Paraguay country brief - September 2010
Introduction/overview
Australia's positive relations with Paraguay are modest. As agricultural producers and exporters, we work together to achieve fairer international trade in agricultural products through membership of the Cairns Group and cooperation in other multilateral fora. Australia has non-resident accreditation to Paraguay through the Australian Embassy in Argentina. Paraguay has non-resident accreditation to Australia through its Embassy in Tokyo, Japan. It also maintains a Consulate-General in Melbourne.
Political overview
Background
Paraguay is a constitutional republic headed by a directly elected president, with a bicameral legislature.
Paraguay's National Constitution, enacted in 1992, radically decentralised and democratised the country's system of government, establishing a clear division of executive, legislative and judicial responsibilities, and vastly improved protection of civil rights.
The Executive Branch is headed by a President, elected by popular vote for a five-year term, who appoints a Cabinet of ministers. The Legislative Branch consists of a bicameral Congress, with an 80-member Chamber of Deputies and a 45-member Senate. Members of both houses of Congress are popularly elected for a five-year term under a system of proportional representation, based on local electoral districts ("Departments") for the Chamber of Deputies and on nationwide results for the Senate.
On 15 August 2008, Fernando Lugo was sworn in as President of Paraguay.
Economic overview
Paraguay is predominantly an agricultural economy. The country's main export is soybeans, which makes it highly susceptible to climate and world price changes. Paraguay's economic outlook continues to be affected by the economic performance of its neighbours, particularly its larger Mercosur partners, Brazil and Argentina. Paraguay has floated the idea of negotiating bilateral FTAs with other countries, including the United States.
The robust performance of Paraguay’s agricultural sector in 2010, as well as strong performances in construction and manufacturing, has driven a rebound from the recession in 2009. The banking system weathered the recession relatively well.
Bilateral relationship
Australia's modest relations with Paraguay centre on our shared drive for fairer international trade in agricultural products through membership of the Cairns Group and cooperation in other multilateral fora. Paraguay has taken a more active role in multilateral trade issues since it became a member of the WTO in 1996, and joined the Cairns Group – chaired by Australia – in June 1997.
Bilateral economic and trade relationship
Australia's bilateral trade with Paraguay is small – largely reflecting one-off deals rather than ongoing supply arrangements. There are no significant investment flows between the two countries. Two-way merchandise trade totalled A$2.4 million in 2009, of which A$1.5 million was Australian exports. Australia’s merchandise exports to Paraguay consisted mostly of oil-seeds and fruits; printing machinery and parts; measuring and analysing instruments; and heating and cooling equipment. Imports totalled $A920,000 and were made up by sugars, molasses and honey; clothing; floor coverings; and cut flowers and foliage.
Export and Investment Opportunities
There may be some openings for investment in the agribusiness sector and for the export of agriculture-related and other products and services from Australia. In December 2009 P&O Maritime Services completed the acquisition of 70% of the shares in the Dos Santos Group Bulk Barging business, a river navigation business based in Asuncion, Paraguay. One strategy for Australian companies looking to invest and trade in Paraguay is to take advantage of existing interests they may have in Argentina and Brazil. The close commercial ties that these countries have with Paraguay may facilitate entry into the Paraguayan market.