Ecuador announced that it will suspend tariffs on Peruvian and Colombian imported products after the Community of Andean Nations (CAN) ruled that the fees had not been authorized. Ecuador says that it disagrees with the ruling and is asking for reconsideration.
Ecuador imposed the tariffs of 7% on Peruvian imports and 21% on Colombian imports on Jan. 5, to counter-act what is said was the devaluation of currency in those countries.
Ecuador has been reeling economically from the drop in oil prices as well as a strengthening U.S. dollar, which it uses as its currency. The government says that the dollar puts the country in a “straight jacket” that makes it difficult to react to revaluation of currencies in other countries. “We have reached a definitive agreement under which Ecuador has decided to dismantle the safeguarding exchange rate, safeguarding BOP no later than the week of February 23,” said Francisco Rivadeneira, Minister of Foreign Trade of Ecuador.
According to CAN, the tariffs were a violation of binding agreements and could not be imposed unilaterally. “This type of mechanism we would no longer be within the context of the Andean Community but to multilateral level”, said Rivadeneira.
President Rafael Correa criticized CAN following the ruling, saying that the organization may no longer be relevant. He suggested that free trade agreements signed by Colombia and Peru, two of the four CAN members, may be to blame for currency valuation discrepancies.
Ecuador reported that in the period from January through November 2014, it imported $2.5 billion of Colombian products and $926 million worth of Peruvian products.