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The relations between the EU and Paraguay are governed by the Framework Cooperation Agreement signed in 1992.
The follow-up of this agreement entails regular meetings of the EU-Paraguay Joint Commission, including on trade matters. This Commission meets normally every 2 years, most recently in May 2021. As a member of Mercosur, Paraguay is also a party to the EU-Mercosur Framework Co-operation Agreement signed in 1995, which includes provisions on trade cooperation.
Paraguay participated fully in the negotiation of an EU-Mercosur Association Agreement.
- Trade and investment between the EU and Paraguay are at relatively modest levels. Bilateral trade in 2020 was worth about €1 billion. EU imports from Paraguay have decreased since 2018 from around €648 million to €417 million in 2020. EU exports to Paraguay declined slightly over the same period, from €653 million to €592 million.
- In 2020, the EU was Paraguay's fourth most important trading partner (after Brazil, China and Argentina), accounting for 5.5% of Paraguay’s total trade. EU imports from Paraguay are dominated by agricultural products (85% of total imports from Paraguay into the EU in 2020).
- EU exports to Paraguay are dominated by manufactured products, in particular machinery and transport equipment (37%) and chemicals (20%) (2020 data).
- The EU is an important investor in Paraguay. EU Foreign Direct Investment stocks in Paraguay increased were of the value of €900 million in 2019.
- EU exports of services to Paraguay were of approximately €200 million in 2019, while Paraguay exported services to the EU worth approximately €100 million.
The EU and Paraguay
The Framework Trade and Economic Cooperation Agreement is managed through periodic meetings of the EU-Paraguay Joint Cooperation Committee, including one part on trade matters. The last Joint Cooperation Committee meeting was held in May 2021.
Although EU-Paraguay trade remains modest in absolute terms, as a member of Mercosur Paraguay is part of an important trading partner for the EU in Latin America. Furthermore, Paraguay has relatively sound public finance and a good growth potential, with IMF estimating a growth rate of 4% in 2021, which makes it attractive for foreign investment.
The EU attaches importance to the fight against illegal trade in pirated goods in the tri-border area between Paraguay, Argentina and Brazil and considers the respect of intellectual property rights a priority. The EU is cooperating with Paraguay in this respect.
Paraguay no longer qualifies for preferential trade treatment under the EU GSP scheme due to its upper middle income status and was removed from the list of GSP beneficiary countries as of 1 January 2019.
Paraguay and foreign investment
- Access to other Mercosur markets plays an important role in the attractiveness of Paraguay as a destination of Foreign Direct Investment.
Paraguay in Mercosur
Paraguay is as a member of Mercosur. As a member of Mercosur Paraguay participated fully in the negotiation of the EU-Mercosur Association Agreement.
This Agreement should provide a boost to regional trade integration among the countries of Mercosur and stimulate new opportunities for trade to and from the EU by removing tariff and non-tariff barriers to trade.
Committees and Dialogues
The EU and Paraguay meet once every two years to discuss the Framework Cooperation Agreement.
Trading with Paraguay
- Importing into the EU from Paraguay
- EU trade defence measures on imports from Paraguay
- Exporting from the EU to Paraguay
- Trade relations are part of the EU's overall political and economic relations with Paraguay
- Paraguay is a member of the World Trade Organization
Joint communiqué of the European Union and Mercosur.
The Commission published today the final version of the SIA on the potential impact of the EU-Mercosur agreement.
On the occasion of the EU27-LAC Informal Ministerial Meeting in Berlin on 14 December, the ratification and entry into force of the EU-Mercosur Agreement were discussed.