Wednesday, November 4, 2009

Colombia-Venezuela Trade Fight Escalates?

What the heck is going on between Venezuela and Colombia?  According to unconfirmed reports, a Chavez-inspired trade war between the two nations has produced a WTO complaint:
An August directive by Venezuelan President Hugo Chavez to “reduce to zero” bi-national trade with neighbouring Colombia has begun to bite, with imports from the neighbouring country falling dramatically.

Chavez issued the directive in protest against a military agreement signed between Bogot√° and Washington allowing US military troops access to Colombian bases.

According to a report by Colombia’s National Department of Statistics, exports to Venezuela fell 49.5% in September. Trade between the two countries is expected to decline even further, after Venezuela imposed a blockade on Colombian agricultural products.

On October 14 Venezuela’s Ministry of Agriculture and Land decided to restrict the entry of Colombian agricultural products and the issuing of sanitary certificates on Colombian animal and vegetable products.

In response, Colombia filed a formal complaint with the World Trade Organisation’s Committee on Sanitary and Phytosanitary Measures last Friday.

Colombia argues that the measure, which impacts the sale of meat, eggs, chicken, coffee, cattle, fruits and vegetables, among other products, was not reported through official channels and the WTO was not notified.

Colombia’s Minister of Commerce, Industry and Tourism Luis Guillermo Plata, said the measures are a “flagrant violation” of WTO norms.

Despite the move, Venezuela continues to remain Colombia’s second biggest trading partner after the U.S., accounting for 14.7% of Colombia’s export market, followed closely by the European Union at $14.6%. In 2008 the two countries shared an estimated $7 billion in bilateral trade.

The measures will affect an equivalent of 17% of Colombia’s 2008 exports to Venezuela, valued at an estimated US $1.03 billion according to Colombia’s Ministry of Commerce, Industry and Tourism.

Under WTO regulations, Caracas is required submit justification to the WTO at its next meeting, scheduled for February 2010, if the restrictive measures are to continue.

The Venezuelan government, which aims to substitute Colombian agricultural imports with imports from Brazil and Argentina, has issued no formal statement on the WTO complaint. However, delegates from Venezuela indicated that they will review the case and hope to address the issue bilaterally....
I can't verify whether the Colombian complaint was actually filed at the WTO, although they certainly appear to have a case.  There's been only one other report of the filing, and that came from an equally dubious source - Venezuela's El Universal.  I've checked the WTO, the Colombian Government and a few other trade sites and see no mention of the complaint at the WTO SPS Committee or the WTO's Dispute Settlement Body (DSB).  So it's far from certain that Colombia has actually gone to the WTO.

That said, the bilateral trade conflict itself is undisputed.  According to Reuters, Chavez' embargo "is damaging their $7 billion a year in trade," and considering that several deaths have occurred at the countries' shared border in recent weeks, a WTO complaint is certainly a preferred means of dispute resolution.

But if only there were a way for Colombia (described by Reuters as a "staunch Washington ally") to gain some leverage over Chavez by securing economic ties with its other major trading partner, the United States. If only there were some sort of already-drafted-and-signed agreement or something that deepened and normalized free trade between the United States and Colombia and could be quickly ratified by Congress.  And considering the US-Colombia military agreement provided Chavez with his excuse to start the bilateral trade war in the first place, expediting implementation of such a mythical agreement would be the least that the US could do to calm Colombian nerves, right?

Alas, too bad nothing like that imaginary "free trade agreement" exists.  Because, boy, if it did, now would seem like a perfect time to whip it out.

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