Peruvian exporters are concerned because the Ecuadorian Government announced it would apply safeguards, in response to the currency devaluation harming their economy, said Gaston Pacheco, president of the Exporters Association (Adex).
Pacheco said that Ecuador could legally apply an exchange safeguard but that, before doing so, they had to comply with certain procedures and deadlines, including demonstrating that their economy was being impaired and proposing a set of indicators to monitor the effects of said measure.
"After having these elements, the CAN has 30 days to authorize the safeguard. If the damage caused by the devaluation were grave, Ecuador could be authorized to apply the safeguard. If it not, the country would be acting rashly," he said.
Gaston Pacheco believes that, in the current context where the exchange rate is determined by the market, Ecuador can't claim that Peru and Colombia are intentionally devaluing their currencies to take advantage because the dollar has risen in international markets. "Ecuador caused its own problems when it chose to leave the Sucre and adopt the dollar as its currency," he said.
Additionally, Gaston Pacheco said the government of Rafael Correa weakened the Andean integration process by having a different monetary policy than the rest of its members. A basic condition on integration is that, if a set of countries has a free trade area, economic policies should be coordinated, he said.
He also added that at this point, Ecuador should recognize it was doing harm to the Andean integration, not only with this measure, but with other protectionist measures it often takes in accordance with its development model based on import substitution.
"We are in the era of integration in which countries should seek to solve their business problems cooperatively. Unfortunately, the idea that each country must solve their problems regardless of the effect it causes in others still prevails in the region. It is the old policy of making your neighbour poor that eventually makes us poor," he said.
ADEX recalled that, since early 2014, Ecuador imposed the use of Recognition Certificates to restrict the entry of goods into the country and then signed agreements with Peruvian companies to relocate part of their production to its territory, which hurt generation employment in Peru.
Data
Peruvian exports to Ecuador fell by 13.5% in the period between January and November 2014 while imports from that country, in the same period, also fell by 11.8%. "If the exchange rate was a factor, our exports should have grown and Ecuadorian sales to our country should have declined. Statistics tell us that there are other factors, such as the price of oil and trade barriers, causing a contraction of bilateral trade," Pacheco said.
Since January 5 this year, Ecuador established the aforementioned safeguard by applying an ad valorem equivalent to 7% for all products originating from Peru, claiming that this country had adopted financial measures to stop the devaluation of their currency, which would give Peruvian exporters a competitive advantage over their products.
Ecuador has appealed to Article 98 of Decision 563 of the Andean Community of Nations, which states that, "if a currency devaluation made by one of the member countries alters the normal conditions of competition, the country that is aggrieved may bring the case to the General Secretariat, which shall act briefly and summarily."
Source: Agraria.pe