MERCOSUR should
beseeninthiscontext; itsphilosophy wasbased onthepractice ofopenregionalism. Contacts had
beenestablished withmany othercountries andregional groups. Many ofthequestions onMERCOSUR
werecurrentlybeingconsideredintheCommitteeonRegionalTradingAgreements,whichwasregarded
astheappropriate forum forsuchissues; replies hadalready beenprovided inthatforum. Some
members emphasized that,bearing inmind thebroad transparency roleoftheTPRM, questions on
members 'participation inregional trading arrangements were legitimate andhadbeendealtwithin
other cases.
WTO andother related issues
Members urged Paraguay tomeetitsoutstanding WTO notification obligations without delay,
particularly inareas suchasimport restrictions andState trading enterprises. Questions wereasked
about theWTO consistency andapplication of"other" import charges suchastheconsular taxand
portandstorage fees. Information wassought onefforts made byParaguay toimplement the
WTO Customs Valuation Agreement, andonprocedural aspects ofthepre-shipment inspection régime.
Onedelegation expressed concerns oncostsanddelays withrespect tocustoms clearance procedures,
despite theexistence ofthePSIrégime. Onemember asked several questions onthecompliance with
internationally agreed rulesoftechnical standards adopted atMERCOSUR level, aswellaswhether
mutual recognition agreements concluded bythesub-regional group were open tonegotiation with
thirdcountries.
Some Members questioned theconsistency withWTO rules ofexport restrictions affecting
timber, hides andskins.
Positive action taken byParaguay toimprove thelegalandinstitutional framework forprotection
andenforcement ofintellectual property rights wascommended. Information wassought onprogress
innewlegislationinthisarea,trainingarrangementsforjudiciaryandothersconcernedwithenforcement,
theresults oftheNational Campaign Against theViolation ofIPRs, andspecific actions taken bythe
National Council fortheProtection ofIPRs andtheCustoms tocombat piracy.
Inreply, therepresentative ofParaguay saidthathisauthorities hadbeenmaking agreateffort
tomeetthenotification requirements oftheWTO; however, thiswasdifficult while many MERCOSUR
measures werebeing adopted. Technical assistance fromtheWTO wasbeing sought tohelpParaguay
meetitsobligations. Concerning theconsular tax,hepointed outthatthecharge wasafixed amount
ofUS$15 onwhich 7.5percentwaslevied (i.e.US$1.05) forthesupport oftheParaguayan Institute
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fortheIndigenous People. Itwasnotbased onthec.i.f. value ofthegoods. Theoriginal consular
charge of5percentofthec.i.f. value waseliminated in1993. Pre-shipment inspection companies
provided information tothecustoms service toverify declared values, which weregenerally accepted
within a15percentmargin; thecostswereabsorbed bytheGovernment. Information wasprovided
ontheapplication oftheVAT under thetourist regime, levied atarateof10percenton15percent
oftheinvoice value.
Therepresentative alsoprovided information onthework oftheNational Council forthe
Protection ofIntellectual Property andefforts totrainofficials, judges andlegislators inthisarea.
Thelegalframework fortrademarks, authors 'andrelated rights andpatents wasalsobeing updated
inaccordance withtherequirements under theTRIPS Agreement, andthiswould alsostrengthen
enforcement. Export restrictions ontimber were intended tocombat deforestation; theprocessing
industry wasalsorequired tocomply withdomestic restrictive measures. There wasnorestriction
ontheexport ofrawhides andskins.
Sectoral questions
Paraguay wasasked toexpress itsviews onsectoral policy prospects andtheroleofState
intervention inthiscontext. ThelowlevelofGovernment intervention inagriculture wasappreciated
andtherecent accession ofParaguay totheCairns Group waswelcomed. Information wassought
onpolicies tobeadopted todiversify, andraise value added in,theagricultural sector. Questions
werealsoposed ontheeffectiveness ofmeasures taken toprevent deforestation, aswellasthescientific
basis forbanning imports ofbovine semen.
Members commented ontheexistence oftariff escalation inprocessing andmanufacturing
industries; theyraised questions concerning theimpact onParaguay oftheMERCOSUR common
automotive regime, tobeintroduced inthenearfuture.
Notewastaken ofreforms inthelegalframework forthefinancial sector intheaftermath of
the1995 banking crisis. Improvements intheregulatory framework governing telecommunication
serviceswerealsowelcomed;however,Memberssawscopeforimprovementintransportinfrastructure.
Information wassought onParaguay 'splans formaking offers intheongoing negotiations onfinancial
andbasic telecommunications services.
While onedelegation raised questions regarding theobservance ofcorelabour standards by
Paraguay, many others opposed raising ofsuchquestions inanyWTO body, including theTPRB.
They emphasized thatthese questions arenottrade-related and,inaccordance withtheSingapore
Ministerial Declaration, should bedealtwithintheILO.
Inreply, therepresentative ofParaguay noted thatParaguay hadnotariff quotas orspecial
safeguards inagriculture, anddidnotgrant export subsidies. Paraguay wasworking actively and
constructivelyininternationalnegotiationsonagriculture,henceitsrecentaccessiontotheCairnsGroup.
Paraguay wastrying todiversify itsproduction toreduce dependency onafewitems. Information
wasprovided onParaguay SPSfacilities, andextension services. Restrictions ongrowth-promoting
hormones wastoconform withrequirements offoreign markets forbeef, while restrictions onbovine
semen from theEUwerelinked totheBSEcrisis. Boththese matters werecurrently under review.
Therepresentative stressed thattrade inservices wasofgreat importance fortheParaguayan
economy, andParaguay hadmade progress inliberalizing thesector, especially intelecommunications.
Paraguay wasworking tocomplete aframework agreement onservices within MERCOSUR; therefore,
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intheshortterm, Paraguay didnotintend tomodify itssector-specific commitments under theGATS.
Recalling theterms oftheSingapore Ministerial Declaration inrelation tocorelabour standards,
therepresentative ofParaguay considered thatitwasnotappropriate torespond toquestions onthis
matter intheTPRB orwithin theWTO.
********
Overall, Members welcomed Paraguay 'sparticipation inthereview process, withastrong
delegation ledatMinisterial level. Theywelcomed thestepsalready taken byParaguay toward greater
transparency intradepolicy andtheauthorities 'stated commitment tofreeandopentrade, andstrongly
encouraged Paraguay tocontinue along thepathofliberalization andderegulation. They emphasized
theneedforMFN andregional liberalization tobecomplementary, theimportance ofdiversification
oftheeconomy andtheneedfordevelopment tobepursued onasustainable basis. TheTPRB welcomed
theanswers given byParaguay toquestions andlooked forward towritten replies onoutstanding issues.
END