ECUADOR DIGESTEcuador to begin negotiations to join Mercosur; grocery store fight in Peru turns into a diplomatic incident

President Rafael Correa has announced that Ecuador is beginning negotiations to join Mercosur, the South American trade organization, and is also working to close a trade agreement with the European Union the Ecuador. He made the announcement during his weekly radio and television programs, broadcast from Esmeraldas.

“The strategy is to begin negotiations with Mercosur which will take eight to ten months and in that time we expect to have closed the trade agreement with the EU," said Correa, who anticipated that talks with Europe will not be under the free trade agreements scheme which does not take into account the asymmetries between economies.

“The decision is to notify Mercosur that we have started negotiations for the incorporation protocol, plus requests such as the possibility of easing non tariff barriers to improve exports and make the common external tariff more flexible,” added the Ecuadorean president.

He said that in the negotiations referred to the common external tariff there are some exceptions contemplated which are crucial for Ecuador, particularly referred to capital goods and inputs.

Ecuador will also ask Mercosur to make more flexible the chapters referred to norms of origin and sensitive products, and on the South Bank investments and the Convergence Fund from the block, “particularly for the development of the so called “Manta-Manaos” axis which should help interconnect the Pacific and Atlantic oceans through the Amazon.

Correa also pointed out that the safeguards clauses referred to foreign exchange must be considered since contrary to the other members of Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela) Ecuador can’t implement devaluations of its currency since the economy is based on the U.S. dollar.

“There’s nothing to lose in beginning negotiations with Mercosur, because it will have no effect in dialogues with the European Union," said Correa.

Besides negotiations with Europe “will not be under any conditions or under any ways” because they will not trespass certain red lines which are vital for Ecuador," he said. He also recalled that Mercosur negotiations have a basic principle which states that “until negotiations are complete, nothing is agreed."

In support of the presidential announcement, Fander Falconi, head of the National Planning and Development Secretariat, Senplades, said that free trade for Ecuador is ‘a means and not a target by itself”. And that is why negotiations will have as the main objective “to strengthen national production."

Falconi underlined the significance of Mercosur because it is part of the South-South approach and “it is the fifth largest economy in the world, with a population of 286 million."

But he also emphasized the ‘red lines’ since dollarization impedes Ecuador to appeal to monetary or foreign exchange sovereign policies. “This integration means boosting self determination processes without the classic strings tied to neo-liberal policies and trade treaties entirely disadvantageous for the small economies."

Grocery store fight stirs Peru–Ecuador conflict

A supermarket brawl has caused a diplomatic standoff between Peru and Ecuador, with both governments recalling their ambassadors. Both countries, however, say they expect to resolve the conflict soon.

The Ecuadorean envoy to Peru, Rodrigo Riofrio, allegedly hit two Peruvian women and insulted them with racist terms during an argument in a checkout line.

The incident, which occurred on April 21, has sparked outrage in Peruvian media and social media sites.

Ecuador's embassy issued an apology the next day but said it did not accept the women's version of events. Ambassador Riofrio admitted he was involved in the incident, but denied that he insulted the women and said that the blows they reported were in self-defense. The store video, released several days after the incident, appears to support the ambassador's claim, showing the woman landing the first blows.

The woman at the center of the incident, Cristina Castro, said that Riofrio's fury exploded because she was waited on before he was, and at that point he started shouting "That's the way Peruvians are, ignorant, that's why this country isn't going anywhere, because it's full of Indians."

Castro said that she and her daughter ended up on the floor and that the ambassador struck and kicked them.

By-standers in the supermarket give varying views of what happened, some supporting Riofrio, others supporting Castro.

Credit: Merco Press, http://en.mercopress.com; photo caption: President Rafael Correa