Just 19 years after the heavily publicized coup that ousted its controversial dictator, Alfredo Stroessner, Paraguay is experiencing unprecedented economic growth. But James Spalding, the country’s U.S. ambassador, said Paraguay’s success depends on building a stronger relationship with the United States.
Nestled between Argentina and Brazil, the two largest economic forces in South America, Paraguay has long struggled to compete with its neighbors in exporting goods to North America. But Spalding said Paraguay’s effort to slow drug trafficking in South America in the last decade has strengthened ties with the United States — ties that he hopes will lead to a free-trade agreement between the countries.
“Milestones have been set to solidify relationship between our countries,” Spalding told an audience at the Hinckley Institute of Politics on March 28. “But unfortunately, trade between our two counties is very lopsided to Paraguay’s disadvantage. For every $1 in goods that we export to the U.S., we import another $20.”
Sugar and timber account for nearly two-thirds of Paraguay’s exports to the United States, which according to Spalding are not sustainable products on which to build a solid trade relationship.
“No country in the long term can grow solely from agriculture,” he said. “We need to (be) able to export more valued products.”
Spalding said joining the Andean Trade Preference Act agreement, which now grants four South American countries tariff-free trade with the U.S., is the first step toward Paraguay’s economic sustainability.
“We manufacture high-quality clothes that we would love to (be) able to sell on the U.S. market,” he said. “But when Columbia can manufacture similar products and export them without paying the 19 percent tariff we face, how can we compete?”
Even without a trade agreement, Spalding said Paraguay’s economy is growing faster than ever. In an attempt to foster new business and attract regional enterprise, Paraguay’s aggressive tax cuts now give the country the lowest tax rates in the Western Hemisphere. Paraguay’s gross domestic product grew by 4.3 percent in 2006, which, despite tax cuts, resulted in a 145-percent jump in tax revenue, Spalding said. GDP is the measure of goods and services produced within a country.
Francisco Oviedo, a native Paraguayan who moved to Utah more than 20 years ago, said Paraguay is often overlooked by Americans.
“Everybody knows about Columbia and Brazil,” Oviedo said. “But Paraguay is a beautiful country with people that are facing serious social and economic problems. It’s great to have the ambassador here to educate students about Paraguay.”
Ben Iron, a junior business major, agreed, admitting that he knew little about Paraguay before attending the Hinckley forum to hear Spalding speak.
“We’re so privileged in America that we sometimes forget the influence we have abroad,” he said. “It’s good to hear from someone like ambassador Spalding about a part of the world that doesn’t get much attention these days.”