Quito, January 31st, 2003 

TECHNICAL REPORT
R  I  C  E

 

Rice:  production and trade with Colombia 

1.  Ecuador is a rice surplus producing country.  During the current producing cycle an exportable surplus of 150,000 MT of milled rice is estimated. 

2.  During last productive cycle, the rice sector suffered a hard crisis basically caused by market and prices situation due to permanent obstacles imposed by Colombian to the trade sector.  Rice supply surplus without a defined market (Colombia closed its trade), adversely affected the Ecuadorian market prices. 

3.  Ecuador have always exported rice to Colombia.  Every year our country has had to face restrictive measures imposed by Colombia to rice trade.  During 1997, a record exporting of 105,580 MT of milled rice was given.  In 2001, Ecuador exported about 78,000 MT of milled rice to Colombia.  In 2002, Ecuador exported approximately 55,000 MT, by means of a private trade agreement.  Although having enough rice, Ecuador has not have the chance to keep on exporting its surpluses to Colombia, as result of the safeguard. 

4.  Colombia and the Andean area are the Ecuadorian natural markets.  Producing cycles are complementary between Ecuador and Colombia: when Colombia has a deficit, Ecuador has a surplus.  On the other hand, Ecuador has the most competitive production costs of the Andean Community, without any subsidy.  Colombia also maintains a harvest absorption program conditioned to importing licenses; it also manages minimum paddy rice purchasing prices, and maintains other subsidies like the storing one.  Ecuador does not have these kind of production subsidies.

 

Permanent Colombian obstacles to rice trade 

5.  Obstacles Colombia imposes to Ecuadorian rice three years ago, although many Default Resolutions have been issued by the Andean Community: 

Through Decree No. 635 dated April 16, 2001, Colombia unilaterally postponed until June 30, 2001, 15 points of the Common External Tariff applied to rice imports taking no notice of the Andean Normative and Resolution 503 of the CAN General Secretariat dated April 16, 2001, through which the Secretariat disapproved such deferral, besides Resolution 524 that reiterated the Resolution 503 pronouncement. 

Through Decree 1607 dated August, 2001, Colombia applied a safeguard measure to rice imports originated in the Andean Community Member Countries: a quota of 18,000 MT of dry paddy rice, i.e., 10,260 MT of milled rice for three months, i.e., up to January, 2002.  With this measure, in 2001, Colombia will complete its strategy of limiting trade, with a camouflaged boundary closure. 

In 2002 Colombia maintained its trade obstacles: on February 4, 2002 through Decree 200 of the Ministry of Agriculture and Rural Development, Colombia imposed a safeguard to imports originated in the Andean Community Member Countries, based in a 123,000 MT of dry paddy rice quota, i.e., 70,110 MT of milled rice. 

In 2003, Colombia still maintains its trade obstacles.  On December 27, 2002, through Decree 3211 (which lasts until December 27, 2003) of the Ministry of Agriculture and Rural Development, Colombia imposed a safeguard to imports originated in the Andean Community Member Countries, based in a 150,000 MT of dry paddy rice quota, i.e., 85,500 MT of milled rice. 

Through Resolution 617 dated April 22, 2002, the Andean Community, declared this new safeguard as “improcedente in limine” and asked the Colombian government to immediately raise it; moreover, through Resolution 634 dated July 11, 2002, due to reiterative obstacles imposed to rice imports originated in the CAN Member Countries, the CAN General Secretariat provided the Colombian government 20 calendar days to definitely raise such measures; however, until now, Colombia still maintains this safeguard, taking no notice of the Andean Normative. 

Although in about a month the Colombian failure will be in hands of the Andean Justice Tribunal, Colombia will be still limiting trade for some more years and violating the Andean Normative.

 

Recommendations 

6.  An Andean Free Trade Area shall be warranted.  The Colombian government commercial restriction has damaged the Ecuadorian competitiveness and commercial flow, resulting in a deep crisis of the Ecuadorian rice sector.  Within the Andean Normative frame, Ecuador shall commercially punish Colombia, based in those processes won by Ecuador (3AI 1997 and 16AI 2000), which empowered it to punish Colombia with a tariff of 10% over 5 products of Colombian interest. 

7.  Ecuador and Colombia shall sign immediately a “Bilateral Agreement for Rice Commercialization” (enclosed) of 150,000 MT of dry paddy rice or its equivalent; therefore, leading to negotiations of the private sector, which are the main players of the Agreement.  It is important to highlight the urgency to sign and formalize the agreement before February 15, 2003; on the contrary, Ecuador will lose effective exporting days  because trade period will begin on March 15, 2003 and private sectors of both countries will need at least a month for negotiating shipping and price terms; moreover, it is important to bear in mind that the subject is been studying since September 2002, and in October 5, it should be signed by the chancellors, but it never occurred. 

8.  The Agreement shall state that both Colombia and Ecuador (Ecuador is a rice surplus country) are committed to cover their own rice deficits exclusively produced in the Andean Community Member Countries in order to avoid entrance of rice subsided by third countries to the Andean market. 

9.  Those agreements made in the Colombia-Ecuador High Level Meeting held in November 28, 2002 shall be accomplished: “During the 2003 first trimester, Ecuador and Colombia will negotiate the chance to export a larger volume of Ecuadorian rice to  Colombia, on a demanding country stocks basis.”  Such agreement answers to demands made by the Ecuadorian producing sector that Colombia provides higher exporting volumes and to open its boundaries to a free trade system, because Colombia is still failing the CAN measures by imposing permanent safeguards to rice trade.  From the very beginning Ecuador offered Colombia 250,000 MT of dry paddy rice.

Octavio Recalde
The SICA-MAG/IBRD Project

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