WTO Trade Policy Review of Paraguay

 

Ambassador Michael Punke

Statement by Ambassador Michael Punke,
U.S. Permanent Representative to the World Trade Organization

Geneva,
April 27, 2011

As Delivered-

Thank you, Mr. Chairman. The United States warmly welcomes Ambassador Manuel Maria Caceres, Vice-Minister of Foreign Affairs, and the delegation from Paraguay to this, Paraguay’s third Trade Policy Review.  The Secretariat gave us a comprehensive, informative report and we welcome the views of the Paraguayan government that it so effectively articulated in its Report.  We would like to thank the discussant, Ambassador Fernando De Mateo, for facilitating these deliberations and for helping to ensure that Paraguay’s Trade Policy Review is thorough and productive.  And thanks finally to Ambassador Gonzalez, for his ongoing work with all of us here in Geneva.

The United States continues to commend the government of Paraguay for its commitment to reform.  The government reports that its commitment was validated economically in 2010 by an increase of 14.5 percent in real GDP over 2009.  Paraguay has reason to state proudly that this growth was not only “the highest rate in the region” but also set “a new record in the country’s economic history”.  The government further reports that total imports rose by 45 percent in 2010 over 2009.  We appreciate and applaud Paraguay’s resolve to resist erecting import barriers, and take special note of the government’s acknowledgement that “higher purchases of capital goods are a positive sign for economic growth as they will strengthen agricultural infrastructure and hence the competitiveness of the productive sector”.  This is a positive example of how trade fosters development and how open markets can lead to economic prosperity.  Imports of capital goods can be critical to the growth necessary for developing countries to compete in the global market place.

Paraguay’s trade with the United States has increased during the last 7 years, after a steady decline over several years due to a long-term recession of the Paraguayan economy.  Our total two-way trade with Paraguay increased by about 32 percent in 2010 over 2009.  More than a dozen U.S. multinational firms have subsidiaries in Paraguay, including firms in the computer, agro-industrial, telecom, banking, and other services industries.  Some 75 U.S. businesses have agents or representatives in Paraguay, and more than 3,000 U.S. citizens reside in your country.

Since Paraguay’s last TPR, our two governments have continued to deepen our dialogue, a dialogue that encompasses a wide range of issues, including the adequate and effective protection of intellectual property rights and hemispheric efforts to ensure sustainable development.  Our exchanges in various fora complement our cooperation here at the WTO as well as our constructive engagement with other countries in our hemisphere.  Our dialogue with Paraguay is underpinned by trade and investment linkages that remain strong, despite fluctuations in recent years.  We hope that this dialogue, started by our two Presidents in 2003, will help continue to expand the economic linkages between our countries.

The United States and Paraguay exchanged ideas on a number of bilateral issues of mutual interest during an October 2010 United States-Paraguay Joint Commission on Trade and Investment meeting in Asuncion.  We discussed ongoing work under a bilateral Memorandum of Understanding (MOU) on intellectual property rights issues which enumerates Paraguayan commitments to implement institutional and legal reforms and to strengthen intellectual property rights enforcement and prosecution.  The current MOU will remain in effect through the end of 2011.  Both sides also discussed joint work in creating opportunities for small and medium-sized enterprises in the United States and Paraguay.

The United States is pleased to note that Paraguay’s main objectives in the Doha Round are to gain “effective access” to the markets of both developing and developed countries.  We understand how, as a landlocked country with limited exports, Paraguay would consider the Doha Round as one of the critical “pillars of economic recovery and poverty reduction in developing countries”.  The United States welcomes Paraguay as an important partner and stakeholder in the DDA negotiations on trade facilitation, and we remain hopeful that Paraguay’s commitment will help advance the Doha Round negotiations to a successful conclusion.  We look forward to our continuing work with Paraguay to achieve an ambitious, balanced, and comprehensive Doha Agreement that results in meaningful new trade flows in industrial goods, services, and agriculture and benefits all Members.

Today, I would like to highlight several aspects of Paraguay’s trade policy – areas where further progress could bring significant gains, both to Paraguay and to its trading partners.  We raised some of these issues during Paraguay’s 2005 Trade Policy Review, and we would like to take this opportunity today to review a few issues of current concern to the United States.

  • Nontariff Barriers: A number of new procedures and requirements imposed by the government of Paraguay in 2009 could make importation of products more difficult.  Since March 2009, the government of Paraguay has required non-automatic import licenses on a number of items, and obtaining a license is slow, taking up to 30 days for goods that require a health certification.  Once issued, the certificates are valid for only 30 days.
  • Customs Procedures:  Paraguay requires specific documentation for exports – such as the commercial receipt, certificate of origin, and cargo manifest – to be certified by the Paraguayan consulate in the country of origin.  The United States urges Paraguay to eliminate these requirements.  Furthermore, Paraguay frequently makes changes in its customs procedures, making it difficult for exporters to ensure that they are following the most current procedures.  The consequences of these changes can result in delayed shipments leading to unexpected costs.  Other customs procedures of concern include a 2009 resolution that restricted the ports of entry for numerous goods.  And Paraguay’s mandatory requirement that all companies operating in the country must acquire the services of a customs broker can add significant and unnecessary costs.
  • Government Procurement: During Paraguay’s 2005 TPR, the United States commended the government for enacting a new government procurement law to make the procurement process more transparent.  At that time, we urged the government to safeguard and to build on the impressive gains it made to decrease the costs of publicly procured goods and services as a result of its transparency improvements.

Today, however, the situation has deteriorated as a result of the government’s effort to encourage local production.  In March 2009, Paraguay, which is not a signatory to the WTO Agreement on Government Procurement, changed its procurement rules.  The government of Paraguay gives preference to a locally produced good even if it is up to 70 percent more expensive than the imported good.  Importers of foreign goods can participate in these procurements only where locally manufactured products and service providers are unavailable or the government fails to award a contract to a domestic supplier.  We urge the Government of Paraguay to reevaluate the cost to its economy of these changes to its procurement rules.  We also urge the government of Paraguay to reassess the benefits of GPA accession and, as a first step, to become an observer to the GPA.

  • SPS Concerns:  In May 2007, the World Organization for Animal Health (OIE) Scientific Commission formally classified the United States as a controlled risk country for BSE.  The controlled risk classification recognizes that U.S. regulatory controls are effective and that U.S fresh beef and beef products from cattle of all ages can be safely traded due to our interlocking safeguards.  This provides strong support from an internationally recognized, standard-setting body that the science-based mitigation measures in place in the United States effectively protect animal health and food safety.  Based on the OIE classification of U.S. BSE risk status and current safeguards, we look forward to knowing Paraguay’s plans for granting full market access for U.S. beef and beef products in line with the international, standard-setting body.
  • Intellectual Property Protection:  The United States continues to monitor implementation of the Memorandum of Understanding between the United States and Paraguay pertaining to IPR protection and enforcement, which was revised in 2009 and will remain in effect through December 2011.  While Paraguay has made improvements by increasing enforcement efforts, permanently establishing a specialized technical unit responsible for intellectual property enforcement, and has recently issued guidelines for clarifying and streamlining procedures for administrative IPR litigation, concerns remain because of porous borders, ineffective prosecution of IPR violators, and court sentences that are insufficient to deter infringement.  Although a new penal code which became effective in 2009 increases penalties for IPR violations, prosecution of IPR offenders remains weak, and there are few convictions.  Concerns also remain about inadequate protection against unfair commercial use of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products as well as agricultural chemicals, and the shortcomings in Paraguay‘s patent regime.  We look forward to Paraguay’s update of its efforts to ensure adequate and effective protection of intellectual property rights.

It is clear to us, Mr. Chairman, that while Paraguay has made progress with regard to trade liberalization and internal market reform, there is more to be done, especially in the areas I have just discussed.  We urge the government also to re-examine its maquila incentives and trade-related investment measures in light of its obligations under the WTO Agreements that address these programs.

In conclusion, the United States appreciates this opportunity to engage in an open discussion of Paraguay’s trade regime.  We look forward to further cooperation with our Paraguayan colleagues, both here at the WTO and in the context of our bilateral dialogue.  We thank Paraguay for its responses to our questions and we look forward to examining the government’s answers to our questions and to those of other Members.  Thank you.