18 JULY 1997
POLICY REVIEW BODY: REVIEW OF PARAGUAY
TPRB'S EVALUATION Back to top
The Trade Policy Review Body
of the World Trade Organization (WTO) concluded its first review of Paraguay's trade
policies on 17 and 18 July 1997. The text of the Chairperson's concluding remarks is
attached as a summary of the salient points which emerged during the discussion.
The review enables the TPRB
to conduct a collective examination of the full range of trade policies and practices of
each WTO member country at regular periodic intervals to monitor significant trends and
developments which may have an impact on the global trading system.
The review is based on two
reports which are prepared respectively by the WTO Secretariat and the government under
review and which cover all aspects of the country's trade policies, including: its
domestic laws and regulations; the institutional framework; bilateral, regional and other
preferential agreements; the wider economic needs and the external environment.
A record of the discussions
and the Chairperson's summing-up, together with these two reports, will be published in
due course as the complete trade policy review of Paraguay and will be available from the
WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the
following reports have been completed: Argentina
(1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993),
Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile
(1991), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), the Czech
Republic (1996), Cyprus (1997), the Dominican Republic (1996), Egypt (1992), El Salvador
(1996), the European Communities (1991, 1993 & 1995), Fiji (1997), Finland (1992),
Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993),
Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 & 1995), Kenya (1993),
Korea, Rep. of (1992 & 1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico
(1993), Morocco (1989 & 1996), New Zealand (1990 & 1996), Nigeria (1991), Norway
(1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993),
Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak
Republic (1995), South Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994),
Switzerland (1991 & 1996), Thailand (1991 & 1995), Tunisia (1994), Turkey (1994),
the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela
(1996), Zambia (1996) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: REVIEW OF
CONCLUDING REMARKS BY THE CHAIRPERSON Back
The first Trade Policy
Review of Paraguay was conducted on 17-18 July 1997. These remarks, prepared on
my own responsibility, are intended to summarize the discussion and not to be a full
report: this will be contained in the minutes of the meeting.
The discussion developed
under four main themes:
Members commended Paraguay's
recent macroeconomic performance, which had been assisted by widespread political and
economic reforms; the reduction in inflation was specifically noted. Nevertheless, it was
also observed that economic growth had barely kept pace with population growth and that
many challenges related to development remained to be addressed. The role of
"shopping tourism" in the economy and Paraguay's dependence on export revenue
from two cash crops (soybeans and cotton) and electricity was evident. Concerns were
raised regarding the possibility of an inflationary increase in spending due to possible
increases in public expenditure in an election year.
Questions were posed on the
role and incidence of State involvement in the economy and the need to accelerate progress
in privatization. Information was sought on recent improvements in transparency of the
régime of Government procurement, and on provisions favouring domestic suppliers;
Paraguay was encouraged by some members to open its procurement market to stimulate
greater efficiency in the use of resources.
Paraguay's success in improving the legal framework for investment. In this connection,
questions were raised on the independence of the judiciary, as well as the impact of
strong capital inflows on macroeconomic management, and other investment-related issues
such as business registration procedures.
In reply, the representative
of Paraguay noted that his country was continuing its efforts to overcome numerous
structural problems; trade liberalization was a key factor in this process. Efforts to
diversify agricultural production would help in the alleviation of poverty. Increased
efficiency through privatization was one of the aims of the reform of State enterprises;
the representative gave details of the programme. Paraguay's notification on State-trading
enterprises would be completed as soon as possible. Government procurement was part of the
work programme of MERCOSUR; Paraguay thus did not intend to sign the Government
Procurement Agreement in the near future, although it was seeking maximum transparency in
this area. Paraguay sought to encourage foreign investment to help industrial development;
integration was part of these efforts. The representative indicated that Paraguay would
continue its pursuit of development through balanced and stable macroeconomic policies and
deepening the structural reforms.
In reply to a supplementary
question, the representative of Paraguay provided details regarding the Register of
Suppliers for government procurement; this was open to all legitimate, taxpaying firms and
was not a restrictive device.
Regionalism and multilateralism
Members praised Paraguay's
increasing integration into the global economy, and its rôle in promoting a liberal trade
régime for MERCOSUR coupled with a strengthened dispute settlement mechanism. However,
concerns were voiced that convergence to the MERCOSUR common external tariff would lead to
an increase in Paraguay's average tariff, as well as to greater tariff escalation. It was
pointed out that, to the extent this process affected Paraguay's scheduled
WTO commitments, these should be settled through negotiations under
Article XXIV:6 as soon as possible. MERCOSUR commitments may also influence
Paraguay's interest in participating in multilateral liberalization efforts, among which
the Information Technology Agreement and the negotiations on financial and
telecommunications services were mentioned. A question was raised regarding compliance
with the provisions of Article XXIV and seeking information on Paraguay's participation in
other free trade arrangements.
In reply, the representative
of Paraguay, supported by a number of regional partners, noted that regional agreements
were compatible with the multilateralism trading system. MERCOSUR should be seen in this
context; its philosophy was based on the practice of open regionalism. Contacts had been
established with many other countries and regional groups. Many of the questions on
MERCOSUR were currently being considered in the Committee on Regional Trading Agreements,
which was regarded as the appropriate forum for such issues; replies had already been
provided in that forum. Some members emphasized that, bearing in mind the broad
transparency role of the TPRM, questions on members' participation in regional trading
arrangements were legitimate and had been dealt with in other cases.
WTO and other related issues
Members urged Paraguay to
meet its outstanding WTO notification obligations without delay, particularly in
areas such as import restrictions and State trading enterprises. Questions were asked
about the WTO consistency and application of "other" import charges such as
the consular tax and port and storage fees. Information was sought on efforts made by
Paraguay to implement the WTO Customs Valuation Agreement, and on procedural aspects
of the pre-shipment inspection régime. One delegation expressed concerns on costs and
delays with respect to customs clearance procedures, despite the existence of the
PSI régime. One member asked several questions on the compliance with
internationally agreed rules of technical standards adopted at MERCOSUR level, as
well as whether mutual recognition agreements concluded by the sub-regional group were
open to negotiation with third countries.
Some Members questioned the
consistency with WTO rules of export restrictions affecting timber, hides and skins.
Positive action taken by
Paraguay to improve the legal and institutional framework for protection and enforcement
of intellectual property rights was commended. Information was sought on progress in new
legislation in this area, training arrangements for judiciary and others concerned with
enforcement, the results of the National Campaign Against the Violation of IPRs, and
specific actions taken by the National Council for the Protection of IPRs and the Customs
to combat piracy.
In reply, the representative
of Paraguay said that his authorities had been making a great effort to meet the
notification requirements of the WTO; however, this was difficult while many MERCOSUR
measures were being adopted. Technical assistance from the WTO was being sought to help
Paraguay meet its obligations. Concerning the consular tax, he pointed out that the charge
was a fixed amount of US$15 on which 7.5 per cent was levied (i.e. US$1.05) for the
support of the Paraguayan Institute for the Indigenous People. It was not based on the
c.i.f. value of the goods. The original consular charge of 5 per cent of the c.i.f.
value was eliminated in 1993. Pre-shipment inspection companies provided information to
the customs service to verify declared values, which were generally accepted within a
15 per cent margin; the costs were absorbed by the Government. Information was
provided on the application of the VAT under the tourist regime, levied at a rate of
10 per cent on 15 per cent of the invoice value.
The representative also
provided information on the work of the National Council for the Protection of
Intellectual Property and efforts to train officials, judges and legislators in this area.
The legal framework for trademarks, authors' and related rights and patents was also being
updated in accordance with the requirements under the TRIPS Agreement, and this would also
strengthen enforcement. Export restrictions on timber were intended to combat
deforestation; the processing industry was also required to comply with domestic
restrictive measures. There was no restriction on the export of raw hides and skins.
Paraguay was asked to
express its views on sectoral policy prospects and the role of State intervention in this
context. The low level of Government intervention in agriculture was appreciated and the
recent accession of Paraguay to the Cairns Group was welcomed. Information was sought on
policies to be adopted to diversify, and raise value added in, the agricultural sector.
Questions were also posed on the effectiveness of measures taken to prevent deforestation,
as well as the scientific basis for banning imports of bovine semen.
Members commented on the
existence of tariff escalation in processing and manufacturing industries; they raised
questions concerning the impact on Paraguay of the MERCOSUR common automotive regime, to
be introduced in the near future.
Note was taken of reforms in
the legal framework for the financial sector in the aftermath of the 1995 banking
crisis. Improvements in the regulatory framework governing telecommunication services were
also welcomed; however, Members saw scope for improvement in transport infrastructure.
Information was sought on Paraguay's plans for making offers in the ongoing negotiations
on financial and basic telecommunications services.
While one delegation raised
questions regarding the observance of core labour standards by Paraguay, many others
opposed raising of such questions in any WTO body, including the TPRB. They emphasized
that these questions are not trade-related and, in accordance with the Singapore
Ministerial Declaration, should be dealt with in the ILO.
In reply, the representative
of Paraguay noted that Paraguay had no tariff quotas or special safeguards in agriculture,
and did not grant export subsidies. Paraguay was working actively and constructively in
international negotiations on agriculture, hence its recent accession to the Cairns Group.
Paraguay was trying to diversify its production to reduce dependency on a few items.
Information was provided on Paraguay SPS facilities, and extension services. Restrictions
on growth-promoting hormones was to conform with requirements of foreign markets for beef,
while restrictions on bovine semen from the EU were linked to the BSE crisis. Both these
matters were currently under review.
The representative stressed
that trade in services was of great importance for the Paraguayan economy, and Paraguay
had made progress in liberalizing the sector, especially in telecommunications. Paraguay
was working to complete a framework agreement on services within MERCOSUR; therefore, in
the short term, Paraguay did not intend to modify its sector-specific commitments under
Recalling the terms of the
Singapore Ministerial Declaration in relation to core labour standards, the representative
of Paraguay considered that it was not appropriate to respond to questions on this matter
in the TPRB or within the WTO.
Overall, Members welcomed
Paraguay's participation in the review process, with a strong delegation led at
Ministerial level. They welcomed the steps already taken by Paraguay toward greater
transparency in trade policy and the authorities' stated commitment to free and open
trade, and strongly encouraged Paraguay to continue along the path of liberalization and
deregulation. They emphasized the need for MFN and regional liberalization to be
complementary, the importance of diversification of the economy and the need for
development to be pursued on a sustainable basis. The TPRB welcomed the answers given by
Paraguay to questions and looked forward to written replies on outstanding issues. Back