RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/316
19 October 2001
(01-5148)
Council for Trade in Goods Original:  Spanish
STATEMENT AND QUESTIONS BY PARAGUAY TO THE
 EUROPEAN COMMUNITIES CONCERNING THE
EU/ACP PARTNERSHIP AGREEMENT
The following communication, dated 18 October 2001, has been received from the Permanent
Mission of Paraguay.
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Pursuant to the decision taken yesterday, 17 October 2001, by the Council for Trade in
Goods, to set up a Working Group to consider the waiver request for implementation of the
Partnership Agreement between the European Uni on and the African, Caribbean and Pacific States,
and in accordance with the suggested terms of reference and procedure, I wish to inform you as
follows.
Paraguay requested to become a member of the Working Group in order to follow closely the
consideration of this waiver request.
In accordance with the suggested timetable, which provides that any questions should be
asked no later than 18 October 2001, I have the honour to transmit herewith the comments and
questions of the delegation of Paraguay to the Eu ropean Union concerning the EU/ACP Partnership
Agreement, and I await the replies of the delegation of the European Communities in Geneva.G/C/W/316
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1. Paraguay has long-standing cultural and historical links with the European Communities,
which are reinforced by its strong desire to step up current trade relations, returning to the relationship
we previously enjoyed whereby many products were exported to various countries which today make
up the European Community.  Those exports progressively disappeared following the signature of the
first Lomé Agreements, as a result of the preferences obtained by ACP countries.  Exports such asmeat, tobacco and fruit to the United Kingdom and cotton and oil to other countries ceased to be
competitive as a result of this Agreement.
2. Paraguay has a system and a policy of market opening and free trade.  It believes in the
multilateral character of international trade and opposes any restrictive policy which leads to
discrimination against other developing countries, such as Paraguay.  It believes that the multilateral
trading system should then provide for compensation or other arrangements to prevent harm being
done to those countries.  This is particularly true for a developing country such as Paraguay, whichnot only meets the description given by the Worl d Bank of Lower Middle Income Countries (LMC),
but is also land-locked, which consequently increases freight transport costs for exports, thereby
damaging competitiveness even further.
3. The Government of Paraguay appreciates the recent decision by the European Communities
to grant a quota of 1,000 tons of high-quality Hilton beef (we had asked for 2,000 tons), which willput us on an equal footing with the other three MERCOSUR countries.  We also appreciate and
express our gratitude for the considerable technical and financial cooperation we receive which would
be boosted if Paraguay could significantly increase exports to the European Communities consisting
of over 200 million dollars, but constituting a very unfavourable trade balance.
4. The only preferences granted by the European Communities to Paraguay are those which
were made in the context of the Generalized System of Preferences (GSP), which involve some
reductions to tariffs or other specific duties under the most-favoured-nation clause (MFN).  These
preferences are much smaller than those granted by the EU to the ACP countries, EBA, ANDEAN,
CACM and GSP Sugar.  It should be recalled that the current GSP expires on 31 December 2001
(Regulation 2820/98) and that the GSP which will be in force for the period 2002-2004 was preparedin June 2001, simplifying the sensitivity of products and offering a reduction of only 3.5 per cent on
the MFN, which is less favourable than the previous regime.
5. Of the products which are currently exported, 87 per cent are MFN duty-free, because they
include soya, corn (maize) and some essential oils.  However, the other products such as leather,
wood, meat, sugar, juice and fruit have a surcharge of 50 per cent in most cases through customs
duties and AVE, and of 100 per cent in the case of very sensitive products such as meat, fruit, fruit
juice, sugar and some vegetables, which makes it completely impossible to export.
Market Access for Paraguay Exports
Market Access for Paraguay
Products in the EU1999 EU imports from
Paraguay (US$ 000)%
MFN duty free 171,336 87%
Ad valorem  duties only 11,655 6%
Ad valorem  + specific duties 12,176 6%
Total imports 196,758 99%
As the table shows, our position has deteriorated compared with 1997 and 1998.G/C/W/316
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6. Paraguay would like to increase exports in products other than Hilton beef such as fruit, fruit
juice, organic sugar, tobacco, tubers (manioc), rum or cane spirit and soluble maté.
7. For example, if we compare the advantage that some ACP countries have in terms of meat
exports, which have a 92 per cent reduction within these quotas, we see that competition is completely
discriminatory.
ACP Countries Quotas under the Beef/Veal Protocol
Botswana 18,916 tons
Kenya 142 tons
Madagascar 7,579 tons
Swaziland 3,363 tons
Zimbabwe 9,100 tons
Namibia 13,000 tons
8. While we recognize that sugar is a sensitive product for the EU, the sugar produced by
Paraguay for exportation is completely organic, and cannot compete on the terms granted to the ACP
countries, India, Cuba and Brazil.
Sugar Quotas Allocation Under the Preferential Sugar
Barbados 50,312
Belize 40,348
PR Congo 10,000
Fiji 163,600
Guyana 157,700
Côte d'Ivoire 10,000
Jamaica 118,300
Kenya 5,000
Madagascar 10,000
Malawi 20,000
Mauritius 487,200
Christoph & Nevis 15,000
Surinam 0.0
Swaziland 1186,400
Tanzania 10,000
Trinidad - Tobago 69,000
Uganda 5,000
Zambia 0.0
Zimbabwe 30,000
All ACP 1,294,700
India 10,000
Total 1,304,700
9. In addition, sugar also comes from the LDC countries through the EBA system, which
involves a system of quotas, together with the SPS sugar system.  The solution is to grant a quotaexclusively for organic sugar, either by establishing this in the Sugar Protocol or by direct negotiation.
10. In view of this preamble which describes the background, we wish to put the following
questions:G/C/W/316
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Questions by the delegation of Paraguay to the parties to the EU/ACP Partnership Agreement
1. How does the EU consider the EU/ACP Partnership Agreement to be consistent with the
Tokyo Round decision adopting the Enabling Clause, which provides for the granting of preferences
to developing countries by developed countries in such a way as to avoid discrimination and to grant
general rather than reciprocal preferences?  Given that the EU/ACP Partnership Agreement has
55 Member countries of the WTO as signatories, of the 77 developing countries, excluding
52 developing-country Members of the WTO, and thereby leaving them unable to benefit from the
preferences and advantages of the Partnership Agreement, does the EU not think that these countries
also deserve preferences and advantages?  Is it not true that this is also the situation fornarcotics-producing countries or for other groups of countries, such as those in the Caribbean? What
is the reason for this discrimination?
2. The parties to the Agreement recognize the need for the waiver because it is designed to
benefit the ACP countries.  It also benefits the countries of the European Union themselves.  We hope
that the European Community will adopt similar initiatives to help the small number of developing,least-developed land-locked and small island countries, which do not enjoy the preferences granted to
the ACP countries.  Could the European Union describe its initiatives to benefit non-ACP land-locked
and small island countries?
3. In view of the fact that there is an asymmetric relationship between, on the one hand, the
European Community, with 15 highly-developed countries with high per capita income, and on theother, 77 ACP partners, 19 of which have a per capit a GDP higher than that of Paraguay and other
developing countries, how does the EC analyse th e competitive disadvantage of exports from other
developing countries, particularly those which are land-locked or small islands, and are non-parties to
the Agreement?
4. This waiver, for historical reasons, aims to establish a preference for a group of developing
countries with close links to the EU, and is discriminatory towards other developing countries,
including countries like Paraguay.  This preference liberalizes trade in products of Paraguayan origin,
such as maté (llex paraguayensis), classified in the preferential tariff regime nomenclature in chapter 9
as "coffee, tea, maté and spices".  How can the EU compensate non-ACP countries for this situation?
5. What are the economic and trade measures adopt ed by the EU to benefit land-locked ACP
countries and land-locked non-ACP developing countries?
6. The protocols on sugar, beef and veal which form part of the fourth Lomé Convention have
been incorporated into the Partnership Agreement.  The preparatory period during which economic
partnership agreements will be negotiated and existing preferences will be largely maintained, will
expire on 31 December 2007.  The negotiation of these new trade agreements will begin in
September 2002.  Can non-ACP countries b ecome signatories to these protocols?
7. The Partnership Agreement is not merely an extension of the Lomé preferences;  in certain
parts of the text, there are mutual commitments to  grant preferential treatment.  WTO Members are
being asked to grant a waiver which offers preferences not only to the ACP countries, but also to
those of the EU.  We believe that the waiver request is not only for maintaining preferences for the
ACP countries, but also for including additional pref erences.  What impact, in the opinion of the EU,
will these preferences have on the markets of other developing countries, such as Paraguay, after over20 years of implementation of the Lomé Agreements?G/C/W/316
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8. The continuing marginalized status of many developing countries, particularly the
least-developed, land-locked and small island countries, justifies the requirement to grant trade
preferences that are non-discriminatory as between developing countries.  The impact frequently
resulting from the duty-free access for commodities imported or processed by the EU and
subsequently re-exported to the same markets or to third markets in non-ACP developing countries, isto prevent the accumulation of added value, as well as creating competition with the products and
production of other developing countries which may process their own raw material.  What is the
EU's assessment of the negative impact on non-AC P developing country economies of competition
from products re-exported by the EU and originating in the ACP countries?
9. Developing countries excluded from the preferen tial treatment have a wide range of products
in which they share an advantage, but which cease to be competitive because of the lack of
preferences.  What measures has the EU adopted or will it adopt to create a level playing field fordeveloping countries?  Please describe any such measures.
10. Some non-ACP developing and least-developed countries have certain preferences derived
from the EU's existing GSP.  How will the EU protect the interests of these developing countries in
the new GSP or has it planned any other arrangements?
11. There are plans for further negotiations and subsequent changes to the scope of the
Partnership Agreement in the event of its extension.  This creates uncertainty with regard to the scope
of the waiver which would apply to the ACP countries.  How can the WTO Members be sure that no
subsequent extension of the Agreement will be made to include other binding concessions?
12. We are concerned that commodity prices may decline further and that tariff escalation may
prevent the promotion of diversified trade patterns.  How will the EU attempt to avoid such negativeeffects, particularly on prices?
13. Does the EU consider that at the end of the established duration of the Partnership
Agreement, a multilateral trade regime will enter into force or will it seek a further waiver?
14. Pursuant to Article 25 of the ACP-EEC Lomé  Convention, signed on 28 February 1975, and
the Third Protocol thereto, the Community has given its commitment for an indefinite period, withoutprejudice to the other provisions of the Convention, to buy and to import, at guaranteed prices,
specific quantities of raw or white cane sugar fr om sugarcane producing and exporting ACP countries,
which those countries have given their commitment to supply.  How can non-ACP countries, which
have no quota, export the same product to the EU, and how can we compete on a fair basis with the
re-exportation of goods carried out by the EU, co nsidering the EU's considerable technological,
financial and industrial capacity, which enables it to process large quantities of this commodity that it
obtains almost entirely from the ACP countries with guaranteed quantities, terms and conditions andprices?
15. What are the guaranteed prices for sugar from ACP countries over the coming years, in
comparison to international market prices?
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