Search

 

Cablegate: Colombian Carmakers Smarting From New Venezuela

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0169 0112243
ZNR UUUUU ZZH
R 112243Z JAN 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 0912
INFO RUEHCV/AMEMBASSY CARACAS 9768
RUEHPE/AMEMBASSY LIMA 5779
RUEHZP/AMEMBASSY PANAMA 1075
RUEHQT/AMEMBASSY QUITO 6486

UNCLAS BOGOTA 000169

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: EIND ETRD PREL ECON CO
SUBJECT: COLOMBIAN CARMAKERS SMARTING FROM NEW VENEZUELA
IMPORT QUOTAS


1. SUMMARY: Venezuela's recently imposed vehicle import
quota will hit Colombian assemblers particularly hard.
Colombia's big three, who have been gearing up for increases
in the Venezuelan market, will have their exports cut to less
than one third of what they were in 2007. Citibank estimates
the quota will cost Colombia USD 500 million annually,
although the GOC predicts a lesser impact. Neither the GOC
nor private sector suspect the BRV of imposing the quotas as
a retaliatory measure against Colombia, but Trade Minister
Plata used this incident to highlight the need for Colombia
to expand its export markets. END SUMMARY

Venezuelan Quota Hits Colombia Car Manufacturers
--------------------------------------------- ---

2. Colombia faces the brunt of Venezuela's recent decision
to restrict new car imports to 220,000 vehicles (80,000 less
than were imported in 2007). Colombia's 65,000 vehicles
exported to Venezuela in 2007 will be shrunk by over 60
percent: to 20,000 vehicles in 2008. The quota reduces
exports from all other countries by only some 20 percent:
from 240,000 vehicles in 2007 to 200,000 in 2008.

3. Colombia's big three auto assemblers, Sofasa (Renault and
Toyota), General Motors Colmotores (Chevrolet), and the
Colombian Automobile Company (CCA) (Mazda, Mitsubishi and
Ford), exported one third of their total production to
Venezuela in 2007. In anticipation of continued Venezuelan
demand, Sofasa and CCA initiated significant plant expansions
and labor force increases in 2007, and will have to
substantially scale back their plans. GM had planned to
introduce a new line of light trucks for export to Venezuela
and domestic sales. GM official Santiago de Francisco
Caballero told EconCouns that with the Venezuelan market
reduced they will no longer assemble the new line; they have
yet to determine whether this will impact employment.

GOC Considers Measures to Ameliorate Pain
-----------------------------------------

4. Citibank estimates the quota will cost Colombia about USD
500 million a year, a reduction in its GDP of 0.3 percent.
GOC officials are not so alarmist. Trade Minister Plata told
EconCouns that they estimate a one percent GDP drop for a
complete cutoff in Venezuelan trade. Nonetheless the
Ministry is discussing measures to ameliorate the damage,
including increasing the tariffs on vehicles imported into
Colombia, reducing taxes on sales of locally produced cars,
and creating a campaign to encourage consumers to buy
Colombian cars. Caballero noted that the three assemblers
are not in agreement on which measures would be most
appropriate, with GM favoring a reduction in trade distorting
policies over increased tariffs. He recognized, however, that
GM is taking the lesser hit compared to Sofasa and CCA:
"They're in panic mode, while we're just at the fear stage."

No Retaliation Suspected
------------------------

5. Both Plata and Caballero told EconCouns that they do not
suspect the BRV of instituting or distributing these quotas
as part of a concerted effort to punish Colombia. These
measures have been in the works for several months, Plata
continued, and Colombia took a bigger hit compared to other
exporters only because it enjoys a bigger market share and
the restrictions were not imposed on a pro rata basis. Plata
sees a more important lesson for Colombia: reliance of the
Venezuelan market -- Colombia's second largest destination
with 70 percent growth in 2007 -- is risky and not in
Colombia's long-term interest. He underscored the need for
Colombia to continue to expand its export base, noting the
importance of ratification of the FTA with the U.S. and
completing accords with Canada and the EU.

Brownfield

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO: