Paraguay Paraguay-India - Page 26

paraguay PARAGUAY A GATEWAY FOR INDIA TO EXPLORE BUSINESSES IN MERCOSUR BY GUSTAVO ROJAS* I ndia and the South American Common Market (Mercosur) seem to be re-launching their partnership in 2019. In March, the Vice President of India Venkaiah Naidu visited Paraguay. After the presidential elections in Paraguay and Brazil, the authorities of Mercosur and India resumed the trade talks in order to extend their tariff preferences agreement in force since 2009. Mercosur is India’s main trading partner in Latin America. Trade fl ows between Mercosur and India grew 252 percent since 2008, reaching a record level of US$ 14 billion in 2017. The expansion of trade has been balanced, with no chronic trade defi cits for any of the partners. Indian exports to Mercosur are concentrated in chemical, plastic, pharmaceutical, steel, automotive, textile and apparel sectors, while India imports soybean oil, oil, sugar, mining and steel products from Mercosur. Throughout these years, the importance of the Indian market for Mercosur exports has grown. Today, India is the sixth largest foreign market for Argentine and Paraguayan exports, accounting for over 3 percent of its global exports. India’s increasing purchasing power, growing middle class and the new Indian Government’s market approach indicate 26 • PARAGUAY 2019 an important potential for strengthening trade and investment fl ows with these countries. Despite India and Mercosur having great potential for productive complementarity; both partners have to overcome several obstacles to achieve this. Currently, the trade preferences agreement is limited, granting preferences of no more than 20 percent of their value to 527 products in the Indian market and 461 products in the Mercosur market. Both trading partners aim to expand mutual market concessions to around 2,500 products, along with a higher level of liberalization of preferences. This objective is an important initiative when world trade is losing its dynamism. The Mercosur countries share the condition of having a limited number of trade agreements concerning only trade in goods with India. In many cases, the rules of origin of these trade agreements no longer respond to the dynamic reality of global value chains. Global value chains require comprehensive rules that regulate trade in goods, services and investments at the same time. A new agreement should take into account this new reality. At the same time, the potential future agreement