WORLD TRADE  
ORGANIZATION  WT/TPR/M/146 
12 July 2005 
 (05-3105) 
Trade Policy Review Body 
  
 
 
 
TRADE POLICY REVIEW 
 
PARAGUAY 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr Don Stephenson (Canada) 
 
 
Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPR ESENTATIVE OF PARAGUAY 4  
III. STATEMENT BY THE DISCUSSANT 11  
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 15  
V. REPLIES BY THE REPRESENTATIVE OF PARAGUAY AND ADDITIONAL 
COMMENTS 28  
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 36  
 
 
Note:   Advance written questions by WTO Member s and the replies provided by Government of 
Paraguay are reproduced in documents WT /TPR/M/146/Add.1 and WT/TPR/M/146/Add.2 
and will be available online at http://www.wt o.org/english/tratop_e/tpr_e/tp_rep_e.htm. 
  WT/TPR/M/146 
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 I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The second Trade Policy Review of Paraguay was held on 27 and 29 April 2005.  The 
Chairperson extended a warm welcome to the member s of the TPRB, H.E. Mr Ernst Bergen, Minister 
of Industry and Trade and head of the Paraguaya n delegation, Vice-Ministers Ramirez and Segovia 
and Ambassador Gauto, the rest of the Paraguayan delegation, and the discussant, 
H.E. Mr Ronald Saborio (Costa Rica). As usual,  the discussant would speak in his personal capacity 
and, in accordance with the established procedures, he  had made available, in advance, a summary of 
the main issues he intended to raise (document WT/TPR/D/122). 
2. The Chairperson recalled the purpose of th e Trade Policy Reviews and the principal 
procedures of the meeting.  The report by the Government of Paraguay and the WTO Secretariat 
report were contained in documents WT/TPR/G /146 and WT/TPR/S/146, respectively.  The 
delegations of Chile, Mexico, Cana da, Argentina, Japan, European Union, United States, Turkey, 
Costa Rica, Hong Kong, China, and Brazil had su bmitted advance written ques tions which had been 
forwarded to the delegation of Paraguay.  These qu estions and the answers provided by the delegation 
of Paraguay were reproduced in  document WT/TPR/M/146/Add.1. 
3. The Chairperson referred to the improvement in Paraguay's economic situation and to the 
important role of international trade in its dom estic economy.  He noted that Paraguay's report 
concluded that the main challenge facing Paragua y in recent years had been how to increase 
productivity and said it would be interesting to learn what importance Paraguay attributed to foreign 
investment as a means of improving productivity and whether Paraguay considered that increasing its 
GATS commitments might not help to attract such investment.  The Chairperson referred to the 
numerous measures taken by Paraguay to modernize its trade and investment regime, as well as to the 
various reforms currently under c onsideration.  As these reforms could bring significant economic 
benefits, he asked whether the Paraguayan delegatio n was able to give some idea of when the new 
legislation on competition policy, public banking  and the electricity sector might be enacted. 
4. The Chairperson noted that Paraguay was conti nuing to participate actively in the WTO and 
had contributed numerous proposals within the c ontext of the Doha Development Round.  He 
observed that according to the Secretariat repor t Paraguay considered th at the opening up of 
multilateral markets complemented the regional in tegration agreements, whereas Paraguay's report 
indicated that the MERCOSUR integration project was the most important component of Paraguay's 
trade strategy.  The Chairperson thought that Member s might like Paraguay to elaborate on its view of 
the relationship between the regional a nd multilateral liberalization efforts. WT/TPR/M/146 
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 II. OPENING STATEMENT BY THE RE PRESENTATIVE OF PARAGUAY 
5. The representative of Paraguay
 (H.E. Mr Ernst Bergen) said that it was a great honour to lead 
the Paraguayan delegation on behalf of the Gove rnment of Paraguay and expressed his personal 
satisfaction at having the opportunity to represent hi s country in the world's most important trade 
forum, not only in order to explain his country's  trade policies but also to share with such a 
distinguished audience the hopes and aspirations of a people anxious to achieve sustainable growth 
and thereby reduce poverty and bring about development with social justice. 
6. For Paraguay, the trade policy review was not so much an obligation as an unique opportunity 
provided by the WTO for a broad analysis of the c onsistency and integration of its trade policies and 
the effectiveness of their implementation for the pu rpose of contributing to Paraguay's growth and 
development. 
7. Paraguay was emerging from a long period of ec onomic stagnation which had left its people 
impoverished.  The Administration of President Ni anor Duarte Frutos, which had taken office in 
August 2003, was determined to turn the situa tion around through a strategy aimed at restoring 
confidence in the economy and establishing the basi s for sustainable growth, with poverty reduction 
and greater social cohesion. 
8. Important reforms had been introduced and im portant legislation, such as the laws on 
Administrative Reorganization and Fiscal Adjustment, the Customs Code and Government Procurement and that on the reform of the Retir ement and Public Pension Funds, had been enacted. 
9. The efforts which had been made were bearing fruit. After five years of stagnation, the 
Paraguayan economy was beginning to take off, with moderate growth of 2.9 per cent and inflation of 
2.8 per cent.  In 2004, all sectors of the economy ha d turned in positive results, a situation which had 
not been seen for 9 years.  International reserves had increased by 40 per cent and all external and 
domestic debt payments had been normalized.  Tax revenue had increased by almost 50 per cent and 
exports and imports had recorded growth of 31 and 42 per cent, respectively. 
10. Price stability, fiscal discipline and the restored faith of economic operators in public 
management had been decisive factors in sustaining the growth recorded. 
11. Paraguay's development strategy was aimed, fi rstly, at: restoring confidence in the public 
institutions by waging an unremitting campaign agai nst corruption and by modernizing the public 
administration; secondly, at achieving sustained gr owth based on the development of agro-industry 
and exports of value added produc ts; and, thirdly, at increasing human capital through greater 
investment in health and education and policies which made for greater fairness and easier access to 
those services. 
12. Paraguay was convinced that the growth of a sm all and open economy such as its own, one of 
the most open in Latin America, depended on its abilit y to take advantage of globalization, the flow of 
investment and the possibility of ensuring free trade. 
13. In his recently published book, Horst Köhler po sed the question: "With regard to morality, are 
import restrictions a form of theft?"  To this he replied: "with import restrictions on tariffs we are 
depriving the poor countries of the opportunity to he lp themselves.  I see this as a cardinal problem for 
the credibility of our policy towards the devel oping countries.  We are promoting free market 
principles and democracy, but as soon as it is a questi on of our jobs or our capital, then we suddenly 
start applying double standards.  I learned at the IMF, indeed I had to learn, that this is one of the 
main reasons why many developing countries do not belie ve in us.  We have to work to change that".  WT/TPR/M/146 
 Page 5 
 
 
 14. The representative of Paraguay shared the views of President Köhler and urged everyone to 
join in seeking ways of enabling developing coun tries, such as Paraguay, to obtain access to 
developed markets. 
15. The representative of Paraguay confirmed the s upport of his government for the efforts made 
by the Paraguayan delegation to the WTO regardi ng the recognition of the concerns and needs of 
landlocked countries, the programme for sma ll and vulnerable economies and the sectoral 
negotiations on cotton. 
16. The representative of Paraguay also confirme d his Government's genuine belief in the 
principles and ideals on which the WTO was based.  The defence of a free and undistorted multilateral trading system was a necessary precondi tion for reducing asymmetries between countries 
at world level and achieving genuine development with social justice by overcoming poverty and 
marginalization. 
17. At this point, the representative of Paraguay handed over to the Vice-Minister
 for Economic 
Relations and Integration, Ambassador Ruben Rami rez, who proceeded to give a more detailed 
presentation of Paraguay's trade policies. 
18. The Vice-Minister said that international trade was particularly important for the Republic of 
Paraguay since its economy was smal l and its domestic market very limited.  Paraguay had opted for 
export promotion and greater openness to imports as a strategy for achieving sustainable growth in the 
medium and long term.  As an exporter of basic pr oducts, which made it vulne rable to international 
price fluctuations, the thrust of trade policy ha d been directed toward export growth and the 
diversification of export products and markets. 
19. Paraguay had a long tradition of openness to international trade.  In recent years, Paraguay's 
strategy for trade negotiations with other c ountries and blocs had been based on MERCOSUR.  
Within this framework, agreements with various degrees of economic complementarity had been signed with the LAIA countries, India, South Africa, Egypt, the Southern African Customs Union (SACU) and Morocco and negotiations with the European Union and the Free Trade Area of the 
Americas (FTAA) were continuing.  These strategies  were consistent with the aim of encouraging 
more direct foreign investment and participati ng actively in cooperation and technical assistance 
programmes with a view to achieving fair and e fficient integration in international trade. 
20. After more than 20 years of economic stagna tion, low growth and recession, since 2003 the 
Paraguayan economy had begun to r ecover.  The government whic h took power in August 2003 had 
inherited macroeconomic instability often provoked by external forces beyond its control, poor 
governance, legal uncertainty, a large informal ma rket, and institutional weakness.  The negative 
growth of GDP during the previous two years had been combined with high levels of inflation, 
historically high shortfalls in ta x revenue, a highly volatile exchange rate, a rapid fall in international 
reserves, and long delays in meeting debt commitmen ts, which had brought the country to the brink of 
default. 
21. Thus, the first task undertaken by the presen t administration had been to re-establish 
macroeconomic stability and avoid de fault in order to restore confidence among economic operators.  
GDP had grown by 2.6 per cent in 2003 and by 2.9 per cent in 2004, after six years of recession.  Likewise, at the end of 2004 inflation had amounted to a mere 2.9 per cent, the lowest in 30 years.  After suffering an historic fiscal deficit of 3 pe r cent of GDP in 2002, in 2003 Paraguay had reduced 
the deficit to 0.6 per cent and by the end of 2004 had produced a surplus of 1.5 per cent of GDP, the 
first after ten years of deterioration of the fiscal accounts.  The interest rates on local-currency loans 
have been reduced and a monetary policy compatib le with the process of economic revitalization has WT/TPR/M/146 
Page 6  
 
 been pursued.  There are no arrears of payment of  domestic or external public debt and in 2004 
international reserves almost doubled as compared with the previous year. 
22. Even more importantly, however, it was possibl e to avoid default in 2003 by rescheduling the 
internal debt with private banks and paying off the arrears of external debt through signing a Special 
Drawing Rights Agreement with the IMF and obtaini ng structural adjustment loans from the Inter-
American Development Bank and the World Bank. 
23. Economic recovery had had a favourable impact on the country's balance of trade.  Since 
2003, Paraguay's exports ha d broken away from their historical stagnation levels and increased by 
32 per cent, rising even higher by the end of 2004, with a cumulative increas e of 55 per cent above the 
historical mean.  All this had helped steadily to  reduce Paraguay's trade gap, without imports losing 
momentum. 
24. The forecast for 2005 was for 3.5 per cent growth  in GDP, a fiscal surplus of the order of 
0.5 per cent, inflation of not more than 7 per cent,  a stable exchange rate, a further reduction in the 
trade gap and an increase in international reserves.  
25. The second task undertaken by the Government was to root out corruption within the public 
administration for the purpose of restoring confiden ce in the institutions of the State and enhancing 
their credibility.  One of the principal results of  the anti-corruption campaign had been a substantial 
increase in tax collection, by over 40 per cent in 2003 and 2004.  A nother important result had been 
savings of 20 per cent for the State on government purchases thanks to the creation of, and the action 
taken by, the new General Directorate of Public Procurement. 
 
26. The international business climate had also been  favourable.  Thus, the MERCOSUR member 
countries had grown at a rate of over 5 per cent in 2004.  Reasonable prices had been obtained for the 
Paraguay's export commodities and international interest  rates had remained low.  The world financial 
scenario favoured the flow of capital into the region wh ich, together with other factors, had made it 
possible to build up international reserves. 
27. Moreover, the campaign against piracy, counterfeiting and smuggling had also been 
intensified through the establishment of a speciali zed technical unit set up by the Ministries of 
Industry and Trade, Finance, the Interior and Defe nce and other government agencies, in coordination 
with the Office of the Attorney General, the aim be ing to gather intelligence in order to eradicate the 
black economy and illegality. 
28. Within this framework of transparency and coor dination, there had been a six-fold increase in 
activities involving deterrent, preventive, repr essive and support operations on several fronts 
including, in particular, importation, production, ma rketing and the criminal organizations themselves. 
29. In recognition of its work, Para guay had received the thanks of the Congress of the United 
States and the IFPI and had been awarded a prize by the Imaging Supplies Coalition for its efforts to 
combat counterfeiting. 
30. It was essential to prevent and combat corrup tion in order to create a business environment 
that encouraged private investment and economic  growth.  This was the belief of the National 
Government in acting directly against this pla gue which affected both the private and the public 
sectors.  The National Government also believe d that the anti-corruption campaign should be 
measured not solely and exclusively in terms of pub lic perception but also against the actual facts and 
hard realities, like the results just mentioned, and fi nally translated into clear  messages for the investor 
signalling the political will to undertake and suppor t the difficult task of eradicating practices 
historically prejudicial to the economic life of the country.  WT/TPR/M/146 
 Page 7 
 
 
 31. The third task undertaken by the Government had been that of improving governance and the 
predictability of public policy through an agenda of reform and draft legislation aimed at ensuring 
fiscal sustainability, access to cr edit for the productive sectors, and modernization of public 
management and the financial sector. 
32. Thus, a policy agreement has been reached be tween the Executive, the National Parliament, 
the political parties and the private sector to adopt  a programme of reform designed to achieve these 
objectives.  Of the seven laws proposed by the Execu tive in 2003 five had b een adopted, namely those 
on the reform of the public retir ement and pension funds , tax reform, the new Customs Code, the 
guaranteeing of deposits, and the rescheduling of th e public debt.  The reform of the public banking 
system, the key to credit for small and medium industry, was in the process of passage through 
Parliament, as was the draft law on the reform of the private banking system. 
33. Likewise, the Executive had forwarded to the National Congress other draft laws relating to 
economic reform, in particular to clarify the rules on the operation of the ma rket.  These included the 
Law on Biofuels, the Law on the Protection of Competition, and the Law on Fuels, aimed at 
liberalizing the marketi ng of this product. 
34. As far as State-owned enterprises were concerne d, the National Government had embarked on 
a process of substantially improving their efficien cy, for which purpose it had introduced a financial 
and management audit procedure, to be followe d by the preparation of business plans for each 
enterprise, with the participation of private capital. 
35. The Government was engaged in permanent dialogue and consultation with the political 
parties and civil society for the purpose of the advancing the necessary economic reforms and framing 
medium and long-term State policies.  Thus, it was not by chance that the Government of Paraguay, 
entrepreneurs and representatives of civil society ha d drawn up the Plan for Economic Growth with 
Justice 2005-2011 based on the four pillars of national development: 
 - Improvement of the business environment and competitiveness; 
 - greater diversificati on of production and exports; 
 - improved distribution of land to increase agricultural production; and 
 - the reduction of poverty and social injustice.  36. The National Government believed that its input must include a social factor.  The specific 
social programmes that were being applied would make a decisive contribution to reducing poverty 
and inequality by extending to all citizens access to food, education and social welfare and by creating 
and protecting jobs. 
37. Within the context of a policy of strengtheni ng the competitiveness of the national productive 
sector, important decisions had been taken concerning  the opening up of trade in goods in sectors vital 
to the development of the country's productive activ ity.  Tariff protection had been considerably 
reduced for capital, information technology and telecommunications goods, to mention the only the 
most important.  With respect to the production of meat, the product with the greatest export growth 
in recent times, Paraguay had acquired the internati onal status of a country free of foot-and-mouth 
disease with vaccination, which had made it possible to recover important traditional markets for this 
product and win new ones. 
38. Paraguay was promoting the entry of foreign dir ect investment (FDI) with various laws and 
promotion mechanisms which, however, had not proved  sufficient to attract more foreign investment.  
Whereas for MERCOSUR in general, in 2004, fore ign investment had increased by 75 per cent, 
according to an ECLA report, during the same pe riod Paraguay recorded a decrease of 12 per cent. WT/TPR/M/146 
Page 8  
 
 39. Paraguay's foreign trade rose to a maximum, for both exports and imports, in 1997, but in 
1998 it began to fall, reaching a minimum in 2002.  Since 2003 there had been a notable recovery in exports and imports with growth ra tes of 31 and 42 per cent, respectively, in 2004 as compared with 
the previous year. 
40. Where tariff policy was concerned, Paraguay was applying low and uniform customs duty 
rates.  The weighted average import duty applied to goods originating outside the MERCOSUR area 
had fallen from 5.9 per cent in 1995 to 4.1 per ce nt in 2003, maintaining the historical progress 
towards an economy open to the international co mmunity of nations.  The exception agreements 
signed with MERCOSUR, which allowed Paraguay to maintain tariffs different from those imposed 
by the MERCOSUR Common External Tariff (CET), had been a fundamental part of this policy. 
41. Structural improvements in the customs service were making possible distinct advances in 
customs procedures, thanks to a computer-based cross-checking system operated jointly with the 
transit countries, bearing in mind that Paraguay is count ry without direct access to the sea.  In the field 
of trade regulations and procedures, Paraguay had improved the transparency and reduced the 
complexity of its trade regime.  To this end, it had intensified work on expediting customs clearance, 
in particular by electronic means, and had modernized  its risk analysis techniques to bring them into 
line with international standards.  Moreover, it ha d made wider use of sanitary measures and technical 
regulations.  The Exporter's Single Window was bei ng implemented in order to reform and simplify 
procedures and other bureaucratic requirements.  Th is was making it possible to reduce the transaction 
costs of foreign trade operations. 
42. In the area of intellectual property, the La w on Patents had opened up the possibility of 
granting patents to sectors which had previously ha d no protection, such as pharmaceutical products.  
Where trade defence was concerned, the Paragua yan legislation governing anti-dumping measures, 
subsidies and countervailing measures had confirme d Paraguay's multilateral commitments.  Since 
acceding to the WTO, Paraguay had found it nece ssary to improve these provisions, in order to 
prevent their being used for protectionist purposes. 
43. Unfair trading practices and economic distor tions were still harming the interests of 
Paraguay's exporters, especially in the agriculture  sector.  These practices had obliged the National 
Government to defend its trade interests throug h the multilateral mechanisms established under the 
WTO Agreements. 
44. With regard to agriculture and livestock farm ing, two of the country's main production and 
export branches, the Government of Paraguay was in  the process of changing the organizational and 
functional structure of the Ministry concerned.  As part of this process it had created two new 
autonomous entities, SENACSA and SENAVE, with lega l personality under public law and their own 
resources to improve the Ministry's efficiency in ca rrying out its basic functions and to deal with the 
reality of the existing and emerging scenarios in the agricultural sector. 
45. The National Animal Quality and Health Se rvice (SENACSA) had unified the official 
veterinary services, by bri nging together into one single entity ev erything to do with animal health, 
the quality and safety of food of animal origin, and international trade in animals and animal products, 
which had made it possible effectively to supervi se and control every phase of the production chain. 
46. For its part, the National Plant and Seed Quality and Health Service (SENAVE) was 
responsible for implementing nationa l policy in the area of plant health and quality, seed production, 
and the protection of new plant varieties and plant products derived from biotechnology. 
47. Although the increase in trade had not been su fficient to alleviate poverty and guarantee 
development, foreign trade was regarded as an essentia l element of any growth strategy.  Within this  WT/TPR/M/146 
 Page 9 
 
 
 context, the most effective means of balancing out  the preponderance of some countries over others in 
terms of economic development, size of markets, wealth, etc. was the multilateral system and the most 
effective and efficient multilateral system had to  be the WTO.  This was Paraguay's aspiration. 
48. However, Paraguay noted that the objectives pursu ed by the WTO had not yet been achieved.  
In carrying out its essential task of liberalizing trad e, the WTO had not generated the mechanisms of 
effective access to markets indispensable for the de veloping countries, but it had been efficient in 
incorporating trade defence rules and disciplines, including a series of elements that had produced 
trade restraints, discrimination and distortions that  encouraged and fostered protectionism, such as 
those generated by increasing subsidies and applying greater tariff escalation. 
49. This situation was aggravated by the failure to implement the Marrakesh Agreements, the aim 
of which was to make substantial progressive re ductions until distortions and protection were 
eliminated and to incorporate non-trade concerns , such as special and differential treatment for 
developing countries, in accordance with Article 20 of the Agreement on Agriculture. 
50. In these circumstances, many developing c ountries, such as Paraguay, were suffering 
discrimination because advantages and privileges were being granted to other countries with the same 
export supply, with the effect of unfairly underm ining competition and imposing an additional burden 
on their efforts to achieve sustai nable and sustained development. 
51. It was therefore important to draw attention to the seriousness of the discrimination that 
existed and, indeed, continued to exist, as for exam ple when the European Unio n or the United States 
granted countries from the same region as Paraguay or countries at a similar level of economic 
development unilateral quotas, advantages or privil eges for products similar to those produced by 
Paraguay, thereby totally depriving the Paraguayan producers of their market. 
52. The situation was even more serious if, like Pa raguay, the country was landlocked and had to 
pay a surcharge to cover the cost of transport to reach the sea, which was not the same as that paid 
within the same country when the production areas we re far away from the coast , since in that case 
the national tariffs applied and did not reflect the obstacles involved in crossing a border and using 
foreign territory to reach the sea, in accordance w ith the provisions of Article V of the GATT 1947. 
53. This was having effects which conflicted with the purpose for which the WTO was created, 
namely, to liberalize trade and generate equality of  opportunity to compete on international markets. 
54. For the developing countries and, in particul ar, for those which continued to support and 
believe in the multilateral trading system, Doha  had represented and continued to represent 
reconciliation between "free trade" and "development with justice".  However, Paraguay noted that 
the group of countries practising protectionism among themselves was growing ever larger. 
55. The Vice-Minister said that, in plain language, wh at he had in mind was subsidies, millions in 
domestic support and protectionism for agriculture wh ich was distorting every possibility of trust in 
the leadership of those countries in the constructi on of the multilateral trading system, the backing and 
political support for which in the less developed countries were steadily weakening because of the 
evidence in favour of protectionism provided by the example of their measures and significant 
exemptions that were distorting trade and discrimin ating against those with less ability to retaliate. 
56. Building an open, free, competitive and multilate ral trading system was a task for all, a 
challenge for all and a necessity for all.  To achieve  this it was necessary to grant easier access to the 
markets of the developed countries, prevent the es tablishment of new barriers to trade, eliminate 
discrimination and provide for sustainability and pr edictability in order that together trade and WT/TPR/M/146 
Page 10  
 
 development might produce satisfactory results for al l the stakeholders in the system which the WTO 
was endeavouring to build day by day. 
57. These were precisely some of the objectives being pursued by developing country Members 
to make their participation in free trade more e ffective and to integrate themselves in the world 
economy.  They were the objectives of the trade policy being promoted by Paraguay.  WT/TPR/M/146 
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 III. STATEMENT BY THE DISCUSSANT 
58. The discussant  (H.E. Mr Ronald Saborio) welcomed  the delegation of Paraguay.  He 
congratulated the Secretariat on its report, the Government of Paraguay on the work done during 
Paraguay's trade policy review and the chairman of  the TPRB for his contribution to the activities of 
that body. 
59. The discussant stressed the importance of the tr ade policy review.  It was an exercise in 
transparency which enabled all Members to acquaint themselves with the details of the trade policy of 
the country under review.  The published results of  the review would become reference materials on 
Paraguay's trade policy for future governments a nd for academics and students around the world, as 
well as for many economic operators.  Moreover, the self-examination of the country concerned 
probably constituted the most positive part of the review.  The close involvement of the various 
ministries, other government departments, the priv ate sector and the universities in the trade policy 
review process was a diagnostic tool that enabled a country to learn about itself from the inside.  It 
gave a picture of that country's strengths and weaknesses.  The opinions of other Members and the 
subsequent dissemination of the results within th e country concerned made this a truly valid and 
valuable exercise. 
60. The Paraguayan economy had returned to the path  of growth in 2003.  The policies designed 
to improve the public finances, strengthen the fi nancial system and generally improve the business 
climate had begun to yield positive results.  In 2004, a real GDP growth rate of 2.9 per cent had been 
achieved.  Likewise, per capita GDP had begun to rise again, reaching US$ 1,019 in 2003.  This growth was largely due to the recovery in exports  of agricultural products, both raw and processed.  
Agriculture continued to be the main source of employment in Paraguay and since 1997 had increased 
its contribution to reach 41 per cent of total employment in 2003. 
61. During the period under review, the Government  of Paraguay had ma de some important 
reforms which had helped to improve the fiscal situa tion.  The most notable of these reforms had been 
the introduction of a personal income tax and the entry into force of the Law on Administrative 
Reorganization and Fiscal Adjustment.  Moreover, a special drawing rights agreement had been 
signed with the IMF.  The Law on Administrative Re organization had provided the government with 
a means of making the operations of the public sector more efficient.  The application of policies to 
improve the efficiency and transparency of Stat e institutions had included audits of State-owned 
enterprises and the implementation of a plan to incor porate the private sector in their capitalization.  
This had been an important and interesting development.  The di scussant requested more information 
about the impact of these policies.  As a result of the reforms introduced, the central government's 
fiscal balance had recorded a surplus of US$ 66.7 million during the first half of 2005. 
62. In the area of monetary policy, inflation had been  held down to manageable levels, with a fall 
in 2004.  The figures for the period up to March 200 5 showed that annual inflation had stayed below 
5 per cent.  The Secretariat report ha d mentioned that the decline in price growth was partly due to the 
appreciation of the exchange rate during 2003 and th e first half of 2004.  On the other hand, high 
interest rates were continuing to make it difficu lt to obtain credit on the domestic market.  The 
discussant said it would be interesting to hear the plans of the Government of Paraguay for reducing 
interest rates and thereby boosting economic growth. 
63. International trade played a decisive role in the Paraguayan economy and to a large extent its 
growth and development were probably trade- dependent.  The nominal value of Paraguay's 
international trade was equivalent to about 100 per cent of GDP.  Primary products, especially raw 
agricultural products, accounted for most of Paragua y's exports, while imports consisted mainly of 
manufactures. WT/TPR/M/146 
Page 12  
 
 64. MERCOSUR continued to be Paragua y's most important trading partner.  Accordingly, it was 
not surprising that the Government considered Paraguay's participation in MERCOSUR to be the 
most important component of its trade policy.  Pa raguay had traditionally placed special emphasis on 
maintaining low tariffs, particularly on capital goods .  The discussant said it would be interesting to 
know how this could be reconciled with the increase in tariffs which might be necessary in order to 
bring Paraguayan tariffs into line with the ME RCOSUR Common External Tariff, at least as they 
stood at the time of the review.  The discussant ask ed how the Common External Tariff would be 
reflected in Paraguay's specific requirements. 
65. Paraguay's foreign investment regime was essen tially open.  There were no restrictions on 
private investment, foreign or national, other than in certain activities reserved for the State.  Paraguay 
had made notable efforts to enhance its investme nt environment through international arrangements 
and bilateral agreements on investme nt promotion and protection.  However, to attract foreign direct 
investment a high degree of predictability was requ ired.  From the investor's point of view, the 
absence of this factor seriously limited the attr activeness of many developing countries as far as 
investment was concerned.  It might therefore be advisable for Paraguay to make more use of 
multilateral commitments to improve the predictability of its investment regime.  The discussant 
asked what specific policies had been implemen ted to boost the limited investment in the 
manufacturing sector and to make it possible to compete more effectively with neighbouring countries in attracting investment in manufacturing. 
66. The discussant congratulated Paraguay on its en ergetic participation in both the regular 
activities of the WTO and the Doha Round multilatera l negotiations.  This was evidenced by the 
numerous proposals made by Paraguay both individually and as a member of MERCOSUR, the G-20 
and the Cairns Group, or together with other develo ping countries in defence of the interests of small 
economies or Paraguay's interests in connection with the discrimination it had encountered on the part 
of some of its trading partners.  The discussant sa id that he was confident that Paraguay, despite 
certain frustrations mentioned in the review, would continue to take a positive attitude and participate 
actively in the Doha Round negotiations, which woul d bring a solution to many of the problems it 
currently faced. 
67. Since its first trade policy review in 1997, Paraguay had made considerable efforts to 
rationalize and modernize its trade regime.  Among other measures successfully adopted, he 
mentioned the application of the WTO transaction va lue, the abolition of preshipment inspection and 
the establishment of a single export registry.  Steps had also been taken to address control problems at 
customs.  However, the Secretariat report indicated th at informal trade continue to be a problem.  The 
discussant invited the delegation of Paraguay to d escribe Paraguay's plans for dealing with this 
situation and to indicate whether measur es had been taken at MERCOSUR level. 
68. Tariffs were the main instrument of border protection and an importa nt source of revenue, 
accounting for approximately 20 per cent of annual tax collection.  All tariffs were ad valorem, which 
gave the tariff transparency.  During the period under review, the average applied MFN tariff had 
been reduced to 8.9 per cent, although tariffs had increased in 1999 and 2000 .  Moreover, Paraguay 
had introduced minimum specific import duties (DIE M) and, subsequently, a special temporary 
import measure (METI). The discussant said th at although these measures were no longer being 
applied, it was important for the Paraguayan delegation to explain the reasons why they had been 
adopted in the first place. 
69. The average applied MFN tariff was 9.9 per cent for agricultural products and 8.8 per cent for 
non-agricultural products.  In 2004, the product groups with the highest average tariffs had been cane 
sugar and beet sugar (30 per cent) and parts of motor vehicles (28 per cent), while cotton, clothing and 
footwear (25 per cent) were at similar levels.  The discussant said it was interesting to note that the  WT/TPR/M/146 
 Page 13 
 
 
 tariffs levied on imports of agricultural products we re higher than those on other products.  This was 
rather surprising in a country in which the ag ricultural sector was particularly competitive. 
70. With respect to domestic taxes, the Secretariat report had indicated that, in general, imports 
and domestically produced goods we re similarly taxed.  However,  during the period under review, 
Paraguay had increased the taxable value of ce rtain imported products subject to Selective 
Consumption Tax, such as beer, cigarettes and unlea ded petrol.  According to the Secretariat report, 
this increase had only affected imports.  The discu ssant asked the delegation of Paraguay to confirm 
this. 
71. The Secretariat report had also indicated that  export procedures appeared cumbersome and 
time-consuming.  Some products were subject to prio r authorization in order to safeguard supplies for 
the domestic industry and, during the period under review, certain products, such as bovine leather 
and soya, had been subjected to export taxes.  As previously mentioned, exports had been of 
enormous importance for the growth of the economy in recent years so that it was remarkable that 
Paraguay should have found it necessary to impose ta xes on products which formed such an important 
part of its export basket.  The discussant asked the Paraguayan delegation to explain the reason for 
these taxes. 
72. Paraguay was maintaining export incentives, including free zones and in-bond processing 
(maquila).  These two programmes appeared to grant tax benefits subject to export requirements, but 
according to the Secretariat report they had not been notified as providing export subsidies.  The discussant said it would be useful to know the specifi c nature of these benefits and what impact they 
had had on export promotion. 
73. In 2003, a new Law on Government Procuremen t had been enacted in keeping with the 
objectives laid down in the National Integrity Plan.  This had made it possible to reduce the amount of 
discretion allowed in awarding public contracts and,  at the same time, to improve the predictability 
and transparency of the procedures.  The discussant congratulated Paraguay on the valuable work it 
had done in this area.  It had managed to assure ta xpayers that their taxes would be more efficiently 
used in making public sector purchases and to give participants in these procedures the benefit of 
clear and predictable rules and a fair result.  The discussant said he was confident that Paraguay 
would continue to be equally successful in maki ng improvements in this important area and hoped 
that its example would encourage other countries to take similar decisions. 
74. The discussant expressed his satisfaction with the progress that Paraguay had made in 
connection with the protection of intellectual prope rty rights, both by promulgating new laws and by 
taking steps to have them implemented.  Both  Paraguay and its trading partners had made 
considerable efforts to improve protection. 
75. In recent years there had been significant grow th in mobile telephony, partly due to the 
limitations of fixed telephony.  The Secretariat repor t had noted that, in 2000, efforts had been begun 
to privatize the then National Telecommunications  Administration but that the process had been 
suspended in 2002.  The discussant asked the dele gation of Paraguay to e xplain what measures had 
been taken to improve the efficiency of the ser vices provided by the State communications company 
(renamed the Paraguay Communications Company). 
76. The Secretariat report had also mentioned that the banking sector had experienced a crisis in 
2002 from which, fortunately, it now appeared to have recovered.  Both the Secretariat report and that 
of Paraguay mentioned the steps had been taken to restructure the public banking system with a view 
to creating a new economic development bank.  Th e discussant asked the delegation of Paraguay to 
provide more details on progress with the reform of th e public banking system and, in particular, if it WT/TPR/M/146 
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 was intended to subject it to the same regulatory requ irements as applied to the rest of the banking 
sector. 
77. Transport costs in Paraguay were among the highest in the Western Hemisphere.  To a 
considerable extent, this was due to the country's landlocked situation.  It could also be connected 
with policies that might be restricting competition in the sector, such as the reservation of cargos in 
international river transport.  Even  so, Paraguay had made efforts to liberalize the sector, in particular 
through the Hidrovía (Paraguay-Paraná River Waterway) Treaty.  The discussant congratulated Paraguay on these efforts and wondered whether they might not be extended to operators in other 
countries to help promote competition in the sector and thus reduce transport costs. 
78. The discussant expressed his satisfaction with the direction of the reforms undertaken by 
Paraguay and with the recent economic growth which,  in his opinion, was a clear sign of recovery 
attributable to the efforts deployed by the Gove rnment, as well as with the work which Paraguay was 
doing to ensure that this growth was converted into sustainable development.  WT/TPR/M/146 
 Page 15 
 
 
 IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 
79. Members welcomed the delegation of Paragua y and congratulated the discussant on his 
contribution to the review. 
80. The representative of Chile  stressed the ties which linked Chile with Paraguay at multilateral, 
regional and bilateral level.  For the multilateral trading system, in general, and for Chile, in 
particular, Paraguay was an important  trading partner.  Chile and Paraguay shared an overall vision of 
the WTO and, in relation to the Doha Round as a whol e, were hoping for balanced results in all the 
areas of negotiation but, above all, in those of inter est to developing countries, especially agriculture. 
81. On many of the issues being negotiated in th e WTO the positions of Chile and Paraguay were 
convergent.  For example, the fact that both were members of the G-20 and the Cairns Group showed 
that in agriculture Paraguay and Chile were united by the same interests.  Moreover, they shared with 
the rest of the Colorado Group the objective of improving efficiency in the area of trade facilitation, by means of clear and binding rules, with flexibility for developing countries. 
82. The framework for the bilateral economic relationship was Economic Complementarity 
Agreement (ECA) No. 35 between MERCOSUR and Chile  signed in 1996.  Although there had been 
some decline in trade in recent years, the volumes  traded in 2004 had risen to much more encouraging 
levels.  Last year, imports from Paraguay had reached  a value of 96 million dollars, the highest in the 
last decade.  However, Chilean exports accounted  for only 33 million of the 130 million dollars of 
trade between the two countries.  In simple terms, in 2004, Chile's share of total trade had been only 
one quarter.  The representative of Chile said that he hoped that the work recently done by Paraguay 
and Chile to improve bilateral li nks would give renewed impetus to  trade and business relations and 
facilitate the access of a more diversified range of Chilean products to the Paraguayan market. 
83. Within the framework of the Administra tive Commission for ECA No. 35, Chile had 
expressed interest in bilaterally expanding trade re lations and had proposed the extension of the ECA 
to include trade in services and government procur ement.  This idea was awaiting prior approval at 
MERCOSUR level and Chile hoped that it would be given concrete expression in the medium term. 
84. Nevertheless, the representative of Chile was pleased to be able to announce the recent 
negotiation of an Air Transport Agreement with  Paraguay which, it was hoped, would be signed 
during the month of May.  This agreement establis hed open skies between the two countries and, he 
was proud to say, was one of the most liberal of its kind. 
85. The representative of Chile noted that, sin ce joining the WTO, Paraguay had become an 
active participant in the multilateral system and Ch ile looked forward to cont inued cooperation in the 
WTO, at regional level in MERCOSUR and, of course,  bilaterally.  Chile pointed out that, since the 
last review in 1997, Paraguay had made important progress in modernizing its trade regime, despite 
the adverse external factors with which it had recently had to contend, and welcomed the good 
economic news which the Minister and the Vice-Minister had provided. 
86. The representative of Chile noted that Chile  had submitted certain written questions 
concerning services, intellectual property and import licences and was looking forward to receiving 
the answers in the course of the review. 
87. The representative of Mexico
 offered apologies on behalf of Ambassador De Mateo, 
prevented from attending the meeting by a prior commitment. 
88. There were many ties, apart from geographical  ones, between Mexico and Paraguay which 
bound them inseparably together in a common fu ture.  Undoubtedly, the economies of the two WT/TPR/M/146 
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 countries were linked by their relative similarity, as well as by the numerous trade liberalization and 
harmonization efforts that had been made at regi onal level, as most recently expressed in the Free 
Trade Area of the Americas, although the steps take n within the context of LAIA and the Economic 
Complementarity Agreement between Mexi co and Paraguay were also important. 
89. Nevertheless, trade between Me xico and Paraguay, although it had been growing steadily for 
some years, was still on a small-scale.  In 2004 , total bilateral trade had amounted to 47 million 
dollars.  However, it should be pointed out that, even though this figure was small, it represented 
almost four times more trade than had been recorded in 2003 and, in te rms of its balance of trade with 
Paraguay, involved a deficit for Mexico of 25 m illion dollars.  The representative of Mexico sincerely 
hoped that trade would be deepened and extended a nd that the two countries and their peoples would 
benefit from the dividends it generated. 
90. In Mexico's opinion, however, although bilate ral trade was important, Members' progress 
with trade liberalization in the multilateral context was vitally necessary and a sine qua non  for the 
promotion of further liberalizati on at bilateral level.  In this  connection, Mexico stressed the 
importance for all Members of Paraguay's participa tion in and commitment to the multilateral trading 
system. 
91. The representative of Mexico said that it was appropriate to recall certain comments which 
the Secretariat had made in the summary observations part of its report, to the effect that Paraguay 
probably needed new trade measure s to accelerate and secure its economic growth.  Examples 
included expanding its commitments under the Ge neral Agreement on Trade in Services, the 
introduction of trade facilitation measures and the el imination of the gap be tween applied and bound 
tariffs. 
92. The representative of Mexico also expressed con cern about the lack of a system that would 
enable Paraguay fully to implement its obliga tions under the Agreement on Technical Barriers to 
Trade and the Agreement on the Application of Sa nitary and Phytosanitary Measures.  This was 
nullifying any comparative advantage that might be derived from the trade liberalization offered by 
Paraguay, mainly because it meant that there was insufficient information concerning the technical 
regulations and sanitary and phytosanitary measures that Paraguay was applying and the procedures 
for implementing them, apart from the fact that these procedures were expensive and not necessarily very flexible.  Mexico was genera lly concerned about the effect on exporters of the sudden removal of 
legal certainty regarding their rights and obliga tions when they shipped their products to the 
Paraguayan market. 
93. Mexico had submitted various written questi ons and comments to Paraguay, mainly 
concerning technical barriers to trade and sanitary and phytosanitary measures.  The representative of 
Mexico said that that he did not intend to repeat those questions since they would certainly be dealt 
with in greater depth at the next session and he would be receiving a prompt written reply from his Paraguayan colleagues.  Mexico reaffirmed its read iness to go into these questions in greater detail. 
94. The representative of Canada
 said that Canada and Paraguay were continuing to strengthen 
their trade relations.  In 2004, two-way trade had reached a ten-year high of CAN$ 24 million.  Canada had an assistance programme with Paraguay which focused mainly on transfer of expertise in agriculture, a vital sector of Paraguay's economy.  The representative of Canada noted that Vice-
Minister Ramirez had highlighted the impediments faced by Paraguay as a result of distortions and barriers in international markets for Paraguay's ag ricultural products.  Canada shared these concerns 
and looked forward to continuing to work with Paraguay, individually and through the Cairns Group, 
for a more open and market-oriented agricultu ral trading system in the Doha negotiations.  WT/TPR/M/146 
 Page 17 
 
 
 95. The relationship between Paragua y and Canada was being furthe r cemented by a consultative 
mechanism which brought the two countries toge ther once every two years for discussions on 
bilateral, hemispheric and multilateral issues.  In addition, Canada was looki ng forward to continuing 
its trade and investment dialogue with Paraguay a nd its MERCOSUR partners in the context of the 
creation of the FTAA. 
96. Since its last review in 1997, Paraguay had been through some very challenging times, both 
internally and externally.  All its MERCOSUR nei ghbours, who were also its principal trade partners, 
had had to face economic upheaval and, in some cas es, crises during this period.  Canada commended 
the Government of Paraguay for having adopted  measures, during these difficult times that had 
contributed to its macroeconomic recovery. 
97. In 2003, the Government of Paraguay had unde rtaken an ambitious reform programme, 
including public sector and fiscal reforms.  Most  of these reforms were moving ahead, though some, 
such as those in the banking sector, still required improved GATS commitments.  Canada was supportive of Paraguay's ongoing efforts towards fiscal  and financial reforms and the strengthening of 
its institutions, as these would lay the foundation for more effective governance and responsible 
economic management, along with clearer rules for investors and trade partners.  It was clear from 
Paraguay's opening statement that these were goals  that the governments of Paraguay and Canada 
both shared. 
98. The representative of Canada understood that ma intaining fiscal discipline in the country in 
which poverty and unemployment levels remained  high was a real challenge and encouraged 
Paraguay to pursue and reinforce measures aimed at greater control over public expenses.  Canada 
also urged Paraguay to continue its efforts in battling the underground economy, piracy and 
counterfeiting and welcomed the statements it had heard from Paraguay on these issues. 
99. Although Canada applauded Para guay for its reform efforts,  it had concerns regarding 
differential treatment applied to national and foreign investors in  the banking sector, and ambiguities 
between the Secretariat's report and Paraguay's servi ces offer in the current negotiations with respect 
to mode 4 commitments in the travel and tourism sector.  Canada had subm itted several questions 
pertaining to these concerns and looked forward to  receiving Paraguay's oral and written responses at 
the next session. 
100. It had always been Canada's view that gove rnments which were committed to maintaining a 
liberal and transparent trade regime would be better placed to enjoy the benefits of increased international trade and global economic growth.  Th erefore, Canada encouraged Paraguay to continue 
its reforms and to continue to streamline and mode rnize its trade regime, so that it would be well 
placed to realize the opportunities that the present Round should bring. 
101. The representative of Argentina
 said that since the last trade policy review in 1997 Paraguay 
had experienced a period of economic stagnation a nd recurrent crises during which both real gross 
domestic product (GDP) and per capita GDP had d eclined.  This had been brought about by the 
effects of various external and regional shocks  and problems of political instability, which had 
affected governance in general.  Nevertheless, in the last two years, this trend appeared to have been 
reversed, since positive growth rates well above the natural rate of increase in population (2.2 per 
cent) had been observed. This good performance of th e real sector of the economy was being achieved 
within the context of a macroeconomy based on a significant improvement in the fiscal accounts and 
the prudent management of monetary policy.  During 2004, the Paraguayan economy had increased in 
size by an estimated 2.8 per cent.  Thus it had comp leted a second consecutive year of growth and this 
positive trend was expected to continue in 20 05, with an increase of about 3.5 per cent. WT/TPR/M/146 
Page 18  
 
 102. The internal factors which had sustained the gr owth recorded in 2004 had been price stability, 
reflected in an inflation rate of 2.8 per cent, fiscal  discipline, which had resulted in a surplus of about 
0.6 per cent, and the restoration of confiden ce in the banking sector, which had again begun 
disbursing loans to economic operators.  The incr eased level of activity and the introduction of 
administrative and legislative improvements, including the new Customs Code mentioned in the 
Secretariat report, had had a decisive influence on the fiscal accounts, since they had led to sharp 
increases in the collection of VAT (32 per cent), net income and profits tax (44 per cent) and foreign 
trade tax (17 per cent).  These three taxes, together with fuel tax, which had increased by 51 per cent, accounted for about 90 per cent of the increase in revenue. 
103. The external factors which had contributed to the improvement included greater regional 
stability and growth, the depreciation of the US cu rrency, which had favoured a stable dollar in the 
region, and, in particular, the behaviour of the sector  producing goods of agricultural origin.  This was 
a key sector for the Paraguayan economy both b ecause it made an important contribution to 
employment, its share having increased by 40.9 pe r cent since 1997, and because of its export role. 
104. In fact, agricultural trade, which had accounted for only about 11 per cent of GDP in 1993, 
had reached 21 per cent of GDP by 2003.  Hence th e reform of international trade in agricultural 
products with a view to establishing a fair and mark et-oriented world agricultural trading system had 
special significance for Paraguay and also explaine d Paraguay's active participation in the Doha 
Round, in the G-20 and in the Cairns Group, whose objectives Argentina shared. 
105. These positive economic indicators notwithstanding,  the principal challenges facing Paraguay 
in the coming decades were increasing its productivity, both in the sectors in which it had advantages 
and in those in which it had not, improving the quality of its export supply in order to meet the highly 
quality requirements of the developed country mark ets, establishing a tax policy less dependent on 
international trade and adopting safety networks to facilitate the reorganizati on of production and the 
labour market.  In the medium term, Paraguay's international trade needed to penetrate the 
international markets with products having greater va lue added in order to make its economic growth 
objective attainable.  Some estimates indicated that  Paraguay needed to continue growing by more 
than 4 per cent a year up to 2010 to achieve th e per capita level of production it had in 1995. 
106. Bilateral relations between Ar gentina and Paraguay were based  on very sound foundations 
which went far beyond mere geographical proximity.  It was a question of shared values firmly rooted 
in social and cultural attitudes.  The wide and deep bilateral economic relations clearly reflected this.  
Since the 1990s, trade had been conducted w ithin the framework of MERCOSUR regional 
integration, a dynamic movement whose effects had been felt throughout the region. 
107. The structure and dynamics of Paraguay's geographical trade pa ttern revealed the importance 
of regional integration for Para guay.  MERCOSUR was the main source of imports and the main 
destination for exports.  Clearly, strengthening the integration bloc was esse ntial in order to boost 
Paraguay's international trade, co mpetitiveness and economic growth. 
108. There could be no doubt that the principa l challenge facing small economies was the 
impossibility of obtaining economies of scale for the domestic market.  Therefore, the existing 
complementarities between the countries of the region provided an opportunity for developing an alternative strategy of export-based industrializa tion and for improving the competitiveness of their 
productive structure and their integration into the global economy and, hence, achieving their 
economic development objectives. 
109.
 Argentina was grateful for the opportunity to ex change ideas on Paraguay's trade policy.  The 
representative of Argentina expressed his government 's sorrow at the recent death of the writer 
Augusto Roa Bastos.  WT/TPR/M/146 
 Page 19 
 
 
 110. The representative of Japan  said that Japan and Paraguay had long enjoyed amicable 
relations.  Since 1936, many Japanese people had em igrated to Paraguay and currently around 7,000 
of their descendants were living there.  Next year would mark the 70th anniversary of Japanese 
emigration to Paraguay. Based on these amicable rela tions, Japan had always assisted Paraguay, Japan 
as the largest donor country.  For example, following the serious fire disaster in Asuncion last August, 
Japan had immediately decided to provide Paraguay w ith emergency aid.  Japan sincerely hoped that 
Paraguay would be successful in realizing sustaina ble growth, based on further integration into the 
world economy through a liberalized trade and investment regime. 
111. With regard to the recent economic environment,  Japan much appreciated the Government of 
Paraguay's success in reversing the downward trend in the growth rate, controlling inflation, 
stabilizing the exchange rate, increasing exports and restoring financial balance through economic 
reforms, including tax reforms under the agreement with  the IMF.  In the future, the reform movement 
should be directed towards continuing the endeavour to eliminate corruption, reforming State enterprises and strengthening infrastructure developm ent.  In particular, the enhancement of the 
transport and communications infrastructure, includi ng increased port capacity and the installation of 
optical fibre networks, were very important for improving the business climate and ensuring 
conditions conducive to production.  Accordingly, Jap an hoped that there would be further progress in 
these areas. 
112. With respect to trade facilitation, Japan much  appreciated the steps taken by Paraguay to 
implement a new Customs Code and simplify custom s procedures through the introduction of the 
SOFIA computerized system.  Japan also appreciated  the fact that Paraguay was actively participating 
in the ongoing negotiations on trade facilitation as shown, for example, by the recent proposal 
concerning GATT Article V, made jointly with othe r Members.  Japan sincerely hoped that Paraguay 
would continue to participate actively in these ne gotiations and that constructive results would be 
obtained in this area during the present Round. 
113. Concerning the protection of intellectual propert y rights, Japan welcomed the considerable 
efforts that had been made to improve their enfo rcement.  Japan hoped that Paraguay would further 
promote the protection of intellectual property rights in order completely to eliminate the piracy of 
CDs, DVDs, and other software. 
114. Services, such as financial and telecommunications services, were very important since they 
provided an economic basis for society, as well as supporting the development of other industries.  In order to make services more active and efficient more should be done to pr omote liberalization and 
competition.  Japan much appreciated the fact that Paraguay had tabled an initial offer at a 
comparatively early stage of the ongoing ne gotiations.  However, Paraguay had made no 
commitments in a number of critical services sectors, including telecommunications, maritime and distribution services.  Japan sincerely hoped that  Paraguay would promote the liberalization of 
services sectors and widely improve its commitments in the revised offer. 
115. Japan had submitted its written questions in advances albeit one day later than the 
recommended date due to the fact th at the English versions of the re ports for this review had been 
released with a considerable delay.  Japan w as looking forward to receiving written answers to its 
questions during the present review. 
116. Japan reiterated its hope that Paraguay would continue actively participating in the DDA 
negotiations and that this review exercise would c ontribute to the further development of Paraguay's 
trade and economy. 
117. The representative of the European Union
 (EU) said that it was a pleasure to participate in the 
second review of Paraguay's trade policy.  The EU  and Paraguay were build ing a strong partnership WT/TPR/M/146 
Page 20  
 
 on the basis of political cooperation and dialogue, and not least through development programmes and 
promising arrangements in relation to trade issues, especially within the context of MERCOSUR. 
118. Since the first review, in 1997, Paraguay had faced  a long period of stagnation in its economy.  
The EU was pleased to see that the economic trend w as now shifting, mainly due to increased exports.  
Clearly, Paraguay had acted to modernize its trade regime by putting in place an open regime, as well 
as through autonomous tariff liberalization, in orde r to increase growth and promote development.  
Paraguay had also taken steps to promote the priv ate sector, including through a National Export Plan 
establishing cooperation between the government and the private sector in order to attract investment 
and foster export supply capacity with a view to  increasing the value added and diversifying export 
supply. 
119. The EU welcomed these initiatives, as well as the new policies aimed at supporting further 
productivity and liberalizing trade.  The pursuit of further trade regime opening and increased investment had promoted and would continue to  promote Paraguay's development, as would the 
important steps taken to diversify exports and ther eby minimize the negative effects of fluctuating 
prices on world markets. 
120. Although Paraguay had come a long way  with stabilizing its economy, it should be noted that 
there had been a decline in investment since 1997.   Increased stability and security were important 
conditions for the furthering of economic development and prosper ity.  For too long Paraguay had 
suffered from political instability and governance problems, with consequences for its economic performance.  The representative of the EU said th at he had listened with great interest to the 
statements made concerning the measures taken to solve these problems and warmly welcomed them.  
Although these domestic challenges could not be fully met through the rules and disciplines of the 
WTO, the common ground between the EU and Para guay could be positive for creating greater 
pressure and more transparent disciplines which w ould promote prosperity and provide the economic 
foundation for greater political stability. 
121. The continuation of the reforms in Paraguay would therefore be of benefit for overall 
development.  The EU would encourage Paragua y to continue the process of land reform and 
privatization, as well as laying the foundation fo r a stronger market economy with dynamic transport, 
financial and telecommunications sectors.  In th is respect, external disciplines on services, for 
example, in the sectors just mentioned, would serve to strengthen services and the economy as a whole.  Policies on competition, further governme nt procurement disciplines beyond those mentioned 
in the review and – especially given Paraguay' s geographical situation – WTO rules on trade 
facilitation rules would also further assist Paraguay with strengthening the foundation of the economy. 
122. The EU was pleased to note that a new devel opment plan had been approved in 2004 and 
would follow its implementation with interest.  The EU found such plans to be of great importance for 
ensuring the optimal use of technical assistance and aid.  It was of the view that Paraguay could 
benefit from technical assistance in order to assist it in fully laying the foundations for an open and 
transparent trade policy.  On the other hand, ther e was no doubt that no matter how much aid was 
given, it could not replace trade as the main engine  of development.  The core aim remained to 
provide assistance with strengthening the foundation fo r market forces to be able to strengthen 
development. 
123. The EU strongly encouraged the Government of Paraguay to continue to set its sights high 
and take Paraguay beyond the past two year s' successes on the macroeconomic front. 
124. The EU agreed that regional integration was a good way of stimulating the consolidation of 
regional trade and fostering economic development.  However, this would not be the case if trade was 
not more or less fully liberalized in all sectors and for all products, as such unbalanced liberalization  WT/TPR/M/146 
 Page 21 
 
 
 would hamper development and only result in benefits in a few areas of interest to one or two 
members of the regional scheme.  Regional integrat ion should thus be encouraged provided that it 
fully respected WTO rules, which sought to pr omote further market opening on local, regional and 
global levels. 
125. Many Members placed great emphasis on the need to address trade and sustainable 
development.  One of the pillars of sustainable de velopment was the social dimension, another being 
the environmental one.  The importance of linking tr ade with sustainable domestic policies, and in 
particular employment-related matters  and core labour standards, had been confirmed last year by the 
Final Report of the World Commission on the Social Dimension of Globalization.  The EU welcomed 
the importance that the Government of Paraguay had attached to this issue, with which the global 
trading agenda was increasingly being faced.  Give n the positive role of core labour standards in 
economic growth and development, the EU encour aged Paraguay to continue exploring the links 
between trade and social development when devel oping trade policy measures.  The EU would also 
like to learn how Paraguay assessed its possibilities of promoting the environment, within the 
development of its trade policies. 
126. Having noted the steps taken by Paraguay, the EU looked forward to learning what further 
steps Paraguay was thinking of taking to improve its  own development in the short, medium and long 
run.  The EU would also like to increase its unders tanding of the role which Paraguay saw for the use 
of WTO instruments and disciplines in the devel opment process, while recognizing, as others had 
done, the active stance taken by Paraguay in the WT O, both in negotiations and in other areas, 
including dispute settlement.  The EU was looking forward to receiving Paraguay's response to the 
questions posed in writing on its trade policies and strategies. 
127. The representative of the United States  (US) commended the Government of Paraguay for its 
commitment to reform.  Since President Bush had met with President Duarte in 2003, the two 
governments had engaged in a renewed and deepened  dialogue which had encompassed a wide range 
of issues.  This exchange had complemented th e cooperation between the United States and Paraguay 
at the WTO and their constructive, positive engageme nt with other countries in the Hemisphere.  The 
exchange was underpinned by trade and investment li nkages that remained strong despite fluctuations 
in recent years.  The United States hoped that this dialogue, started by the two Presidents, would help 
to expand the economic linkages between Paraguay and the US. 
128. The representative of the United States wished to highlight several aspects of Paraguayan 
trade policy, areas in which Paraguay had taken positive steps in recent years but where further 
progress could bring significant gains, both fo r Paraguay and for its trading partners. 
129. The first issue was that of transparency, b ecause the transparency of a country's laws, 
regulations, procedures and decisions was essential to the stability and vitality of its trade and 
investment regime.  As part of the anti-corrup tion objectives of the National Integrity Plan, the 
administration of President Duarte had moved aggressively to implement the new government 
procurement law enacted in 2003 to make the proc urement process more transparent.  Significantly, 
the Government of Paraguay had credited these impr ovements in transparency with decreasing the 
costs of publicly procured goods by up to 40 per cen t.  The United States urged Paraguay to safeguard 
and build on these impressive gains and invited Paraguay's representatives to comment on their experience during the course of the review. 
130. The second issue was that of trade facilitation and the United States welcomed Paraguay as an 
important partner and stakeholder in the DDA ne gotiations on the ADD on trade facilitation.  As a 
landlocked country, Paraguay could reap great benefits from a multilateral agreement on trade 
facilitation.  However, trade facilitation also ha d a domestic dimension and the United States had 
noted the references in the Secretariat report to cumbersome border procedures, particularly on the WT/TPR/M/146 
Page 22  
 
 export side.  The representative of the United Stat es understood that Paraguay was working on a new 
exporter's window to simplify the process and would welcome an update on these efforts from 
Paraguay's delegation, including an overview of the process and steps necessary to export a product 
under the simplified procedures.  In addition, the Un ited States would be interested to hear about 
Paraguay's customs reforms, including those aimed at  curtailing the problems of unrecorded trade and 
the simulation of trade for tax purposes. 
131. The third issue was that of the protection of intellectual property, where Paraguay had taken 
positive steps in recent years.  Paraguay had created a special enforcement unit which had participated 
in numerous seizures of pirated and counterfeit goods .  It had also established a statistics centre to 
collect data on enforcement actions and cases invol ving infringement of the intellectual property 
legislation.  Paraguay had also put in place docum entary requirements which had shut down more 
than 50 large-scale optical media pirates.  Legisl ation that would increase the penalties for copyright 
and trademark infringement was currently before  the Congress, and the United States urged the 
Government of Paraguay to conti nue supporting this legislation, as penalties were a key deterrent of 
piracy.  The United States commended these steps a nd encouraged the Government of Paraguay to 
build on them. 
132. For the United States it was clear that Paraguay was making good progress with trade 
liberalization and internal market reform.  However,  there was more to be done and the United States 
urged the Government of Paraguay to keep the pr ocess moving forward.  One area that would benefit 
from particular scrutiny was that of subsidies and trade-related investment measures.  The Secretariat report had identified several subsidies and incen tive programmes, including programmes for motor 
vehicle manufacturers and maquiladoras, which might run foul of Paraguay's obligations under the 
Subsidies and TRIMS Agreements.  The United Stat es urged Paraguay to catch up with the required 
notifications so that a detailed examination of these programmes could be made by Members in the 
relevant committees. 
133. United States appreciated the opportunity provi ded by Paraguay's trade policy review to 
engage in an open discussion of Paraguay's trade re gime.  The representative of the United States said 
that she looked forward to further co-operation w ith her Paraguayan colleagues both at the WTO and 
in the context of the bilateral dialogue.  She was also looking forward to receiving Paraguay's answers 
to the questions posed by the United States and other Members. 
134. The representative of Turkey
 expressed appreciation of the significant reforms affecting trade 
and governance that had been carried out by the Go vernment of Paraguay since its first review in 
1997.  Significantly reducing applied tariffs while, am ong other things, maintaining a stable trade and 
investment regime and a business-friendly econo mic environment were important achievements 
which Members should acknowledge. 
135. Turkey had special sympathy for Paraguay, partic ularly for its efforts to advance the interests 
of landlocked and vulnerable deve loping economies in various forums, including the WTO.  Turkey 
was extremely interested in co-operating with Para guay in this area, since it had a significant number 
of Central Asian neighbours that were also landl ocked.  Turkey considered that Paraguay's 
contribution in this respect was an extremely impor tant international public good that was providing 
benefits, or positive externalities, for all Members. 
136. Turkey commended Paraguay on its active role in the negotiations and the work of the WTO, 
as reflected in the Secretariat report.  The Paragua y was an active Member, had largely complied with 
the notification requirements and had submitted a large number of proposals in various areas.  
Paraguay had also shown an active interest in us ing the legal mechanisms provided by the WTO.  WT/TPR/M/146 
 Page 23 
 
 
 137. A glance at the basic indicators of the Paraguayan economy, as reported by the Secretariat, 
would show that Paraguay's economic performan ce had been adversely affected by economic 
developments in neighbouring countries, by th e global economy and by certain domestic problems 
with negative implications for trade and investment .  Although since the last review it appeared that 
there had been a positive trend back towards the pa th of balanced and sustainable growth, Paraguay 
could improve its growth potential by increasing the pr edictability of its investment environment.  In 
this respect, Turkey thought that it would be advantageous to accelerate integration with 
MERCOSUR, reduce the difference between applied a nd bound tariffs, generally reduce the level of 
the public economy, and expand commitments under the GATS. 
138. Paraguay had a plan much more ambitious than that previously mentioned.  Turkey noted 
that, on the basis of its own experience and that  of other countries, the elimination of excessive 
regulation of entrepreneurial activity could also help .  Paraguay was very ambitious in this respect and 
Turkey fully shared Paraguay's vision of a fairer, distortion-free and more competitive multilateral trading system. 
139. The representative of Hong Kong, China
 said that Paraguay and Hong Kong, China enjoyed 
harmonious trade relations.  Annual bilateral trade, while not large, had seen some growth in recent 
years up to about US$ 150 million.  There were no disputes between Paragua y and Hong Kong, China 
and few complaints but, as always, an eye for opport unity.  In this connection, Hong Kong, China had 
been pleased to hear the good news given by the Minister and commended the Government of Paraguay on its ambitious programme of reform wh ich had resulted in greater fiscal and monetary 
stability, thus creating a more favourable environm ent for trade.  There was potential for the 
expansion of trade between the two countries and Hong Kong, China welcomed the prospect. 
140. At multilateral level, Hong Kong, China appr eciated Paraguay's firm commitment to the 
DDA.  Like Paraguay, Hong Kong, China took the vi ew that the strengthening of multilateralism was 
crucial to stimulating economic gr owth and development.  Hong K ong, China noted that Paraguay's 
main concerns in the current round of negotiations were agriculture, trade facilitation, and special and 
preferential treatment for developing countries, as well as development issu es for small developing 
economies.  These were important areas and the con tinued, active and constr uctive participation of 
Members was essential for the timely and satisfactory conclusion of the round. 
141. Hong Kong, China commended Paraguay for havi ng reduced its average applied tariff from 
9.6 per cent in 1997 to 8.9 per cent in 2004.  It noted, however, that the gap between the bound and applied rates provided much leeway for an increase in applied rates, and hence a reduction in tariff 
predictability.  Hong Kong, China also noted that , in addition to tariffs, certain other charges, 
including a valuation fee and a consular fee, were  being applied exclusivel y to imports.  Hong Kong, 
China urged Paraguay to eliminate the tariff gaps a nd other non-tariff barriers in the current round of 
negotiations. 
142. Hong Kong, China shared the views on services expressed by previous speakers.  Various 
studies had shown the importance of the contribution that trade in services could make to economic 
development.  As an economy with first-hand experience of the benef its of liberalizing services, Hong 
Kong, China encouraged Paraguay to expand its co mmitments under the GATS, currently limited to 
financial services and tourism only.  In particular, given the enormously high transport costs borne by 
Paraguay as a landlocked country, Hong Kong, Ch ina would encourage Paraguay to consider 
commitments in transport and logistics services.  These were essential for supporting merchandise 
exports and were particularly im portant for landlocked countries with  significant exports of physical 
goods, such as Paraguay. 
143. Hong Kong, China believed that if the Doha  Round was to have a successful outcome, 
equally ambitious results would have to be achieve d in all areas of negotiation.  Thus, the active WT/TPR/M/146 
Page 24  
 
 participation of all Members in the services negotiati ons, with a view to achieving substantive results 
on both market access and rule-making in services,  was crucial to obtaining a balanced overall 
outcome.  Hong Kong, China had submitted a number  of written questions and looked forward to 
receiving answers in the course of the review. 
144. The representative of Brazil 
said that Paraguay was not only a near neighbour of Brazil but 
also a valued partner in the MERCOSUR integration process.  As one of Paraguay's closest trade 
partners, it was clear to Brazil that Paraguay's ec onomic and trade policies were intimately bound up 
with the economic environment and trade polici es associated with the progress of the MERCOSUR 
integration project.  As the Secretariat had pointed  out in its report, most of Paraguay's trade was 
conducted within the MERCOSUR cu stoms union and benefited from pr eferential treatment or open 
markets within that geographical area.  Brazil believe d that this factor was playing an important part 
in improving the benefits of regional and international trade for Paraguay. 
145. Accordingly, it was important for Brazil to be  sure not only that Paraguay was fulfilling its 
commitments to the WTO and was able to enjoy the benefits of integration in the multilateral trading 
system but also that Paraguay valued and was ab iding by its regional commitments to MERCOSUR, 
in a way which respected and was compatible with  its obligations to the WTO.  Having submitted 
questions in advance, Brazil would like further clarif ication with regard to the way in which Paraguay 
was fulfilling its separate, but e qually binding obligations under the WTO Agreements and the Treaty 
of Asuncion, taking into account the rele vant part of the Secretariat report. 
146. Brazil wished to draw attention to the many positive indicators contained in the two reports.  
Relative monetary stabilization had provided some prot ection against exchange rate fluctuations in the 
region.  Agriculture was clearly Paraguay's strong est export sector, which showed that this was the 
area that could contribute most to economic growth through genuine and effective trade liberalization, 
even in small, landlocked developing economies su ch as that of Paraguay.  In Brazil's opinion, 
substantial progress on agriculture in the Doha R ound would be the most important contribution to 
making the international trade regime more favour able for developing countries, and Paraguay in 
particular. 
147. As the Secretariat report had shown, Paragua y's trade still depended on the triangulation of 
primary products and goods.  Apar t from agriculture, part of this trade was based on a sectoral logic, 
like that of the automotive regime, and participa tion as a distribution channel for production factors 
relating to information technology  and consumer goods within th e MERCOSUR region.  This was 
why Paraguay's tariff profile was lower than the MERCOSUR average common external tariff, as the 
Secretariat had pointed out.  However, the reduc tion of the dependence on trade triangulation should, 
in some way, be a long-term trade policy objective and a factor that contributed to industrialization 
and job creation within the Paraguayan economy.  In so far as it chose to follow this path, Paraguay 
would have to exploit the flexibilities and special and differential provisions of the WTO, together 
with the new and additional provisions that should emerge within the context of the Doha Round.  
Progress in this direction would eventually lead to  the greater harmonization of regional trade regimes 
and closer convergence in the MERCOSUR area. 
148. Brazil was pleased to see that Paraguay had rever sed the negative trend in its trade balance 
dating from the end of the 1990s, and that disinvest ment and the public deficit were falling.  The 
renewed growth of GDP, based on agricultural e xports, fiscal discipline and the growth of the 
transport and communications services sectors, without these two sectors being basically in the hands 
of and managed by the State, augured well for Pa raguay's future.  Brazil believed that in this, 
generally positive, context easier access to the de veloped markets of North America and Europe for 
Paraguay's agricultural products would help to achie ve the objectives of higher and sustainable levels 
of growth.  The representative of Brazil said that he was looking forward to the answers to Brazil's 
written questions and to fu rther productive discussions.  WT/TPR/M/146 
 Page 25 
 
 
 149. The representative of Uruguay  said that Paraguay's active participation in the affairs of the 
WTO, its firm commitment to the multilateral trading system and its efforts to promote trade liberalization were the keys to growth and economic development.  He noted that it was now more or 
less ten years since Paraguay had joined the WTO.  Moreover, he had been personally and directly 
involved in Paraguay's accession negotiations and coul d directly testify to the belief of his entire 
administration in Paraguay's faith in multilateralism,  both now and at the time when its trade policy 
was first presented to the WTO.  Ten years after Paraguay's accession, it could be said that Paraguay 
had benefited from its membership of the WTO but that the WTO had also benefited from the 
accession of Paraguay, an active partner and active pa rticipant not only in the current round but also 
in the WTO's everyday activities. 
150. References had been made to Paraguay's effort s to open up its economy and make structural 
reforms.  Two of these in particular, which had been mentioned by the Minister and the Vice-Minister, called for special attention, namely, the st ructural reform of the social security system, a 
fundamental concern for a government with social ju stice as an objective, and tax reform, with the 
same objective.  Obviously, all these reforms were not being made in a vacuum but within a social 
and economic environment, as the discussant had, among other things, clearly explained, and, 
moreover, within a political environment where institutional strengthening was also one of the 
Paraguayan Government's permanent objectives, and this everyone welcomed.  The representative of 
Uruguay said that there was no free trade without the guarantee of freedoms in general. 
151. Together with Uruguay, Brazil and Argen tina, Paraguay was a founding member of 
MERCOSUR and special mention should be made of  its role in the MERCOSUR regional integration 
process. Paraguay's participation and vision were based on open integration consistent with the 
multilateral trading system.  Uruguay had always supported these ideas and policies and would continue to do so. 
152. It was worth emphasizing the point made by the Secretariat in its report regarding the 
importance of trade in general for the Paraguayan ec onomy in view of the considerable efforts that 
had been made to rationalize and modernize the trad e regime and make it more transparent, since the 
first trade policy review in 1997.  The aim of Para guay's trade policy was to consolidate and increase 
the country's participation in international trade and thus promote economic and social development. 
153. The representative of Uruguay noted Paraguay's e fforts to overcome the disadvantages of its 
landlocked situation.  The efforts made in the WTO were completely consistent with the existing rules 
and country categories, and to those efforts Urugua y was adding its own in both the bilateral and 
multilateral sectors. 
154. Particularly noteworthy was Paraguay's partic ipation in the current WTO negotiations with 
respect to special and differential treatment for de veloping countries and, more especially, in the 
agricultural negotiations, in which Paraguay and Uru guay had argued that agricultural trade should be 
subjected to the same rules as government trade in  other goods, with a view to finally establishing a 
fair and market-oriented world agricultural trading system. 
155. The representative of Uruguay expressed regret at the news of the death of the Paraguayan 
writer Augusto Roa Bastos, and hoped that the presen t review would prove an interesting and fruitful 
exercise. 
156. The representative of India
 said that during the period under review Paraguay had undergone 
far-reaching economic and structural reforms.  India congratulated Paraguay on its improved 
economic performance and the successful stabiliza tion of the economy following these reforms, 
despite continuing structural difficulties.  I ndia wished Paraguay continued economic success. WT/TPR/M/146 
Page 26  
 
 157. India and Paraguay had friendly b ilateral relations.  Despite pe riodic fluctuations, bilateral 
trade between the two countries had grown.  The re cent conclusion of a preferential trade agreement 
between India and MERCOSUR would increase bila teral trade between India and Paraguay even 
further.  In the WTO, the common commitment to  the G-20 had provided the basis for closer co-
operation and collaboration in the post-Doha negotia tions in progress.  India was looking forward to 
even stronger trade and economic relations with Paraguay and hoped that the trade policy review 
would prove productive. 
158. The representative of Mongolia
 said that Mongolia's participation in Paraguay's trade policy 
review showed how far the impact of Paraguay's active participation in the multilateral system had 
reached: as far as Mongolia. 
159. Mongolia noted that, according to both Secret ariat and Government reports, Paraguay had 
made significant progress since the first trade policy review in 1997.  More especially, since 2003 the 
Government of Paraguay had implemented a series of fiscal and monetary policies with numerous 
positive results. 
160. Mongolia commended Paraguay for its active ro le in the multilateral trading system.  
Paraguay's small, but hard-working mission in Gene va, under the capable leadership of Ambassador 
Gauto, was making an enormous contribution on beha lf of the developing countries, particularly in 
the current round of negotiations.  Mongolia and Pa raguay had been co-operating in a number of areas 
in order to advance their common interests as sm all, vulnerable and landlocked countries.  The 
representative of Mongolia said that small economi es such as those of Paraguay and Mongolia could 
benefit fully from opening up to multilateral trade by actively defending their interests in the 
multilateral trade negotiations.  Paraguay had fu lfilled its role and obligations as a Member by 
actively co-operating with small and developing countries such as Mongolia. 
161. Mongolia hoped that Paraguay would continue to  attach importance to co-operation between 
developing countries, particularly those which were landlocked and smal l and had vulnerable 
economies.  Mongolia thanked the Government of Paraguay for inviting it to attend the Ministerial 
Conference of Landlocked Developing Countries to  be held in Asuncion and looked forward to 
playing an active part in the meeting. 
162. The representative of Bolivia  wished to stress the important contribution made to the 
multilateral trading system by Paraguay as a devel oping country which, in compliance with the 
principles and disciplines that governed the WTO,  was pursuing an economic policy based on the 
liberalization of trade in goods and services, tran sparently and in a manner consistent with the 
commitments it had undertaken. 
163. Bolivia also welcomed the fact that during 200 4 the economy of this important trade partner 
had improved and stabilized.  This had led to a strength ening of trade relations, particularly in the last 
two years during which total bilateral trade had increased. 
164. Paraguay's integrationist policy, within which it had accorded special importance to 
MERCOSUR, had been one of the State policies whic h had enabled it to increase its participation in 
the regional context, as well as to participate ever  more extensively and actively in extra-regional 
markets, despite the difficulties and costs involved in being a landlocked country. 
165. Multilaterally, as developing countries, Bolivia and Paraguay were ne gotiating and sharing 
interests and ambitions within the same groupings, su ch as the G-20 and the Cairns Group.  Thus, in 
Bolivia's view, the objectives being pursued by Para guay would further the closer integration of both 
economies in global trade.  WT/TPR/M/146 
 Page 27 
 
 
 166. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu  
(Chinese Taipei) said that despite unwelcome events  in the past few years having had an adverse 
impact on its economy, Chinese Taipei admired the gr eat efforts made by the people of Paraguay and 
the government elected in 2003 to revitalize its economy through projects such as the stand-by agreement with the IMF in 2004, which had been extended to September 2005.  The representative of 
Chinese Taipei said that these were ambitious meas ures and, once successfully implemented, would 
surely create a sound environment for trade and i nvestment.  Chinese Taipei also applauded the 
Government of Paraguay for its determination to press ahead with its reform and liberalization 
policies, which would facilitate its furt her integration into the global economy. 
167. Chinese Taipei sincerely appreciated the econom ic partnership which had developed between 
it and Paraguay.  In terms of two-way trade, Chin ese Taipei was already cooperating closely with 
Paraguay through joint programmes in the areas of ag riculture, technology transfer, investment and 
trade, and both countries felt that there was still gr eat potential for development.  The representative 
of Chinese Taipei wished Paraguay success with its future economic development. 
168. The representative of Cuba
 said that it was an honour to make the closing contribution to the 
statements by the delegations which had joined th e distinguished delegation of Paraguay in this 
second review of its trade policy. Before going an y further, she would like to unite with the 
representatives of Argentina and Uruguay in expr essing her deepest condolences on the death of 
Augusto Roa Bastos the previous day.  His life had been dedicated to the just cause of the people and 
the intelligentsia are in general. 
169. As could be seen from the reports of both the Government of Paraguay and the Secretariat 
itself, for Paraguay the year 2004 had marked th e beginning of a phase in which its economy had 
started to recover from a period of stagnation, dur ing which the indicators had been very negative. 
170. Considering that it was a small and vulne rable landlocked economy, Paraguay's recent 
success in reducing inflation and indebtedness and improving external competitiveness must be 
counted a major achievement.  Its efforts to improve the transparency and efficiency of its legislation 
were equally commendable. 
171. The work done by its Mission to the WTO w as an example of Paraguay's commitment to the 
multilateral trading system and the election of Amba ssador Rigoberto Gauto Vielman as Chairman of 
the WTO's Informal Group of Developing Countries reflected his leadership and the confidence he inspired in the members of the Group.  Cuba congrat ulated him and his efficient team which, though a 
small delegation, had played and w ould continue to play a very active part in all the work of the 
WTO.  Cuba noted the dynamism which Ambassa dor Gauto had instilled in the Informal Group of 
Developing Countries.  All this showed Paraguay's firm commitment to the negotiations and the work 
of the WTO, as well as its firm commitment to the Doha Agenda.  Cuba and Paraguay shared common objectives in many areas of the negotiations, as reflected in their common membership of the 
G-20 on agriculture, in their defence of the objectives pursued by the small economies, and in their 
interest in effective special and differential treatment for developing countries and the strengthening 
of the multilateral trading system with just, fair and non-discriminatory rules. 
172. Although Cuba's trade with Paraguay was mode st, both having only small economies, it had 
increased in recent years and should develop furthe r, since there were still unexploited opportunities 
for trade in strategic sectors.  Since 1995, ther e had been fruitful collaboration between the two 
countries in the areas of culture, education and s port.  There were currently 70 Cuban doctors in 
Paraguay working to set up a Faculty of Medical Sc iences with Cuban expertise.  Cuba congratulated 
Paraguay on its second trade policy review and on th e progress it had made, extended its best wishes 
to the Paraguayan authorities in their efforts to achieve growth and sustainable economic development, and assured them that they could always count on a helping hand from Cuba. WT/TPR/M/146 
Page 28  
 
 V. REPLIES BY THE REPRESENTATIVE OF PARAGUAY AND ADDITIONAL 
COMMENTS 
173. Vice-Minister Ramirez
 extended Paraguay's sincer e thanks to Ambassador 
Mr Don Stephenson for having efficiently con ducted Paraguay's trade policy review and to 
Ambassador Ronald Saborio who, in his role of discussant, had presented the Secretariat report and 
enriched it with shrewd personal observations, comments and questions which had contributed 
considerably to the review.  He also commende d the Secretariat for its work on preparing the 
documents and noted the excellent attitude of the o fficials assigned to the review, with whom he had 
worked in perfect understanding throughout the process. 
174. The delegation of Paraguay had been much distressed to receive the sad news of the death of 
the Paraguayan poet and writer Augusto Roa Bast os who, as Ambassador Guillermo Valles had 
pointed out, had fought for liberty and democracy through literature.  The solidarity and condolences 
expressed by several of the delegations present were sincerely appreciated. 
175. The Vice-Minister expressed his gratitude to his friends in Geneva, former colleagues with 
whom he had shared difficult moments, challenges a nd joys and, more than once, the satisfaction of 
having obtained positive results for their countries.  He also drew attention to an issue which had been 
addressed by most delegations and one to which Para guay attached particular importance, namely, the 
special situation of landlocked countries. 
176. Paraguay was a developing country without direct access to the sea.  This situation, which 
nothing could change, determined its economy and rest ricted its trade.  Recent studies had shown that 
Paraguay's transport costs were 66 per cent highe r than those of other members of MERCOSUR and 
240 per cent higher than those of the United States.  This discrepancy was due to the distance that 
separated Paraguay from the marketing centres and in termediate ports, as well as to the high charges 
and liabilities incurred as a consequence of the unavoid able need to transit through the territories of 
other States. 
177. The lack of direct access to the sea was an insuperable handicap with which Paraguay and 
other landlocked countries were forced to live.  However, it could be alleviated by special and 
differential treatment which enable d them to compete on fairer terms within the multilateral trading 
system. 
178. As a consequence of the geographical situ ation described, Paraguay had a "small and 
vulnerable economy".  Its gross domestic product was the lowest in Latin America, despite its not 
being the country with the smallest area or the smallest population.  Its trade relied on a limited 
number of products, mainly raw materials, a nd was confined to a few export markets. 
179. Paraguay was therefore always exploring ways of  overcoming its disadvant ageous situation.  
To this end, within the framework of the WTO,  it was vigorously pushing for the adoption of the 
Programme for Small Economies, mentioned in para graph 35 of the Doha Ministerial Declaration.  
Likewise, it was leading the Group of Landloc ked Countries, whose objectives were general 
recognition of the special situation affecting its  members and compensation to enable them to 
overcome the marginalization to whic h they saw their economies condemned. 
180. Paraguay was also actively participating in th e trade facilitation negotiations, in which it saw 
a means of making the cross-border traffic in goods originating in, or bound for, its territory more fluid, fairer and cheaper.  WT/TPR/M/146 
 Page 29 
 
 
 181. At Marrakesh and Doha, Ministers had announced  a new era of world economic cooperation 
aimed at establishing a fairer and more open multilate ral trading system for the benefit and well-being 
of all peoples. 
182. Vice-Minister Ramirez said that it was now time to honour those promises.  Landlocked 
countries were at a disadvantage as compared with those with direct access to the sea and were 
therefore demanding that their special situation be recognized and treated with special consideration. 
183. Vice-Minister Ramirez welcomed, on behalf of Paraguay, the questions received in writing.  
The answers to all of them had been forwarded to the Secretariat and were available to Members, in 
Spanish.  He also referred to the statements ma de by the discussant, Ambassador Ronald Saborio, and 
by the delegations of Chile, Mexi co, Canada, Argentina, Japan, the EU, the United States, Turkey, 
Hong Kong-China, Brazil , Uruguay, India, Mongolia, Bolivia, Chinese Taipei and Cuba.  Paraguay 
had taken note of their valuable comments. 
184. Vice-Minister Ramirez said that these countries had made a constructive contribution with 
their reflections on Paraguay's trade policy and with  their questions, to which the Vice-Minister of 
Trade, Dr Myriam Segovia, would now reply in detail. 
185. Vice-Minister Segovia  explained that she would provide oral answers to the questions raised 
by the discussant as they covered the substance of those asked by Members.  The answers would be 
arranged under the usual three main headings. 
(i) Macroeconomy and institutional environment 
186. The environment for economic reform had impr oved and in 2004 the economy had stabilized.  
This was evidenced by the behaviour of the GDP, which had increased by 2.9 per cent in 2004, while 
the level of inflation had fallen substantially and was now  only 2.8 per cent.  International reserves 
had registered an historical record, the fiscal a ccounts were in surplus, and as far as internal and 
external indebtedness was concerned there were no a rrears with local or international creditors.  The 
substantial increase in revenue and the fiscal surp lus had enabled Paraguay to reduce its external 
indebtedness by 5 per cent during 2004. These results had made it possible to re-establish the financial 
relationship with the country's creditors, stabili ze the economy and prepare the ground for more 
sustainable growth. 
187. The interest rate reflected a series of risks: commercial, operational, exchange rate, political, 
future inflation, etc. The Government was seeking to  influence the interest rate and believed that with 
greater economic, political and financial stability th e confidence of both depositors and financial 
institutions would improve; consequently, the inter est rate should fall in the medium term.  This 
reduction in interest rates would encourage investme nt, consumption and, finally, the much desired 
economic growth. 
188. The Government was seeking to consolidate its macroeconomic achievements so as to send a 
positive signal to the financial system.  This positiv e signal would be translated into a reduction in 
country risk and, ultimately, in the interest rate. 
189. The Government was also seeking political consensu s in order to continue with the reforms in 
preparation, such as the reform of the public banki ng system, the reform of the law on banks and the 
introduction of prudential regulati ons for cooperatives, to mention but a few.  The Government 
believed that expanding its reform  agenda would bring greater confidence and credibility for both 
depositors and financial institutions.  This would fi nally translate into lower interest rates, which 
would stimulate growth. WT/TPR/M/146 
Page 30  
 
 190. Within MERCOSUR, Paraguay had negotiated differe ntial treatment for the application of the 
Common External Tariff (CET).  In this connection,  within the context of MERCOSUR's treatment of 
asymmetries, Paraguay was authorized to apply cust oms tariffs different from those of the CET until 
2010.  The capital goods and information and tele communications goods sectors and a significant 
group of other products were being ke pt at levels below those of the CET to meet Paraguay's specific 
needs, which were fully recognized  by the members of MERCOSUR. 
191. A series of reforms had been carried out to strengthen the institutions of the Republic and 
consolidate the rule of law, thereby giving th e country greater credibility.  The anti-corruption 
mechanisms had been reinforced, and most of the members of the Supreme Court of Justice had been 
replaced with a view to developing legal certainty.  The task facing the Government had been to 
improve governance and the predictability of publ ic policies through a programme of reforms and 
draft laws aimed at achieving sustainability an d fiscal responsibility, access to credit for the 
productive sectors, and the modernization of p ublic management and the financial sector. 
(ii) Trade policies by measure 
 
192. The Paraguayan Government was working to pr event and combat fraud and tax evasion with 
a new and updated legal instrument, namely, Law No. 2422/04 (the new Customs Code), which was 
mainly directed towards achieving transparen cy in customs management, modernizing and 
professionalizing the customs service, and facilit ating trade.  In drafting the new Code the 
recommendations of the WCO, the updated Kyoto Convention, the rules of the WTO, the MERCOSUR Customs Code, and the Customs Code of  the EU had all been taken into account. 
193. Non-invasive measures had been taken to avoi d problems with trade.  These were being 
applied by capturing the data of both transit and import clearance declarations at MERCOSUR level 
and tracking the merchandise by means of the global positioning satellite (GPS) system. 
194. As Paraguay was landlocked, ag reements had been reached with neighbouring countries on 
directing transit loads to real and existing custom s control points, as well as on implementing the 
Integrated Control Areas (ACI), in accordance with MERCOSUR's Recife Agreement and its First 
Amending Protocol. In these areas, customs and the au thorities responsible for immigration, transport, 
animal health, sanitary surveillance and human h ealth were carrying out joint and simultaneous 
controls. 
195. Moreover, an effectively verified Register of  Foreign Trade Operators had been set up and 
well-defined customs control processes had been introduced in accordan ce with international 
standards and recommendations, which had made it possible to track and effectively control 
declarations and create offices specializing in defe rred control in the local administration and post-
clearance control in a centralized service. The T echnical Customs Surveillance Unit responsible for 
control in secondary zones was also new. The valu e suffix mechanism had been adopted to prevent 
underdeclaration or undervaluation, as well as d eclarations intended to simulate in customs 
intellectual property compliance controls. 
196. At MERCOSUR level, the Technical Sub-Co mmittee on Preventing and Combating Customs 
Offences, under MERCOSUR's Trade Commission, had made it possible to organize joint actions 
between the customs services of States parties, including the Register of Offenders, harmonized customs valuation system control and customs control processes, etc. These efforts had been 
reinforced by the adoption of Decision of the MERCOSUR Common Market Council No. 1/97, which 
provided the framework for comm on action by customs services.  WT/TPR/M/146 
 Page 31 
 
 
 197. Measures had been taken to improve the effectiveness of the rules which governed 
international land and river transit, in relation to  common and regional customs controls, so that the 
tracking and cancellation processes could be carried out efficiently in computerized form. 
198. A Code of Ethics had been drawn up to regul ate and control the conduct of both customs 
officials and the operators who had dealings w ith them, while at the same time simultaneous 
operations were being initiated with  both the Attorney General's Office and other State institutions 
such as the National Police, the Ministry of Indust ry and Trade, the Ministry of Agriculture and 
Livestock, the National Anti-Drugs Secretariat, etc. 
199. The new General Inspection Directorate was opera ting completely independently of the units 
responsible for processing and checking declar ations, and the Customs Management Audit 
department had been restructured. Bilateral coope ration and mutual assistance agreements on the 
prevention and repression of customs offences had been signed with the United States, France and 
Bolivia, in addition to those signed jointly with th e countries of Latin America, Spain and Portugal. 
Moreover, delegations representing Paraguayan Cust oms had offices in the seaports of Paranagua, 
Santos, Buenos Aires, Montevideo and Iquique. 
200. DIEM and METI were not in force in Paragua y at the time of the review. The reasons for 
adopting these temporary measures had been strictly economic, a response to the adverse effects of 
fluctuations in the exchange rates of some ME RCOSUR members in the region during those years, 
which had resulted in a sharp fall in the compe titiveness of some of the country's more sensitive 
goods producing sectors. 
201. Following the implementation of Law No. 2421/04,  the taxable value subject to Selective 
Consumption Tax of beer, cigarettes and unleaded pe trol had the same tax base as any other product 
affected by the tax in question, whether imported or locally produced. 
202. The acts and documents tax, which was repealed  by the enactment of Law No. 2421/04, had 
applied to agricultural products in the natural state,  at a rate of 4 per cent, and had been basically 
intended to encourage the processing of raw material s to give more value added to exportables and 
thereby create more sources of work. 
203. In-bond processing (maquila) and Free Zones were  means of promoting investment applied 
by Paraguay in order to acquire technology, genera te employment and increase the export supply, so 
as to make it attractive for industries to establish themselves in the country under these regimes. In-
bond processing was carried out in the customs te rritory under the Temporary Admission Regime 
(with the suspension of, not exemption from, ta xes), operating as a "Cost Centre" without being 
subsidized at any point in the process.  Paraguay co nsidered that, in this respect, its maquila regime, 
with its special characteristics, was not a subsidy,  which is why it had not notified it and would not 
notify it as such. The maquila regime and its mechanisms did not satisfy any of the criteria that defined a subsidy according to Article 1 of the ASCM. 
(iii) Trade policies by sector 
 204. The creation of the National Animal Quality and Health Service (SENACSA) had had the 
effect of uniting the official veterinary services by  bringing together in one single entity everything to 
do with animal health, the quality and safety of f ood of animal origin, and international trade in 
animals and animal products, which had made it possi ble effectively to supervise and control all the 
phases of the production chain.  It should be note d that Paraguay had been declared free of foot-and-
mouth disease by the IOE in Paris in February 2005. WT/TPR/M/146 
Page 32  
 
 205. With regard to the drought wh ich Paraguay had suffered, consid eration was being given to the 
request of the agricultural sector concerned, and especially the farmers in the south and east of the country, who were asking for an extension of the term s of their loans, not forgiveness of the debt, in 
order to alleviate the effects of the drought. 
206. Paraguay was endeavouring to process more raw materials and to incorporate greater value 
added in the five clusters or groupings identified by the EDEP (study on the economic development of 
Paraguay) prepared with the technical assistance of  the Government of Japan.  These sectors, which 
included the entire chain, were fruit and horticulture , wood, metal-working, balanced feed and meat, 
and cotton textiles. 
207. Within the MERCOSUR framework, efforts we re being made to generate a MERCOSUR 
export supply by integrating produc tion chains with export potential.  The wood furniture sector was 
being developed, while other sectors were the subj ect of analysis and negotiation between the States 
Parties. 
208. The Government of Paraguay had embarked on a process of substantially improving the 
efficiency of public-owned enterprises, having initia ted a financial and management audit process as a 
prelude to the preparation of individual business plans,  with the participation of private domestic or 
international capital.  The National Governme nt was permanently engaged in dialogue and 
consultation with the political parties and civil so ciety with a view to carrying forward the necessary 
economic reforms and formulating medi um and long-term State policies. 
209. The reform of the banking law was intended to expand the banking system in order to 
increase the supply of mainly medium and long-term credit.  This was because important sectors of 
the Paraguayan economy did not have access to credit; in  particular, a large majority of citizens did 
not have credit to produce, there were areas of th e country without financial services, there was no 
medium or long-term credit, the poorest producers n eeded help, and there were producers not eligible 
for credit who had no technical assistance. 
210. The reform of the law was based on two stra tegic initiatives, one fi nancial and the other 
aimed at providing technical and financial assistan ce, while the institutions involved were all State-
owned enterprises such as: 
 - Rural Development Fund 
 - Industrial Development Fund  - National Housing Bank  - Technical Project Implementation Unit of the BCP 
 - National Development Bank 
 - Livestock Fund  - Agricultural Equipment Credit Bank 
 
211. The first strategic initiative could be broken dow n into two levels: a first-tier banking system 
(the National Promotion and Development Bank wo uld be created) and a second-tier banking system 
(the Development Finance Agency would be crea ted).  The first-tier banking system would be 
composed of the entities that dealt directly with  the borrower, consisting of the banks, financial 
institutions and cooperatives, while  the second-tier banking system would be the only State entity to 
provide medium and long-term financing for the firs t-tier system, including the public first-tier bank 
(future BNFD). 
212. The second strategic initiative would be a Stat e entity that would provide assistance for 
poorer rural producers on more advant ageous terms.  It would not be  governed by the banking laws  WT/TPR/M/146 
 Page 33 
 
 
 but would take into account the poverty and needs of  its beneficiaries.  It would receive resources 
from the Paraguayan State budget and from donations.  The idea was to enable small producers to 
become customers of the formal banking system. 
213. With respect to the first (finan cial) strategic initiative, the legi slation was intended to make 
the BNFD (State first-tier banking system) a bank sp ecializing in small and medium-sized loans that 
operated mainly on behalf of the rural sectors, ha d a national presence and covered more cities than 
the present State bank, the BNF (National Devel opment Bank).  The restructuring process would 
involve the transfer to the BNFD of all the liabiliti es of the BNF originating in the banking operation, 
with the exception of its labour liabilities and tho se originating in loans granted to the Paraguayan 
State, which would remain the responsibility of the Development Finance Agency (AFD).  To assist it 
in handling these liabilities, all BNF's assets, toge ther with the corresponding security, would be 
transferred to the BNFD, with the exception of portfolio rated category 4 and above and goods 
received as payment in kind; to this would be added the Agricultural Equipment Credit Bank (CAH) 
portfolio, subject to prior valuation by an i ndependent company, and the corresponding security. 
214. At the same time, the AFD (second-tier banking system) would incorporate all the second-tier 
entities of the Paraguayan State for the purpose of centralizing the administration of funds, 
concentrate and administer external assistance fo r intermediation purposes, reduce administrative and 
financial costs by providing economies of scale, greater opportunities for diversification resulting from that scale and highly professional management , and make medium and long-term resources 
available to banks, financial institutions and c ooperatives, which as experts in risk assessment and 
information management would have to approve and guarantee the projects.  The AFD would 
establish lines of credit for specific sectors and co-o perate with the private sector on increasing the 
country's productivity and competitiveness by selecting projects suitable for financing. 
215. The second strategic initiative (technical and fi nancial assistance) would involve the creation 
of an entity to be known as the Institute of Cooperative Economics wh ich would be an entity of public 
law, with its own assets and administrative and re gulatory autonomy, be linked with the Executive 
through the Ministry of Agriculture and have the following characteristics: its objective would be to 
promote, finance and provide technological support, individually or in the form of collective credit, 
for small production units in the rural sector and, in general, to provide services and goods in order to 
help improve the quality of life of the rural popul ation and increase the output and productivity of the 
rural sector.  In order to carry out these tasks, the Institute would have at its exclusive disposal the 
following resources: (a) the appropriations earmarked  for this purpose in the budget; (b) donations 
from national or international entities; (c) the repa yments on loans made from its resources; (d) the 
fees charged for the services it provided.  The In stitute would not be able to incur debts in any 
currency, even on subsidized conditions with respect to cost and term.  The resources of the Institute 
could not be used to grant loans to natural or legal persons who were qua lified borrowers or had 
outstanding loans with public or private financial entities.  The Institute would maintain a database 
open to the public with details of its beneficiaries and the amount of their debts or contingency funds.  
The maximum quota of indebtedness to the Institut e per natural or legal person would be fixed 
annually by the Executive.  The calculation of this quota would include any debt or contingency funds 
for which the person in question would have to account. 
216. Paraguay recalled that the reform of the Law on the public banking system was based on two 
strategic initiatives, one financial and the other invol ving technical and financial assistance.  It was the 
first of these initiatives that would be subject to the same regulatory requirements as applied to the 
rest of the banking sector. 
217. Competition in the river transport sector, for bo th nationals and foreigners, was completely 
free.  As Paraguay was a landlocked country, it was essential to guarantee mar itime transport.  The 
State was providing this service through the State Merchant Fleet, and Law 295/71 on Cargo WT/TPR/M/146 
Page 34  
 
 Reservation reserved cargo for Paraguayan-registered vessels.  The State Merchant Fleet had been 
privatized and Paraguay was not ope rating maritime transport so that  this restriction was no longer 
being applied; however, the legislation in force maintained the restrictions. 
218. The discussant
 thanked the Paraguayan delegation for its  answers to questions and noted the 
effective efforts Paraguay had made to improve  its situation as a landlocked country, which 
determined and hampered its trade  The Hidrovía Treaty was an example of those efforts and the 
privatization of the merchant fleet was a positiv e step, although it would be desirable to have 
legislation to remove the existing restrictions .  The discussant welcomed Paraguay's efforts to 
improve competitiveness, which had also made it possible partially to offset its geographical 
disadvantages.  In the macroeconomic area, Paragua y's achievements in the last few years had been 
very positive and there had been an increase in per ca pita GDP.  The intention to reduce the interest 
rate was an important development that would encourage investment, consumption and economic 
growth. 
219. The discussant welcomed the an swers concerning policies for boosting the limited investment 
in manufacturing.  Attracting investment was a useful means of implementing the development 
strategy that Paraguay had defined, as its efforts had shown.  Paraguay's frontal attack on corruption 
was something which deserved to be noted.  He was confident that the legal certainty achieved 
through the measures to improve the fiscal situation would give investors the predictability that would 
bring them to Paraguay.  These efforts should be combined with international commitments that 
would protect this predictability in the investment environment against possible political fluctuations that countries might experience in general. 
220. The discussant praised the efforts made to promote the long-term development of the 
manufacturing sector.  He was pleased by the attempts to improve the MERCOSUR export supply and hoped that Paraguay itself would provide an im portant part of the region's manufacturing export 
supply, something which was not yet clear.  The answers concerning the reform of the public banking 
system had provided additional information concerning  Paraguay's effective approach to this question. 
221. The representative of the United States
 (US) welcomed the answers provided by the 
delegation of Paraguay within a short period of time.   He asked for details concerning the exporter's 
window, the requirement in the new Customs Code for importers to register with the National 
Customs Directorate, and the business registrati on certificates requested in connection with the 
registration of importing companies. 
222. The representative of the European Union  (EU) expressed his gratitude to the Paraguayan 
delegation for all the work it had done since the first session.  He requested additional information 
concerning the questions on sustainable devel opment, including social and environmental 
considerations, and the questions  on core labour standards and e nvironmental promotion policies, 
together with information on how these measures had been developed within the context of 
Paraguay's general reform efforts, wh ich the EU recognized and applauded. 
223. Vice-Minister Ramirez  said that the review had been a very useful exercise for the 
Government of Paraguay since it had made possible self-assessment of the management practices, the economic measures and the trade policy that Paragu ay had adopted.  The trade policy review had 
given a very positive sense of Paraguay's economic development programme.  The environmental 
issues were very significant for Paraguay.  Paragua y was participating very actively in the Committee 
on Trade and Environment, had signed a series of multilateral environm ental agreements, was 
participating actively in those agreements, and was involved in the discussion of paragraphs 31 and 32 
of the Doha Ministerial Declaration.  Paraguay had a National Environmental Department which was 
considering a series of development programmes li nked with the protection and promotion of the 
environment.  WT/TPR/M/146 
 Page 35 
 
 
 224. Since Paraguay had ratified the Kyoto Convention, it had a strong commitment to the 
environment in its trade policy and development pr ogramme.  Under a programme for cohesion in the 
application of economic development, the Ministry of Agriculture and Livestock and the Ministry of 
Industry and Trade were coordinatin g their regulations, all of which could be clarified to address the 
question of the environment.  Paraguay believed that the protec tion of the environment was the 
responsibility of all and that it was therefore necessary to share that responsibility and act 
consistently, so that developing countries were in a position to meet the challenge.  This was why the 
elimination of trade distortions was essential.  It would provide the developing countries with more 
resources to confront the challenges of environmen tal protection, forest conservation and public 
health by developing active policies in these areas.  Paraguay's agricultural sector was internationally 
known for its natural production of pr oducts such as organic sugar, of which Paraguay was one of the 
main exporters, and bovine meat, which had a reput ation for high-quality on international markets 
such as that of the EU, which had allocated it a Hilton quota. 
225. Vice-Minister Segovia  explained that is the objectives of the exporter's single window were to 
simplify Paraguay's export formalities, which in the past had created problems.  The work was being 
carried out in stages with the cooperation of the Inter-American Development Bank.  The first stage 
had consisted in compiling a single register of expor ters with a computerized system used by all 
public entities.  The project was now in the second stage for which two years had been allowed and 
which had as its objective the compilation of a regist er of Paraguayan export products.  This would 
serve to expedite the formalities and increase familiarity with the existing regulations, based on the 
tariff headings in which the goods were classified.  It was hoped that in less than two years it would 
be possible to computerize completely and thus fa r as possible eliminate the use of paper documents 
in export procedures.  The SOFIA system of the National Customs Directorate had been used to avoid having to develop a new system. 
226. Importers had to register with the General Directorate of Customs.  One of the requirements 
was to produce a certificate of regi stration in the Public Trade Regi ster, which involved the procedure 
described in the written answers. WT/TPR/M/146 
Page 36  
 
 VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
227. This second Trade Policy Review of Paraguay h as contributed to an improved understanding 
of its trade and related policies and of the ch allenges Paraguay faces.  As pointed out by the 
discussant, Ambassador Saborio, the most important part of a Trade Policy Review is the domestic dialogue it requires amongst government departments and other stakeholde rs.  He also noted that the 
reports of the country under review and the Secret ariat become important reference documents for all 
Members and I thank both the delega tion of Paraguay and the Secretariat for the excellence of their 
work. 
228. This meeting has provided an opportunity for tran sparency and for useful  exchange.  This was 
possible in good part due to the personal partic ipation of Minister Bergen, Vice-Ministers Ramirez 
and Segovia, and Ambassador Gauto, as well as the excellent work of the rest of the Paraguayan 
delegation.  The full support provided by the Pa raguayan authorities to the whole review process 
shows the importance that Paraguay attaches to the multilateral trading system.  I also thank 
Ambassador Saborio and Members for their thou ghtful interventions, all of which contributed 
positively to our work. 
229. Members highlighted Paraguay's resumption of economic expansion after years of stagnation 
resulting in part from external shocks.  Trade was instrumental to the recovery, playing as it does a 
key role in the economy.  Paraguay was encouraged  to consolidate the macr oeconomic policies that 
have fostered growth, and to carry on further refo rms to modernize the public sector, and strengthen 
its institutions. 
230. Members commended Paraguay for its active partic ipation in the WTO and its contribution to 
the Doha Development Agenda, and noted its e fforts in favour of landlocked economies.  The 
relationship between Paraguay's WTO and MERCOSU R commitments was raised by a number of 
Members. 
231. Members called attention to Paraguay's modest investment record and the suspension of the 
privatization process.  It was suggested that, to  foster investment, greater predictability and 
transparency in the investment regime were necessar y.  In this respect, further GATS commitments by 
Paraguay could play an important role. 
232. Members agreed that Paraguay had taken significant steps to modernize and simplify its trade 
regime.  Paraguay's applied tariffs have declin ed since 1997, although the overall average tariff on 
agricultural products remains higher than on other pr oducts.  Questions were posed on other measures 
affecting imports, such as non-tariff charges, and on the notification and transparency of technical 
regulations and sanitary and phytosanitary requirements. 
233. Enquiries were made about Paraguay's incentiv e programmes, such as the automotive and 
maquila regimes, and about the absence of subsidie s or TRIMS-related notifications to the WTO.  
Members observed that the enactment of new public  procurement legislati on had brought greater 
transparency and predictability to government purch ases.  Members also took note of Paraguay's steps 
to enhance the protection of intellectual property ri ghts, and encouraged it to continue these efforts. 
234. Members were of the view that Paraguay should  continue with the reform of its services 
sector.  Members enquired, and Paraguay provided clarifications, about expected changes to the 
public banks legislation, treatment of foreign in vestors in banking and the development of the 
telecommunications sector.  It was noted that Paragu ay's international transport costs remain amongst 
the highest in the Western Hemisphere, and Paragua y was prompted to consider opening the sector to 
further competition.  WT/TPR/M/146 
 Page 37 
 
 
 235. I thank the Paraguayan delegation for the writte n answers provided to Members' questions. 
236. In conclusion, I welcome Paraguay's ongoing effo rts to strengthen its institutions and to use 
trade as a catalyst for growth, and encourage it to e nhance its multilateral commitments to give greater 
predictability to its trade and investment regime.  At the same time, I invite Members to address the 
trade barriers and market distortions that affect Pa raguay's exports.  With these remarks I conclude the 
Trade Policy Review of Paraguay. 
 
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