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Paraguayan FTA safe: government

Taipei Times

Paraguayan FTA safe: government

NO JEOPARDY: Newspaper reports that a proposed free-trade agreement between Taiwan and Paraguay is in danger of collapse were inaccurate, officials said

By Jessie Ho

15 February 2005

Government officials yesterday dismissed a report that the proposed free-trade agreement (FTA) between Taiwan and its diplomatic ally Paraguay is in jeopardy, due to pressure from other members of Mercosur, a South American trade bloc of which Paraguay is a member.

A Chinese-language newspaper reported on Sunday that Paraguay may not ink the trade pact with Taiwan, citing Paraguay’s foreign minister in a speech last week.

"We didn’t receive any official notice from Paraguay so far, and we are checking the report via the Paraguayan embassy to see whether it was merely a remark made by the official or has become an official decision," James Wu (§d·sµØ), deputy director of the Bureau of Foreign Trade, told the Taipei Times yesterday.

The Chinese-language newspaper said that, during a press conference last Friday to receive David Hu (­J¥¿³ó), Taiwan’s new ambassador to Paraguay, Paraguayan Foreign Minister Leila Rachid de Cowles said as a member of Mercosur, her nation cannot sign any unilateral trade agreements with other countries.

Mercosur, established in March 1991, is a trade bloc made up of Uruguay, Brazil, Argentina and Paraguay.

Wu said that the Taiwan government is aware of the rule passed in 2000 that no Mercosur member can make unilateral trade deals with other countries.

But with the good relationship established between the two countries, Paraguayan high-level officials have reiterated that they will try to convince other Mercosur members to make an exception in this case, due to the country’s economic situation, he said.

Taiwan and Paraguay signed a joint communique when Paraguayan President Nicanor Duarte Frutos came to Taiwan to attend President Chen Shui-bian’s (³¯¤ô«ó) inauguration ceremony in May last year. The communique states that the two countries would sign a FTA within a year to facilitate bilateral trade, investment and economic cooperation.

Last month, when receiving Paraguayan Vice President Luis Alberto Castiglioni Soria and his wife at the Presidential Office, Chen said he would like to travel to Paraguay and sign the FTA himself, if necessary.

Despite the report not having been confirmed, it is suspected that Paraguay’s attitude may change under pressure from other members of Mercosur, as the trade bloc is now keen to ink a FTA with China. It was also reported that Brazil and Argentina have demanded Paraguay break diplomatic relations with Taiwan over the matter.

During the last Asia Pacific Economic Cooperation meeting in November last year, Chinese President Hu Jintao (­JÀAÀÜ) visited four Latin-American countries, including Brazil and Argentina, and expressed his willingness to establish diplomatic ties with all Central and South American nations.

Hu even committed China to invest US$10 billion over the next two years in Brazil, the biggest economic body in Latin America, and also finalized multi-billion dollar trade agreements with Brazilian and Argentinean oil companies during the trip.

Taiwan has only secured one FTA, with ally Panama in 2002. The government expects to complete other trade deals with Nicaragua and Guatemala by August. The FTA consultations with the Dominican Republic and Honduras are also in progress, according to the Ministry of Economic Affairs.

Although Taiwan’s government is eager to include the US and Japan as free trade partners, little progress has been made in this regard.