Paraguay Is Open to Trade With China Without Cutting Taiwan Ties: President

The national flags of Paraguay (L) and Taiwan wave outside the Taiwanese embassy in Asuncion on April 26, 2023. Norberto Duarte/AFP via Getty Images

Paraguay’s outgoing President Mario Abdo Benitez said on May 24 that his nation is open to trade with any country, including China, but will not bow to Chinese pressure to cut off Taiwan.

At the Qatar Economic Forum in Doha, Benitez hinted that China had refused to do business with the South American nation due to its diplomatic ties with Taiwan.

“We are not against doing business with anybody. But we believe that our diplomatic relations should stay firmly with Taiwan,” he said.

“It is not that Paraguay does not want to do business with anybody. It is the other part that does not want to do business unless we change our diplomatic status,” the Paraguayan leader added.

Benitez hopes that the Mercosur—a South American trade bloc comprising Argentina, Paraguay, Uruguay, and Brazil—will enable Paraguay to expand its trading with other nations while keeping its relations with Taiwan.

“If we can use Mercosur to open our market, we do not have any kind of problem doing that,” he added.

Benitez said that his elected successor, Santiago Pena, who is set to take office later in August, has made a commitment to continue supporting Taiwan. Both of them are from the Colorado Party.

Trade between Paraguay and Taiwan has increased by 500 percent under his five-year administration. If it continues, Benitez said this could give his party “enough arguments” to defend the strategic alliance with Taiwan.

Pena pledged to “strengthen the historic ties” with Taiwan after winning the election in April, saying he would “look forward to working on mutually beneficial cooperation projects.”

Taiwanese leader Tsai Ing-wen congratulated Pena and expressed gratitude for his “staunch position” in maintaining Paraguay-Taiwan relations.

In response, Pena said he hoped to visit Taiwan “as soon as possible” for talks with Tsai, according to Tsai’s office.

CCP Threat

The Chinese Communist Party (CCP) claims Taiwan as part of its territory despite Taiwan being a sovereign nation with a democratically elected government.

Only 13 nations, including Paraguay, have formal diplomatic ties with Taiwan. Paraguay is the only country in South America that recognizes Taiwan as a sovereign country.

The CCP has, in recent years, persuaded some of Taiwan’s allies—such as Nicaragua, the Solomon Islands, Panama, and El Salvador—to switch allegiance with the prospect of increased trade and investment.

Honduras severed diplomatic ties with Taiwan in March in favor of China’s relations, which Taiwan’s Foreign Minister Joseph Wu said resulted from Honduras demanding “unreasonable” aid from Taiwan.

Tsai has said that her government will not compete with Beijing in “meaningless” dollar diplomacy.

“These past few years, China has persistently used any and all means to suppress Taiwan’s international participation, intensify its military intimidation against Taiwan, and disrupt regional peace and stability,” she said on Twitter on March 26.

Paraguay-Taiwan Trade

According to a 2021 study published in Foreign Policy Analysis, Taiwan invested an average of $4 million a year in Paraguay from 2005 to 2014 and contributed an average of $14.8 million in aid.

The study was authored by Tom Long, an associate professor at the University of Warwick, and Francisco Urdinez, an associate professor at the Institute of Political Science.

“Paraguay received nil from China in aid, investment, or finance, while regional annual average values for countries with diplomatic relations with China represented 1 percent of their GDP, a striking difference,” it stated.

“Economic benefits from Taiwan do not compensate for these losses. Taiwan is a small trading partner for Paraguay, in absolute terms and relative to China. In 2018, trade with Taiwan represented 0.33 percent of Paraguay’s total trade,” the study says.

Epoch Newsroom and Reuters contributed to this report.