RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/237
24 October 2000
(00-4413)
Council for Trade in Goods Original:  Spanish
TRADE FACILITATION
Presentation by the Permanent Representative of Paraguay in Geneva,
Ambassador Luis María Ramírez Boettner, Concerning Landlocked
Countries, as Part of the WTO Study on Trade Facilitation
The following communication, dated 24 October 2000, was received from the Permanent
Mission of Paraguay.
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1. One of the topics which we consider it important for the working group on trade facilitation to
examine is the situation of landlocked developing countries, of which there are 30, 16 being
least-developed countries (LDCs).  Their geographical distribution is the following:  15 in Africa, 5 inAsia, 7 in Central Asia and 2 in Latin America, namely Paraguay and Bolivia.
It is important to consider them in studying trade facilitation, given the international trade
disadvantage of having no sea coast.  Indeed, it is widely recognized that transport costs are a decisive
factor in any country's foreign trade performance and have a serious impact on the potential for
expanding its trade and hence for speedier economic development.  According to an UNCTAD study,
transport costs absorb almost 18 per cent of the export earnings of landlocked countries, twice as
much as for coastal countries.
2. The situation of landlocked developing countries is aggravated by their remoteness from sea
ports, which further isolates them from world markets and makes it all the more difficult for them to
transport the goods they import and export.  Indeed, potential buying and selling markets are far
removed, and above all, not only is their own goods transport infrastructure limited or deficient, butthese 30 countries are all dependent on neighbouring transit countries, themselves also developing
countries whose transportation infrastructure is just as poor.
3. Public international law recognizes the right of access to and from the sea of landlocked
countries and freedom of transit across the territory of other States by all possible modes of transport.
The converse of this, also envisaged in international la w, is that in the full exercise of their territorial
sovereignty, transit countries have the right to take  the measures necessary to ensure that the transit
rights and facilities provided for landlocked countries in no way infringe upon their legitimate
interests (Resolution of the General Assembly, document A/RES/54/199/20.I.00, paragraphs 3 and 4).
In other words, reconciling the right of free tran sit of landlocked countries with respect for the
sovereign rights of transit countries and the use of their ports is a crucial and difficult issue thatessentially calls for a certain amount of political will to allow free transit to function without
obstructions or prejudice to the transit countries.  This will depend on the applicable international
rules, on regional rules that are negotiated within a group of countries and more particularly, thoseG/C/W/237
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negotiated bilaterally between the landlocked country and the transit country, and on the manner in
which the agreements reached are applied.
4. The right of free transit and access to the sea has been recognized in international law and has
received exhaustive treatment in the United Nations, where there are a great many General Assemblyresolutions - 99 to be exact.  The subject has also been studied in depth by the United Nations
Conference on Trade and Development (UNCTAD).  Si milarly, Articles 124 to 132 of Part X of the
United Nations Convention on the Law of the Sea of 10 December 1982 also contain provisions, inter
alia, on the right of access of landlocked States to and from the sea and freedom of transit.  The
international community, including financial institutions, have participated and continue to participate
actively in guaranteeing this right;  and we can address the overall position of the international
community as well as the specific arrangements between landlocked countries and their respective
neighbours.  In this presentation I shall be dealing with the specific case of my country, Paraguay, in
order to better inform the Working Group on Trade Facilitation in that regard.
Access to the sea as seen by the international community
5. At the international level, in addition to lengthy and productive discussions on access to the
sea of landlocked countries in connection with the Convention on the Law of the Sea, the General
Assembly of the United Nations and UNCTAD are the two international bodies that have examined
this problem most extensively and recommended solutions designed to secure access to international
trade for these countries and to overcome the disadvantages they face.  It would be rather time-
consuming to mention all the resolutions that have been adopted by the General Assembly and I shalltherefore only mention the first one adopted in 1957 – N 1028 (XI) of 20 February – dealing with the
international trade disadvantage and calling on the international community, of which the WTO is
now a part, to find alternatives that could relieve the geographical isolation of these countries.
Resolution 63 (III) of 19 May 1972 states that the international community and international
organizations should conduct studies and take concerted action to ensure more rational treatment forlandlocked countries and also calls on transit countries to endeavour, together with landlocked
countries, to devise more suitable alternatives for transportation and the use of ports in those
countries.  Resolution 123 V of 3 June 1979 (paragraph II.3) emphasizes that measures to deal with
the transit problems of landlocked countries require good neighbourliness, effective cooperation and
close collaboration between landlocked countries and countries of transit to and from the sea.  It
further suggests technical and financial cooperation, inter alia , even to the extent of seeking to
restructure production in landlocked countries to facilitate transportation, and multilateral fundingagencies and international organizations are urged to increase the financial resources of these
countries to promote their overall development, which is being hampered by their geographical
situation and their landlocked status. (Resolution  98/IV) of 31 May 1976.
6. UNCTAD has been endeavouring to come up with specific measures to deal with the
particular needs and problems of landlocked developing countries and its Secretariat has produced
documents of the greatest significance, such as progress report TD/B/46/7 of 20 September 1999,
analysing the progress made towards alleviating the situation.  It has also sponsored meetings of
governmental experts from landlocked and transit countries and representatives of the donor countries
and financial and development institutions to discuss problems and find solutions, the last of whichwas held at the United Nations in New York from 24 to 26 August1999.  These meetings are of the
highest importance in enabling landlocked and transit countries to act jointly.
As an input to any recommendations agreed among the three above-mentioned interested
parties to facilitate transit from and to landlocked countries and give them access to the sea,UNCTAD, the international body that has done most to come to grips with the crucial problem of
landlocked countries, submitted a document to the Second Meeting of Governmental Experts from
Landlocked and Transit Developing Countries and Re presentatives of Donor Countries and FinancialG/C/W/237
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and Development Institutions held in New York on 22 June 1995, under the symbol
TD/B/LDC/AC.1/L3 of 21 June 1995, entitled "Global Framework for Transit Transport Cooperation
between Landlocked Countries and the Donor Community".  These recommendations are highly
insightful and it would be a good thing if they could all be implemented.  They range from transit
transport policies to restructuring the production of export goods, to an analysis of modes of transportincluding railways, railway infrastructure and transport equipment and operational problems
associated with that system, to road transit, in cluding infrastructure, maintenance and administrative
standards for land transport.  The document also covers ports to be used by landlocked countries in
transit countries, their physical structure, maintenance, regulations for their use and insurance.
It also contains recommendations on inland waterways and cites Bolivia, Burundi, Central
African Republic, Malawi, Mali, Niger, Paraguay and Uganda as the main users of such systems.Other countries too could make use of such waterways.  Lastly, the document deals with air freight
and the rules that would have to be applied, and lists some perishable goods that lend themselves to
air transport, such as flowers, fruits, vegetables, meat, fish, and the like.  For all these modes of
transport to function properly, however, they require adequate communication links, which constitute
one of the weakest elements in transit transport to and from landlocked countries.  They require two
types of support:  external technical assistance and funding from international or bilateral institutions.
But above all else, and we repeat this with emphasis, what is needed is political will and international
solidarity so that transit transport to and from landlocked countries can work and that those countries
can be in touch with the outside world.
Finally, I would like to cite the very recent Resolution of the General Assembly No. 54/199 of
20 January 2000, calling on the developed countries of the international community to conclude
financial and technical cooperation agreements and simultaneously inviting landlocked and transit
countries to strengthen their cooperative and collaborative efforts based on regional, subregional and
bilateral agreements.  One wonders why there is the continuing need for so many resolutions andrecommendations when so many resolutions have already been adopted by these two bodies.  The
answer is quite simply that much headway has been made in the realm of intentions, declarations and
promises, but in reality, there has been scant progress in finding ways of alleviating the disadvantage
facing these countries, whether in the sphere of transport, for example in the form of understandings
on freight cost reduction, reducing the volume of documentation etc. still being required of landlocked
countries for the transit of goods despite the abov e-mentioned international agreements, or in the
bilateral agreements reached.  It is an appreciable handicap to international trade competitiveness andthe acquisition of technologies to be isolated and lacking that sea breeze that refreshes political and
cultural life.  It is only the landlocked countries that comprehend these disadvantages, which so far
have not been understood by the international community or by international agencies, including
financial agencies.
GATT/WTO
7. In the General Agreement on Tariffs and Trade (GATT 1947), Article V is the only one that
is of major importance in this regard and is a recognition of freedom of transit.  It states:
"Goods (including baggage), and also vessels and other means of transport, shall be deemed
to be in transit across the territory of a contracting party when the passage across such
territory, with or without transhipment, warehou sing, breaking bulk, or change in the mode of
transport, is only a portion of a complete journey beginning and terminating beyond the
frontier of the contracting party across whose territory the traffic passes.  Traffic of this natureis termed in this article 'traffic in transit'."
Provision is made for freedom of transit through the territory of each contracting party, a
principle recognized under public international law, and the obligation to make a customs declarationG/C/W/237
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and, if this does not infringe the rules of the transit country, goods must pass freely and without
excepting charge, charges commensurate with the administrative expenses involved by transit or with
the cost of services rendered.  The matter of determining what are reasonable administrative costs
arising from transit or services rendered has been another source of disruption in relations between
countries, compounded by the need to take account of the prevailing conditions of traffic for thepassage of goods.  The principle of most-favoured-nation treatment is recognized both with respect to
regulations on charges or other administrative provisions and to the goods themselves.  We believe
that the treatment given to the problems of landlocked countries in the WTO is scant by comparison
with the way the issue has been addressed by other international organizations.  All provisions on
landlocked countries should be placed on an equal footing.
8. Nevertheless, we have reviewed the entire WTO documentation on trade facilitation and
found some very interesting documents, such as the Note by the Secretariat on the checklist of issues
raised at the WTO Symposium on Trade Facilitation, a document which I find to be extremely
meaningful in general terms, but which makes no reference to landlocked countries.  It was only in
one other Secretariat document, WT/COMTD/W/57 of 25 February 1999, page 6, paragraph 28, that
we found a small reference that reads as follows:  "Facilitation in the areas of transport and transitmight particularly benefit a specific group of developing countries – the landlocked and island
economies – which are highly dependent on transport and transit rules for their exports.  As many
such countries are among the poorest, their concerns should be given all due attention".
9. I believe that all the other paragraphs concerning trade facilitation are applicable to the transit
of goods, but we need to go further than the mere mention of transport and transit and include suchaspects as financing for infrastructure or the cost of freight or other facilities, as the problem is so vast
that we believe it should be tackled from the standpoint of trade facilitation for landlocked countries
and their inclusion in globalization.
The case of Paraguay as a landlocked country10. During the Spanish colonial era lasting from 1527 to 1811 when Paraguay's independence
was proclaimed from Spain and from the Viceroyalty of the River Plate, the river system made up of
the Paraguay, Paraná and the Plate Rivers was the route used as the only way to the Atlantic Ocean
and for supplying all the needs of what was the Provincia Gigante of Paraguay.  After independence,
with the attempts to reconstitute the Viceroyalty  of the River Plate, the Government of Paraguay
declared in 1813 that there should be free navigation of international rivers for the riparian States and
the world, an important declaration of a principle prior to what the 1815 Congress of Viennaproclaimed as a principle of international law, namely, the free navigation of international rivers.  In
view of the obstacles to the use of this waterway being created by the rulers of the River Plate,Paraguay closed itself to the world, thereafter usin g this waterway only internally, within the country,
but no longer to reach the outside world.
11. Starting in 1852, numerous agreements were signed  concerning navigation of the rivers, but it
was only in 1967 that a treaty was finally signed with Argentina recognizing free navigation of the
Paraguay, Paraná and Plate Rivers, all international waterways.
12. Negotiations were launched amongst the five riparian countries of this extensive river system,
which is navigable over 3,440 kilometres from Puerto Cáceres in Brazil to the River Plate, and the
Paraguay-Paraná Waterway Treaty was signed on 26 July 1992 in las Lenas, Mendoza Province,Argentina, entering into effect on 13 March 1995.  Argentina, Bolivia, Brazil, Paraguay and Uruguay
are signatories to the Treaty, which also has six additional protocols regulating navigation in this river
system.  It is still incomplete as it encompasses only the Paraguay and Paraná Rivers but not the River
Plate which, being the final stretch to the sea, will have to join the waterway regime at some point,
failing which the system will lead only to the gate way to the sea, and not through to the sea itself.G/C/W/237
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The main aims of the Waterway Treaty are to convert a totally natural waterway into a permanent
river transport system, navigable around the clock, with a constant depth of 10 ft. and lanes marked
out by buoys and signs and, if necessary, after the appropriate environmental studies, to rectify certain
sharp curves to ease navigation.  This and other aspects of the dredging of the river to achieve the
desired depth have elicited sharp criticism from environmentalists, with the result that work is now ata standstill in one stretch for fear of doing environmental damage to el Pantanal in Brazil.
13. This Paraguay-Paraná waterway is also the backbone of the Mercosur regional economic
integration project, which embraces Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile
as associate members, and which is now attempting to launch new negotiations with a view to
creating a greater free-trade area with the Andean Community of Nations (CAN).
14. This waterway is complemented by another, ly ing entirely within Brazilian territory, known
as the Paraná-Tieté, which comprises the Paraná River and the Tieté tributary – the only river runningfrom the sea coast inland to join the Paraná River, coming to within a few kilometres of the city of
São Paulo and which is used intensively by Brazil and Paraguay.
15. Up until a few years ago, the Paraguay-Paraná Waterway was the only exit to the sea and was
therefore of crucial importance.  Negotiations were therefore conducted with Argentina and Uruguay
to secure free ports for our international transit traf fic with the result that there are now ports in the
cities of Rosario and Buenos Aires in Argentina, and Nueva Palmira and Montevideo in Uruguay.
16. This single outlet to the sea, which was in fact the main port, could not adequately handle
Paraguay's communication with neighbouring countries and with Brazil in particular, and it was only
in 1956 that an agreement was signed to build a highway running from Asunción to the Paraná River,
including a bridge on this major river called Puente de la Amistad, with the route continuing fromFoz do Iguacu along Brazilian highways to reach the Atlantic ports of Paranagua and Santos where
there are bonded warehouses for all goods entering and leaving Paraguay, under a purely transit
regime.  This means that, although both incoming and outgoing goods pass through Brazilian
territory, they are not subject to Brazilian customs checks and there are administrative arrangements
allowing the free transit of these goods under a regime separate and apart from the one normallyapplicable to goods entering Brazil.
17. Now, the highway system with two free ports in Brazil, originally intended as a window on
the sea, has become the main route of entry and exit for goods and handles 60 per cent of our foreign
trade as it shortens communication with Europe, the United States and the Far East.  The higher cost
of highway transport is offset by the saving in time and distance covered, though it is still an
additional cost that undermines competitiveness with products from other countries.
18. Under the policy of physical integration of the Mercosur countries, reaffirmed at the recent
meeting of Presidents of South America, Paraguay is not content with having no exit to the Pacific
and has therefore been negotiating and is still nego tiating the establishment of inter-ocean corridors
linking the Atlantic and the Pacific.  It already has a free port in Antofagasta, Chile, and is negotiating
with Peru for the port of Ilo.  The asphalt surface of  the inter-ocean corridors needs to be improved in
places and they will represent a major trade advantage for all the countries in South America involvedin the ongoing integration processes.  Paraguay would like the main integration corridor to cross its
territory, forking off to the Pacific via Argentina, Chile, Bolivia and Peru.  Paraguay hopes that,
owing to its location in the heart of the economic in tegration scheme known as the enlarged Mercosur,
the current considerable geographical handicap can become an advantage that will compensate for its
lack of a sea coast.
19. At the initiative of the President of Brazil, Fernando Henrique Cardozo, the first meeting of
Presidents of South America was held in Brasilia from 31 August to 1 September and dealt with aG/C/W/237
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range of topics concerning the geography, aspirations and common destiny of these countries.  These
topics included infrastructure and integration, as well as democracy, trade, illicit drugs and related
crimes, information, know-how and technology.
With respect to integration based on a political understanding, the focus has been on the
importance of developing a regional vision which subsumes and builds upon the purely nationalvision of countries such as Paraguay, and of drawing up plans that encompass the entire region and
make financing more feasible when the physical infrastructure benefits not just one country, but is of
definite interest to a region or subregion.
It is Paraguay's hope that this much broader conception will go some way towards
overcoming the disadvantage of having no sea coast and that the notions of international solidarity
highlighted at that same meeting will help further the development of a landlocked nation in the SouthAmerican continent.
20. The infrastructure of this entire scheme of highways, waterways and communications is in
need of substantial upgrading that calls for increased funding.  Besides, there is the need for more
flexible rules on funding, simpler administrative arrangements and the application of  rules governingthe use of all modes of transport.  This is highly dependent on political decisions taken in the transit
countries, which sometimes depart from agreed rules and, for reasons unrelated to the trade of goods,
impose restrictions hindering the passage of transport lorries or even vessels on the waterways under
pretexts such as customs requirements, the need to declare goods, sanitary and phytosanitary problems
and the like, all of which at times diminishes or impedes free transit.  We therefore continue tomaintain that political decisions must always reflect international solidarity and uniformity of
administrative arrangements and regulations so as to avoid problems of this nature.  On more than one
occasion we have had problems which, when they involve perishable farm produce, can cause
irretrievable losses.  Reconciling the two principles of international law that we have mentioned, free
transit for landlocked countries and safeguarding the interests of transit countries depends on abalance between good neighbourliness and unshakeable international solidarity that will not collapse
at the slightest tremor.
21. We continue to insist that the international community, which has shown so much concern
over facilitation for landlocked countries, should put into practice the large number of
recommendations and statements of good intention that are written into so many United Nations and
UNCTAD resolutions, and this within the framework of the United Nations system.
22. Within the WTO, Article 5 of the GATT 1994 recognizes the concept of traffic in transit.
I therefore consider it necessary for this Organization to recognize landlocked countries as a country
category.  Traffic in transit is closely linked to all the other issues pertaining to ports, customs,
physical infrastructure and administrative formalitie s involving trade facilities. While the international
community is studying trade facilities, it also need s to consider landlocked countries and to try to
provide them with facilities that will counterbalance their disadvantage, placing them on an equalfooting and making them competitive with other countries.
23. In conclusion therefore, on behalf of Paraguay, a landlocked country, this delegation proposes
that the WTO should study more extensively all of the issues pertaining to transit trade from and to
landlocked countries.  To that end,  it should establish a working group with a specific mandate toG/C/W/237
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examine the situation of landlocked countries with a view to providing them with the facilities
necessary for traffic in transit, thereby enabling them to be competitive in world trade.  The
conclusions of that working group should be submitted to the Council for Trade in Goods, which
would then make proposals to the General Council on "trade facilitation for landlocked countries".
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