Although taxes were eliminated, the Colombian rice industry could be affected

With a letter sent to the director of the National Customs Service of Ecuador, the Ministry of Foreign Trade and Investment was notified of the suspension of tariffs that had been applied in 2017 for the 10 categories of products that Colombia exports the most to its neighboring country.

The trade dispute between the nations began last November when Colombia, after committing to let in 85,000 tons of Ecuadorian rice, prevented the entry of the same IGNORE INTO the local market. Given this, Ecuador responded by increasing tariffs on Colombian products above 20% that had already been stipulated by the Andean Court of Justice.

Colombia had not granted Ecuador the phytosanitary requirements document for the importation (DRFI, in Spanish) of rice. The coffee nation argued that the country was over-supplied with rice and indicated that the entry of this Ecuadorian product would not only harm the economic situation of the country, but it also leave unprotected the approximately 500,000 Colombian families who live directly from rice local production.

After this commercial conflict, Colombia ceded in the DRFI concession and Ecuador subsequently abolished the increase in charges against the 10 Colombian product categories, among which are food, pharmaceuticals, textiles, transport material, plastic products, and metals.

Colombia ranks second as Ecuador's export destination. Furthermore, the last mentioned nation ranks third in Colombia's exports. Therefore, a stable flow in commercial relations and guarantee of legal security, both for companies and producers, is of vital importance for both countries.

As stated by the president of Andalex, Javier Díaz, to the specialized media Portafolio, "it is very positive that we have complied with our commitments. A decision of the Andean Court of Justice of the CAN (Andean Community) had condemned us and we had not complied with this ruling, affecting trade with a partner that buys US $ 1,500 million in manufactured goods. I think it is a less commercial irritant in our commercial agenda".

A blow for the Colombian rice industry?

About two thousand Colombian companies sell their products to Ecuador and the elimination of tariffs may mean good news for some exporters. However, the farmers' association qualifies as an "error" the import of rice from Ecuador. The Society of Farmers of Colombia (SAC, in Spanish) rejected this measure and declared through a statement that it is "a public policy error for the Colombian rice sector".

Fedearroz Colombia also expressed its deep rejection of the policy approved by the Colombian government. The institution proposes a revision of the trade agreements with the Andean Community (CAN) to exclude rice from these commitments, since according to the Union, the country has the capacity to supply itself with this product.

Rafael Hernández, manager of Fedearroz, argues that the prices of the product have plummeted and that the small farmer in Colombia is increasingly affected by this situation. Now, with the authorization of entry of the Ecuadorian grain, "the crisis is prolonged and aggravated. There could be a total collapse of the sector. There are about 500,000 families living directly and indirectly from this industry in 215 municipalities in the country, "emphasizes Hernández.

Latin American Post | Krishna Jaramillo
Translated from “ ¿Por qué Ecuador levantó medidas arancelarias contra Colombia?”