(Bloomberg) -- Paraguay wants to negotiate bilateral deals on cars and car parts with fellow Mercosur members Brazil, Argentina, and Uruguay, according to Foreign Minister Luis Alberto Castiglioni.
“Paraguay is the only country that doesn’t have an agreement on cars with any of its partners” in Mercosur, Castiglioni said in an interview during a summit for the South American trade bloc in Santa Fe, Argentina.
Paraguay and Brazil will probably start negotiations at the end of this month in Asuncion, he said. Those talks come after Brazil briefly slapped a 16% tariff on Paraguayan auto part imports earlier this month in a move that threatened to cripple the country’s growing assembly for export sector.
“We are a new government in Paraguay and there’s a new administration in Brazil,” Castiglioni said. “We have time and space to reach an agreement that’s beneficial for both.”
Paraguay’s economy has slowed this year due to weak growth in neighboring Argentina and Brazil with the central bank signaling it might lower its current 3.2% growth forecast next week. That would still make Paraguay one of the fastest growing economies in the region.
The central bank has kept its benchmark interest rate at an eight-year low since March and the government last month announced a $1.54 billion stimulus package to help buttress the economy.
Last month, Mercosur and the European Union clinched a historic trade agreement following two decades of talks. Both sides want to expand goods shipments worth almost $102 billion a year through the elimination of tariffs on nearly all two-way trade. Implementation may take as long as three years, with ratification by the parliaments of all its signatories as the last stage.
Mercosur has decided that the deal will take effect on a country-by-country basis instead of first waiting until all the bloc’s legislatures approve the agreement, Castiglioni said.
“The agreement will take effect in each member country as soon as its respective Congress approves it,” he said. “We are looking for rapid approval of the trade deal.”
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