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Since the beginning of the 1990s, the EU and Paraguay have been gradually strengthening their ties. This strengthening has been carried out both on a bilateral level and within a regional framework.
In 1992 the European Union (EU) and Paraguay signed the Framework Cooperation Agreement to promote bilateral relations. The meetings of its highest body, the Joint Committee (composed of senior civil servants from Paraguay and the EU, meeting regularly), are an excellent opportunity to take stock of the state of relations between the EU and Paraguay.
Political dialogue with Paraguay is also carried out within the framework of European Union - Mercosur relations. In this context, it is worth mentioning that during the EU-Latin America Summit (LAS) held in Madrid in May 2010, it was decided to restart negotiations for an EU-Mercosur Association Agreement, in order to strengthen relations between the regions politically, economically and in terms of cooperation. The agreement includes the creation of a free trade area. Once this agreement is finalised, it will help further consolidate the already good relations between the EU and Paraguay (EU-Mercosur).
On a bi-regional level, the EU has developed close ties with Latin America. In order to cement relations, political dialogue was institutionalised at the ministerial level and between heads of state and senior government ministers in 1990. The EU-LAS scheme, which has developed into the current EU-CELAC (Community of Latin American and Caribbean States), has enabled the regions to grow closer and made it possible to strengthen cooperation systems at the highest possible level (bi-annual EU-CELAC summits of heads of state and senior government ministers). Political dialogue has also played an essential role in the defence and promotion of democracy and the defence of human rights. Thus, Latin America and Europe share concepts of freedom, human rights, social justice and regional integration, principles that have become the foundations for cooperation and dialogue between the regions. Paraguay has been and remains fully involved in this bi-regional dialogue.
The EU's economic relations with Paraguay have continued to strengthen in recent years. Flows of capital and of European direct investment into Paraguay have continued to grow. The EU is the second largest investor in Paraguay after the United States, with investment stock of approximately €1 billion.
There are several European companies with a local presence, and many more are investing in Paraguay: This presence is testament to the great potential for growth in Paraguay's economic relations with the EU.
The EU is Paraguay's third largest trading partner, after Brazil and Argentina. It represents 10% of Paraguay's trade (9% of the country's exports and 11% of its imports in 2018).
Top European Exports to Paraguay
The total value of EU exports to Paraguay in 2018 was €694 million, up by 1.3% from 2017.
- Machinery and appliances which represent 29%
- Chemicals and allied industries which represent 20%
- Transport equipment which represents 14% and
- Foodstuffs, beverages, tobacco which represent 9%
Top Paraguayan Exports to the EU
Total value of EU imports from Paraguay stood at €742 million, down by 35% from 2017.
- Foodstuffs, beverages, tobacco which represent 48%
- Vegetable products which represent 23%
- Animal or vegetable fats and oils which represent 7%
- Raw hide and skins, and saddlery which represent 6%
- Live animal, animal products which represent 6%
In 2018, the volume of goods exchanged between Paraguay and the EU amounted to €1.43 billion. Paraguay had a positive trade balance of €48 million Euros.
EU imports from Paraguay are dominated by agricultural products. EU exports to Paraguay are dominated by manufactured products and technology, particularly machinery and transport equipment (42%) and chemical products (22 %).
The EU and Mercosur
Within the context of regional integration, the EU and Mercosur began to prepare an inter-regional association agreement in 1999. As of 2019, the trade part of this agreement has been agreed in principle. The EU-Mercosur Association Agreement is expected to strengthen political dialogue and cooperation and significantly expand economic and trade relations between the regions to their mutual benefit.
The EU remains Mercosur's main trade partner and the region's biggest investor. In 2018, trade between the blocs amounted to €89.9 billion (€45.7 billion being exports from the EU to Mercosur, and €42.3 billion being imports of products from Mercosur). The EU exported €23 billion of services to Mercosur while Mercosur exported €11 billion of services to the EU in 2017.
The EU is the biggest foreign investor in the region, with an accumulated stock of investment that has gone up from €130 billion in 2000 to €381 billion in 2017. Mercosur is a major investor in the EU, with stocks of €10 billion in 2017.
Chambers of Commerce of European Union and its member states in Paraguay:
The 1992 Framework Cooperation Agreement is the basis for bilateral cooperation between Paraguay and the European Union. Priorities of the technical and financial cooperation are established in multiannual indicative programmes, which run for seven years. The design of the current 2014-2020 Multiannual Indicative Programme is based on priorities established in the Sustainable Development Goals of the United Nations, the EU Agenda for Change, the European Consensus on Development, national priorities and the division of work defined within the context of the joint programme between the European Union and its member states. The programme has allocated a total budget of €168 million as non-repayable cooperation funds to Paraguay. The Government of Paraguay and the EU have together decided to focus this joint work on the following four priority sectors, in line with the 2015-2030 National Development Plan.
The sums involved and principal objectives of these sectors are as follows:
The issues of gender and the environment constitute an ongoing priority common to the EU and to its cooperation with Paraguay. The EU is also committed to the Sustainable Development Goals for 2030.
In addition to the 2014-2020 bilateral technical and financial cooperation, the European Union provides other kinds of support:
The EU supports the contribution of civil society and local authorities in matters such as human rights and democracy and the development of a better organised civil society. This support is managed through open calls for proposals.
Regional cooperation programmes strengthen relations between Latin America and the European Union by exchanging experiences and creating networks while creating ties between the countries within the region. They help efforts in the region to reduce poverty and increase sustainable and inclusive growth.
The 2014-2020 Regional Programme for Latin America amounts to €805 million. It is focused on the following areas:
Several programmes for regional cooperation between the European Union and Latin America will work on these areas, including EUROsocial+, which promotes policies that further social cohesion; AL-Invest 5.0, which focuses on improving the ability of SMEs in Latin America to enter global markets; LAIF, which is a system that enables the financing of infrastructures in sectors such as energy and transport; EUROCLIMA+, which facilitates cooperation between the European Union and Latin America on climate change; COPOLAD II, for matters related to the design and implementation of drug policies; and EL PAcCTO concerning the rule of law and public security.
The European Union, through its humanitarian aid and natural disaster risk reduction programmes, provides aid to more than 120 million of the most vulnerable people in the world every year. European Union funding is used to implement humanitarian projects concerning water, sanitation and hygiene, health, housing, nutrition and the design of tools such as early warning systems, emergency planning and livelihood protection. A significant part is also used to increase preparedness and reduce risks in communities vulnerable to natural disasters.
In Paraguay, humanitarian aid from the European Union has been saving the lives of Paraguayan people affected by natural disasters since 1997. Close to 50 % of the almost €17 million that the EU has provided for humanitarian aid to Paraguay since 1997 has been used to help communities and institutions be better prepared to deal with emergencies.
Through natural disaster risk reduction programmes and resilience initiatives, the European Union strongly supports international efforts to ensure the adoption of global natural disaster risk reduction programmes such as the Sendai Framework for Disaster Risk Reduction 2015-2030 whose objective is to achieve, within 15 years, “the substantial reduction of disaster risk and losses caused by natural disasters: losses of lives, livelihoods and health as well as of the economic, physical, social, cultural and environmental assets of persons, businesses, communities and countries”.
Between December 2015 and January 2016, overflowing of the Paraguay River caused serious floods in the country. In a first response to the most immediate needs, the EU approved €300 000 to assist with basic necessities and actions to provide water and sanitation to around 5 700 people affected in the cities of Nanawa and José Falcón (Presidente Hayes Department). In a second phase, the EU gave €1 million to help around 40 000 people in the city of Asunción and the Neembucu and San Pedro departments; this aid was focused on facilitating access to clean water and actions that would guarantee proper hygiene and adequate sanitation and help with waste management in the shelters.