Korea-Paraguay TIPF Agreement... Establishing First Government Cooperation Channel in 'Trade, Industry, and Energy'

The governments of Korea and Paraguay have established the first government cooperation channel in the fields of trade, industry, and energy.

The Ministry of Trade, Industry and Energy announced that Jeong In-kyo, Director General for Trade Negotiations, signed the "Korea-Paraguay Trade and Investment Promotion Framework (TIPF)" with Javier Jimenez, Minister of Industry and Commerce of Paraguay, in Seoul on the 23rd.

Paraguay is a member of the Southern Common Market (MERCOSUR), one of the world's five major economic blocs, along with Brazil, Argentina, and Uruguay. Among South American countries, Paraguay shows a high economic growth rate (4.6% in 2023) and offers a favorable business environment with lower wages, lower tax rates, and advantageous rules of origin compared to other MERCOSUR countries. Companies operating in Paraguay (local subsidiaries) can export duty-free to other member countries if they meet a local procurement ratio of 40% for raw materials and wages. This is lower than Brazil (60%), Argentina (45%), and Uruguay (50%).

In particular, considering that Korean-made vehicles accounted for 8 out of the top 20 new car models in Paraguay last year, representing 40% of the market share, and that a Korean automotive cable manufacturer has grown into the largest automotive parts manufacturing and exporting company locally, there is expected potential for expanding exports to Paraguay and utilizing it as a manufacturing hub within MERCOSUR.

Immediately following the signing ceremony, during the Korea-Paraguay Trade Ministers' Meeting, both sides exchanged views on ▲ ways to utilize TIPF to expand bilateral economic cooperation ▲ industrial and energy cooperation ▲ progress on the Korea-MERCOSUR Trade Agreement (TA), and agreed to concretize cooperation agendas through the Trade and Investment Cooperation Committee (TICC) under TIPF in the future.

Director General Jeong said, "The cooperation channel established with Paraguay's Ministry of Industry this time is significant as it lays the foundation for Korea and Paraguay to actively promote economic cooperation in trade, industry, and energy for the first time," adding, "It is expected to serve as an important platform for discovering and promoting practical cooperation projects between the two countries going forward."