Government priorities for the services sector
Pillar 2 – Market access
Considering the various trade negotiations in which Paraguay is participating, there is potential to have access to new markets and, therefore, higher trade flows. In general, the MIC has identified that the commitments agreed by developed countries in terms of market access have been broader than those adopted by developing countries. The level of barriers to trade in services changes according to sector and mode of supply, but it is greater in the case of services that require the temporary movement of individuals from one country to another to supply services: mode 4 (table 4). This is a problem of special importance for exports from developing countries but less for developed countries which tend to specialise in knowledge intensive services such as telecommunications and financial services (table 3).
A coherent approach to development that seeks to open markets for services providers requires sound and coherent trade policies that generate market opportunities for the country and for its development policies. Improving the possibilities to take advantage of new trade opportunities calls for policies that strengthen export capacity and for policies that contribute to timely access to markets within a framework of multilateral trade negotiations.
Follow up of the plan
The MIC is the body in charge of regulating the consumption and distribution of goods and services of national and foreign origin, that are not regulated by special laws; and promote domestic and international trade. The MIC will therefore be responsible for the follow up of the strategies, projects and public actions discussed and implemented in the National Plan on Trade in Services.
The implementation will be monitored in coordination with the NSF. The forum will monitor the execution of the actions and the measurement of progress in accordance with the goals framed with the other national agencies, services suppliers, and civil society. To this end, the NSF will establish a definition of monitoring priorities and a quarterly evaluation agenda. The monitoring and evaluation will be based on information from the statistical system and from the MIC, which will inform on the progress in achieving the goals.
This mechanism will also support governmental agencies in improving their statistical and administrative records. This will be promoted by the preparation of technical guides and assistance.
Improved administrative records will be necessary to evaluate, during the implementation of the plan, the adherence to the legality of the actions carried out by the government and the services providers.
D. Other initiatives in the area of services
Further to the National Plan on Trade in Services, other initiatives relevant for the services sector deserve attention.
Regarding the REPSE, there are some efforts to enhance its implementation by verifying constructions where registered architects and other personnel should be working. Lack of verified compliance should be followed by sanctions.
Table 4. Modes of supply of services according to the General Agreement on Trade in Services
Mode Description
Mode 1 – Cross border trade
Supply of a service from the territory of one Member into the territory of any other Member.
Includes, for example, banking services transmitted via telecommunications.
Mode 2 –
Consumption abroad
Supply of a service in the territory of one Member to the service consumer of any other Member. Includes, for example, a tourist consuming touristic services outside of his/her country.
Mode 3 –
Commercial presence
Supply of a service by a service supplier of one Member, through commercial presence in the territory of any other Member. Includes, for example, the provision of insurance services by domestic subsidiaries of foreign insurance companies.
Mode 4 –
Presence of natural persons
Supply of a service by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member. Includes, for example, services provided by accountants, doctors and teachers that are temporarily in another country.
Source: WTO website (https://www.wto.org/) and WTO, 1995, General Agreement on Trade in Services.
As part of the efforts to create a system on services statistics, the NSF is pushing for the adoption of a Presidential decree on the mandatory connectivity of administrative records regarding services providers, including national and foreign, firms and individuals. Another element of this decree would be to appoint the General Directorate on Trade in Services, in the MIC, as the main entity to collect, compile and manage the data, in collaboration with other institutions and departmental administrations. This will contribute to improved statistics that will be useful for policymakers adopting domestic regulations or defining country positions for better market access.
Currently, the method to collect and compile data is limited and time consuming since it is based on surveys and information is shared only at institutional meetings and other types of collaboration.
Also, this would be an opportunity to focus on specific mode of supply, as well as on Foreign Affiliates Trade in Services (FATS) data which is not collect at the moment.
E. Trade negotiations in services
Paraguay has taken commitments at the World Trade Organization (WTO) in financial and tourism sectors. As for the other countries in MERCOSUR, Brazil undertook commitments in seven sectors while Argentina and Uruguay made commitments in six. Many sectors and subsectors in Paraguay remain unregulated, making difficult to negotiate and agree on deeper obligations.
Paraguay has followed the positive list approach in trade in services negotiations. While the positive list approach includes the details of the commitments made, the negative list approach includes the details of the exclusions made. The WTO General Agreement on Trade in Services (GATS) lists commitments as per the positive list approach, while many regional trade agreements (RTAs) have been following the negative list approach. The negative approach requires thorough knowledge of all measures in place in all sectors and detailed scheduling of existing non-conforming measures that limit market access or national treatment, since any measures not scheduled could result in inadvertent liberalization. In the case of Paraguay, trade in services negotiations have followed the positive list approach.
After the publication of the UNCTAD’s first SPR of Paraguay, the main developments regarding trade negotiations are in the context of the MERCOSUR. These developments have received an important push by the other countries in this trade bloc – Argentina, Brazil, and Uruguay – which have been active in international trade.27 For instance, the negotiations between the MERCOSUR and the European Union have reached an agreement in principle in June 2019, which is subject to final transcription and to the respective market access offers. The agreement in principle contains provisions on the movement of professionals and disciplines regarding several services sectors such as postal and courier services, telecommunications, financial services, electronic commerce, and maritime services.28
The MERCOSUR and the European Free Trade Association (EFTA) countries, composed by Iceland, Liechtenstein, Norway, and Switzerland, concluded, in August 2019, in substance the negotiations on a comprehensive free trade agreement (FTA), including the chapter on trade in services. This chapter follows the GATS approach and has specific disciplines, for example, on the movement of natural persons supplying services, telecommunication services, and financial services.29
A. Brief overview of Paraguay’s geography in relation to transport needs
Paraguay has a total land surface of approximately 406,752 km2. Both Paraguay and its northerly neighbour, the Plurinational State of Bolivia – which is almost 3 times its size with 1.1 million km2, are the only two landlocked countries in South America. In a report by the United Nations Office of the High Representative for Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States (UN-OHRLLS), the cost of being landlocked for the Plurinational State of Bolivia was estimated to be 16 per cent “less developed” than what it could have been if it were not landlocked. For Paraguay, this figure was 11 per cent (UN-OHRLLS, 2016).
The river Paraguay, which flows southwards from the Plurinational State of Bolivia through Paraguay, neatly dissects the country’s total area into two distinct regions: the western Chaco region with about 60 per cent of the country’s total landmass; and the eastern Oriental region with the remainder. About 95 per cent of Paraguay’s approximately 6.7 million people are concentrated in the smaller eastern Oriental region. This region ranges from lowlands to mountains, with the highest elevations occurring in its far eastern parts near the border with Brazil. The western Chaco region consists of vast low plains which are susceptible to alternate periods of drought and floods. This is an important factor to consider in both transport infrastructure planning and in general when constructing buildings.
Together with river Paraguay, which runs through the centre of the country, the other main waterway is the river Paraná, which runs along the border with Argentina and Brazil in the East. Both rivers confluence in the far South of Paraguay, just North of the Argentinian city of Corrientes. From this point on, the river continues through Argentina, opening up into the river plate, Uruguay, and the Atlantic ocean. The waterway system of the rivers Paraguay–Paraná is commonly referred to as the Hidrovía Paraguay–Paraná (HPP), or simply hidrovía (figure 29). Today, this is governed by the Hidrovía Intergovernmental Committee (CIH).