Another blow for Free Zone

The restrictions implemented from January 22 has taken many countries by surprise, including Panama.

The steps were taken said the Ecuadorian authorities, as a way to get a balance between exports and imports.

Furthermore, the government of Ecuador is aiming to reduce this year all imports, which currently are in the region of $1.4 billion.

Ecuador’s imports come mainly from the United States, Colombia, Japan, Panama, South Korea, Chile, Brazil, Venezuela, Peru and China.

The Panamanian Foreign Commerce Minister, Severo Sousa said that Ecuador’s change in policy will mainly affect the Colon Free Zone, but also will have consequences for other countries that have commercial relations with Ecuador.

Products such as bonbons, candy, liqueurs, make-up, kitchen utensils, cellular phones, wood and metal furniture and toys will have their tariff increased between 30 and 35 percent.

The measure will affect materials for the automobile sector, fruits, cookies, dog and cat food, toiletries, baby nappies, magazines, electric goods like refrigerators and washing machines, stoves, carpets and sports goods among others.

The Finance Director of the Colon Free Zone, Raul Moreira said that currently the organization is studying the new Ecuadorian tariff to determine how it will affect the commercial movement in the free zone.

Last year the Free Zone received $400 million less in revenues due to the restrictions imposed by the Colombian government.

According to the Ecuadorian authorities the restrictions are compatible with the rules of the World Trade Organization.

Ecuador is one of the principal clients of the Free Zone.

During 2008 the Panamanian exports towards that country were in the region of $350 million.

Last year the Free Zone generated $18 billion, 10 percent more than in 2007.

However, it is expected that the current economic global crisis will affect the Colon Free Zone and it might experience a small decrease, because the buying power of its principal customers could diminish in the next few months.

Currently the international markets are not showing any significant signs of recovery, and it is likely that other countries might follow Ecuador’s example and start trying to decrease their imports as a way to stabilize their economies.