VZCZCXYZ0006
OO RUEHWEB

DE RUEHBO #2587 2292148
ZNR UUUUU ZZH
O 172148Z AUG 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0209
RUEAIIA/CIA WASHDC IMMEDIATE
INFO RUEHCV/AMEMBASSY CARACAS PRIORITY 2618
RUEHPE/AMEMBASSY LIMA PRIORITY 7917
RUEHQT/AMEMBASSY QUITO PRIORITY 8614
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 2505
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 4949

UNCLAS BOGOTA 002587 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD CO
SUBJECT: COLOMBIA ANALYZING ECUADOR'S REVISED TRADE 
RESTRICTIONS 
 
¶1. (SBU) SUMMARY: Ecuador reduced the number of emergency 
tariffs on Colombian products (from 1346 to about 660 items) 
on August 12 in response to two Andean Community (CAN) 
resolutions and high-level bilateral negotiations.  Trade 
Minister Plata stated he would continue to pursue bilateral 
negotiations to remove all import tariffs on Colombian 
products as quickly as possible, without resorting to 
judicial mechanisms.  Colombian pundits and business leaders 
believe political motivations lie behind Ecuador's actions 
and are concerned about the impact of the emergency measures 
on Colombian exports.  End Summary. 
 
¶2.  (U) On July 10, Ecuador adopted a one-year, emergency 
currency safeguard against Colombian imports spanning 1346 
products.  Ecuador argued that Colombia's Central Bank took 
measures that devalued the Colombian Peso, adversely 
affecting Ecuador's dollar-denominated economy.  The 
Ecuadorian emergency safeguard eliminated the Andean 
Community duty-free treatment and applied tariffs to Colombia 
imports similar to those on products from non-CAN countries. 
The measure applied a 20 to 30 percent tariff on most 
(approximately 80 percent) of Colombian products entering 
Ecuador. 
 
¶3.  (U) The Andean Community's General Secretariat reviewed 
Ecuador's actions, and on August 8 issued resolution 1250. 
It ruled that the Colombian-Ecuadorian currency exchange rate 
had adversely affected competitiveness conditions.  The 
General Secretariat determined that the Colombian Peso had 
devalued 18.5 percent, which made Colombia's exports 
significantly cheaper and Ecuador's products more expensive. 
Resolution 1250 also authorized Ecuador to impose temporary 
"corrective measures" that could remain in force until these 
competitive conditions normalized.  However, there were no 
specifics in the resolution to explain the "corrective 
measures."  Trade Minister Plata stated he is seeking 
clarification. 
 
¶4.  (U) The Andean Community also issued resolution 1251, 
which determined that Ecuador's currency safeguard measures 
constituted a tariff, and as such were to be removed within 
15 days of the resolution's publication.  Plata argued that 
the two resolutions appear contradictory and the Andean 
Community needs to provide additional information. 
 
¶5.  (U) In the meantime, Ecuador's recent removal of tariffs 
on certain products will benefit Colombia's meat, vegetable, 
oil, and dairy sectors.  Ecuador's Minister of Production, 
Nathalie Cely, claimed that their objective is to remove 
additional tariffs as trade levels approach those of 2007. 
In 2008, Ecuador imported USD 1.48 billion worth of Colombian 
goods and services -- an increase of 18.5 percent compared to 
2007 figures.  Ecuador attributed this trade increase largely 
to the devaluation of Colombia's currency. 
 
¶6.  (SBU) Several business leaders told Emboffs that the 
safeguards are politically motivated, and they are concerned 
about continued restrictions on Colombian exports to 
Venezuela and Ecuador -- respectively Colombia's second and 
third largest export markets.  A prominent bank official 
expected the trade spat between Ecuador and Colombia to 
continue in different forms until the next Colombian 
President is elected next year. 
Brownfield