Peña says Paraguay will gain most from Mercosur–EU deal

President Santiago Peña defended the trade agreement between Mercosur and the European Union and stated that Paraguay is on track to become one of its main beneficiaries.

The President of the Republic, Santiago Peña, said that the trade agreement between Mercosur and the European Union represents a key opportunity for Paraguay’s economic development. According to the head of state, the country is emerging as one of the main beneficiaries within the regional bloc, both because of its domestic conditions and the changes the deal will bring to the way Mercosur operates.

His remarks were made during the latest episode of the podcast Paraguay Adelante, released on Sunday. In that space, Peña argued that the agreement should be analysed not only in terms of trade relations with Europe, but also in light of its impact on Mercosur’s internal functioning.

The president recalled that the regional bloc was created more than 30 years ago with the intention of functioning as a customs union. However, he explained that although tariffs between member countries were eliminated, non-tariff barriers remained in place. These ultimately affected the smaller economies in particular, such as Paraguay and Uruguay.

In this regard, he maintained that the agreement with the European Union will force a more balanced opening of the Brazilian and Argentine markets. In his view, this will mark an important shift in the bloc’s historical logic and will help reduce the asymmetries that have constrained the growth of the smaller partners. “It will no longer be Paraguay or Uruguay asking for access. Now the larger countries will also have to open up to the European market,” the president said, stressing that this new scenario creates fairer conditions within Mercosur.

Peña also stressed that Paraguay enters this process with clear competitive advantages. He cited the country’s low tax burden, macroeconomic stability, a young population and abundant renewable electricity as key factors to attract investment. He underlined that Paraguay has the highest share of sustainable energy among the countries involved in the agreement and emphasised that the country offers agile conditions for setting up export-oriented industries, which he considers essential to make the most of the new trade context.

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Regarding the impact on the productive sector, the president indicated that small and medium-sized enterprises will be able to access not only the European market, but also regional markets that have historically been more restrictive. In that context, he recalled that Brazil is already positioned as the main source of foreign investment in Paraguay.

Finally, Peña called for overcoming the fear of international competition. He stated that the country still has significant room for growth within the region and argued that the key challenge will be to clearly communicate the opportunities and build the confidence needed for the private sector to capitalise on the new trade scenario.

Read the article in Spanish here