Copyright infringement not intended

Picture Courtesy:  THE STATESMAN

Context: PM Modi meets Paraguay President to deepen trade ties and push for expansion of the MERCOSUR trade agreement.

What is MERCOSUR?

Mercosur, also known as the Southern Common Market, functions as a South American trade bloc and customs union.

It was formally established by the Treaty of Asunción in 1991 and the Protocol of Ouro Preto in 1994.

Mercosur's aims included boosting the regional economy, moving goods, people, workforce, and capital among members.

Copyright infringement not intended

Initially, it created a free trade zone where signatories would not tax or restrict each other's imports. In 1995, this area transitioned into a customs union, where signatories apply the same quotas (common external tariff) on imports from other countries.

It is described as the third largest integrated market, following the European Union (EU) and the North American Free Trade Agreement (NAFTA).

Membership categories:

Full members are Argentina, Bolivia, Brazil, Paraguay, and Uruguay. Venezuela is also listed as a full member but has been suspended since December 2016. Bolivia became a full member in July 2024.

Associated States are Chile, Colombia, Ecuador, Guyana, Panama, Peru, and Suriname.

Observer States are Mexico and New Zealand.

About India and Paraguay Relation

India and Paraguay have maintained friendly diplomatic relations for over six decades, with ties formally established in 1961.

Copyright infringement not intended

Political Relations

India's Embassy in Asuncion, Paraguay, began operations on January 27, 2022. Prior to this, the Indian Embassy in Buenos Aires, Argentina, was concurrently accredited to Paraguay.

Paraguay opened its embassy in New Delhi in March 2006 and also has Honorary Consulates in Mumbai, Chennai, and Kolkata.

The two countries have institutionalized Foreign Office Consultations (FOC) through an MOU signed in 2002, to discuss bilateral relations, including high-level exchanges, trade, investment, agriculture, health, and pharmaceuticals.

Both countries share common views on issues like UN reforms, climate change, renewable energy, and combating terrorism. Paraguay has backed India's candidacy for the UN Security Council for the 2028-29 term. Paraguay is also a member of the International Solar Alliance (ISA), an initiative led by India and France.

Economic Relations

For the fiscal year 2022-23, the India-Paraguay bilateral trade stood at USD 477 million. India’s exports to Paraguay were valued at $ 317 million, while Paraguay’s exports to India were valued at $ 160 million.

India's exports to Paraguay: Organic chemicals, vehicles (especially pick-ups by Tata and Mahindra), auto parts, cosmetics, machinery, pharmaceuticals, plastics, sound and image devices, aluminum, rubber products, agrochemicals, and refined petroleum.

Paraguay's exports to India: Soya oil (constituting a very large percentage, more than 90%), sunflower oil, leather, wood, iron and steel, and aluminum scrap.

MERCOSUR: Paraguay is a member of MERCOSUR, a South American trade bloc. India and MERCOSUR signed a Framework Agreement in June 2003, followed by a Preferential Trade Agreement (PTA) in January 2004, which became operational in June 2009. 

India provides ITEC (Indian Technical and Economic Cooperation) scholarships to working professionals from Paraguay annually.

Recent discussions have focused on expanding cooperation in digital technology, critical minerals, energy (clean energy, green hydrogen, biofuels), agriculture, healthcare, defense, railways, and space.

Must Read Articles: 

INDIA PARAGUAY RELATIONS

India Mercosur Free Trade Agreement || UPSC CSE

Source: 

THE STATESMAN