Meanwhile Patiño highlighted an agreement to establish a “great national cocoa company” that will allow both countries to pool their production. According to Patiño, the two countries decided on this “international association” taking into consideration that together Ecuador and Venezuela export over 60% of the world’s Fino de Aroma flavoured cocoa.
Nevertheless, the most important agreement appears to be a strategic alliance between Venezuela’s state owned oil company, Pdvsa, and its Ecuadorean counterpart Petroecuador. Under the agreement, Pdvsa will undertake to ensure the supply of crude oil to a new refinery to be built on Ecuador’s Pacific coast. According to Maduro, this is “fundamental” to consolidate the project’s development, by allowing for the establishment of global financial agreements for its construction and to “ensure the participation of other important international partners”.
More ambitiously both ministers also expressed their desire to discuss, once again, the construction of a “southern gas pipe” energy integration project between Venezuela, Colombia and Ecuador. “With the sister republic of Colombia we are working on this southern gas pipe project...” Maduro said. He pointed out that the issue would be discussed at the next South American energy council meeting to be held in Caracas on 18 May.
COLOMBIA | Negative FTA impact. Just a day before the Colombia-US free trade agreement came into effect, a group of international NGOs published a report, on 14 May, exposing some of the negative effects it may bring for Colombian farmers. The “Impact of the US-Colombia FTA on the small farm economy in Colombia”, developed by NGOs led by Oxfam, found that 70% of Colombia’s 1.36m small farmers will be negatively affected by the agreement as their incomes stand to decrease by as much as 16%.
The report claims that “the agreement was negotiated unequally and asymmetrically”, allowing the US to maintain its “protectionist policies”. According to the report, Colombia has offered to remove tariffs immediately on imports valued at US$830m while the US only offered to remove tariffs on imports which are currently valued at US$776m.
However, over in Ecuador, business groups have expressed concerns that Colombia’s latest FTA could harm Ecuador’s domestic economy by further “isolating” it from primary markets. The president of Quito’s chamber of commerce, Blasco Peñaherrera, lamented the fact that Ecuador was looking increasingly isolated within the Andean region given that now both Colombia and Peru have FTAs in place with the US, the main economic partner of the three countries. As a result, Peñaherrera said that Ecuadorean exports such as flowers, fish, vegetables and wood will lose competitiveness as they will have to pay tariffs to enter the US while Colombian and Peruvian products will not.
COLOMBIA | Important banking sector acquisition. On 14 May the Colombian owned bank, GNB Sudameris, announced that it had concluded the acquisition of British banking giant HSBC’s operations in Colombia, Peru, Uruguay and Paraguay for US$400m. The deal means that GNB Sudameris will now be in charge of 62 branches across the four countries with assets worth US$4.4bn, adding to the bank’s current US$6bn. GNB Sudameris president, Jaime Gilinski, said that “this transaction is the most important in the bank’s history as it significantly expands the group’s presence in South America, which will allow us to promote our regional growth”.
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