II.  Leading Trade Prospects for U.S. Business

Best Products and Services Prospects for U.S. Exporters

Relatively low import duties in Paraguay have encouraged the
development of a flourishing commercial sector engaged in the
importation of manufactures from the U.S. and the Far East for re-export
to neighboring countries.  U.S. exports to Paraguay have soared as a
result of strong demand for U.S.. products by Argentine and Brazilian
tourists visiting Ciudad del Este and Asuncion to shop for quality goods
at what are bargain prices when compared to those in their home
countries.  If Mercosur implements a low common external tariff, a major
incentive for the activities described above would disappear.
Nevertheless, the existence of high consumption taxes in Brazil and
Argentina would continue to provide incentives to the import/re-export
activities of Paraguayan merchants.  Moreover, a comparison of
Paraguayan import statistics with export statistics published by its
trading partners shows that approximately one third of the merchandise
imported is taxed by the government.

The following is a listing of best prospects for U.S. exporters in the
agriculture and industry sectors.  Please refer to appendix b for details.

--agricultural machinery and equipment;
--computer hardware, software, and network products;
--home entertainment equipment;
--communications equipment;
--office machines and equipment;
--air traffic control equipment.

Best prospects for U.S. services could be related to the following
projects:

(1) natural gas pipeline:  The Paraguayan government announced
February 7, that it would build a 529 mile pipeline from Bolivia to
Asuncion to transport natural gas.  This project could provide
opportunities to U.S. engineering consulting companies, manufactures of
seamless pipe, welding equipment and materials, gas pumping stations,
and pipeline construction equipment.

(2)  Hidrovia:

--development of the Parana-Paraguay river basin for transportation of
goods between Bolivia to Buenos Aires through Paraguay would provide
opportunities for U.S. engineering companies specializing in the design
of flood control dams and irrigation districts, developers of river ports,
manufacturers of dredges, and suppliers of navigation equipment.

--President Wasmosy has a plan to build a dam and a navigation lock
across the Paraguay river near Bahia Negra on the Brazilian border.  The
project includes construction of one irrigation channel in the
Paraguayan Chaco and another into the Brazilian interior to divert
excess water.  The dam would improve the navigability of the Paraguay
river during the dry season, thus allowing the traffic of barges all the
way to Puerto Suarez in Bolivia year-round.  President Wasmosy
estimated the cost of this project at USD 200 million.

(3)  Bridge over Parana river:  The governments of Paraguay and Brazil
have plans to build a road/rail bridge between Ciudad del Este,
Paraguay, and Foz de Iguazu, Brazil.  The USD 12 million project includes
construction of access roads on both sides.

(4)  A U.S. consulting firm is preparing a feasibility study for the
recuperation of the Ypacarai lake basin and the Bay of Asuncion funded
by a TDA grant.  The final report would include recommendations for the
installation of wastewater treatment plants and the construction of dikes
to prevent flooding of land bordering the Asuncion Bay.

(5)  Investment/privatization:  The Paraguayan government has plans to
privatize five government owned enterprises.  These are:  An alcoholic
beverage distilling company, the state merchant fleet, an airline
company, a railroad company, and a steel foundry.  A fertilizer plant and
grain silos could be added to this initial list.  Thus far, GOP efforts to
privatize have been slow and have not yet resulted in the privatization
of any government enterprises.  There are reports that the state
telephone company could be privatized during the next two years.