Paraguay has in its GSP another of its main selling points

By Rosa Elena Di Martino, Berkemeyer Attorneys & Counselors

Paraguay is the only country within the MERCOSUR region that keeps the General System of Preferences Plus (GSP+) of the European Union, which guarantees free access of up to 9700 tariff lines to the European market, a market with over 500 million of consumers. This gives Paraguay the ability to capture and European investment in the region.

The GSP + is a system created 40 years ago to help developing countries. The condition was that to grant the tariff benefit, the countries should be rated by the World Bank as low or middle income (its GDP is less than 1% of World GDP).

The GSP + uses the following criteria for granting benefits: sustainable development, human rights, environmental protection and governance, guaranteed by international conventions.

The benefits the country receives with this special treatment lies in the reduction of one hundred percent of the customs tariff for about 90 percent of exports to the European Union.

The exclusion of several Latin American countries of the General System of Preferences (GSP +) by the European Union, is an important point that can be exploited by companies from being pushed to settle in the country at the loss of competitiveness of industries in their respective countries.

A study by the FIESP (Federation of Industries of Sao Paulo), notes that it is 35% lower to produce in Paraguay than in Brazil. The cost difference reaches 45% in the field of auto parts.

Eleven American countries will continue to benefit from the GSP + system: Bolivia, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay, Ecuador and Peru.