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Lunes, 04 Abril 2016 10:35

Partners accuse Colombia of violating FTA guidelines

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Despite being among the top 10 oil producers, their gasoline reserves are expected to last only two days if put to the test, Pemex are being put to blame.

Colombia has been relying on free trade agreements (FTAs) to cement their position in the international markets, they have 13 of these agreements signed, with a handful of others pending ratification. It is well known that FTAs are mixed blessings, they are complex relationships with thousands of intricacies. If countries are not responsible in their application, FTAs can turn into headaches instead.

Well, this could be the case for Colombia, as in recent weeks corporate giants are filing multi-million claims against the state for alleged violations to the FTA guidelines.

The most notorious suits come from mining powerhouses, Glencore, Eco Oro and Cosigo.

Eco Oro’s case refers to a long standing battle between Colombia and the Canadian firm over gold mining rights in the Santurbán moorlands. The claim specifically addresses “Excessive delays in the delimitation of the Santurbán moorlands” which have now come under special protection following a ruling by the Colombian Constitutional Court.

The Anglo-Swiss Glencore on the other hand is fighting an internal battle against state agencies regarding an adjustment in the payment of royalties. When a one billion investment was not endorsed by Colombian authorities, Glencore’s coal mining subsidiary Prodeco was sanctioned, fined and forced to renegotiate.

Perhaps the most worrying suit comes from Canadian firm Cosigo Resources, which are suing the Colombian state for $16.5 billion, a sum that amounts to 12% of the country’s GDP. The claim follows a fight for mining rights in the Vaupes region, near the Brazilian border. The area designated for their operations was recently declared a national reserve, and the dispute will try to determine whether the mining rights were granted before or after this designation.

Another notable claim was filed by regional telecoms titan América Móvil, owners of Claro, the largest mobile provider in the continent. The Mexican company is trying to reclaim assets lost in a Constitutional Court ruling regarding mobile service provision. Spanish company Telefónica were also affected by this ruling, and might follow América Móvil into court, signifying higher stakes for the Colombian government.

Finally, there is Swiss big pharma flagship, Novartis, which plans to throw their suit in the following weeks. They want to avoid a Health Ministry decision to lift the patent on Imatinib, a drug involved in the treatment of Leukemia. They claim such decision goes against Colombia’s TLC with the European Free Trade Association, which currently regulates relationships with Switzerland and Liechtenstein exclusively.

All of these disputes should be monitored closely, as they will give hints towards the functionality of FTAs, as well as showing exactly how well can Colombia fare when faced in courts against powerful transnational companies. Failure, however, will turn up the heat in the government, as FTAs have been a long standing source of controversy, and have been criticized since their early stages.

Colombia is now in a tug of war against some of the largest players in the international stage, and its performance will help determine their capacity to defend national interests, something that has come under fire in recent months following another disappointing outcome in court against Nicaragua.

LatinAmerican News | Pedro Bernal

Read 32900 times Last modified on Viernes, 18 Noviembre 2016 13:25
Published in Economics

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