Colombia burns time in the failed pulse of European French fries

Everything should be, in theory, simpler in the fight between the European Union and Colombia over the tariffs imposed on French fries of Belgian, Dutch and German origin. However, since 2020, the South American country has used all of its diplomatic machinery to delay a dispute lost before the courts of the World Trade Organization (WTO). A 2022 ruling established that Colombian customs barriers to European frozen goods were inconsistent with international trade laws. And although the bulk of the local potato varieties are not suitable for making the foreign version of the popular food, and therefore their commercialization does not pose any threat to local producers, the potato guild and those responsible for foreign trade have opted to cling to the measure as a kind of protectionist shield.

This Thursday, Brussels launched a new call for consultations before the WTO to evaluate Colombia’s compliance with the ruling. A message that stirs the tectonic plates of a dispute that has become a kind of “cultural battle” rather than a seminal issue for a market that represents only about 52.1 million euros annually in exports for the European Union. But in the back room there is also the shadow of McCain, the Canadian giant that supplies a third of the French fries consumed in the world. He is also an actor with political, union and commercial weight in Colombia through his parent company Congelagro SA, one of the two largest sellers of processed potatoes in the country.

WTO sources assure that, in reality, this is a veiled battle between McCain and the European Union. And to support this they add that the Canadian multinational has closely followed a business strategy that it has already used in Brazil, South Africa or New Zealand, countries lacking solid processed potato industries. Much more than blocking imports, they say, the ultimate objective is to corner competition. Joaquín Montes, an expert in international trade, emphasizes that the Colombian defeat has been overwhelming, despite having availed itself of a special arbitration mechanism established by the WTO as an alternative to the traditional dispute resolution body, paralyzed by the Trump Administration since 2019. .

Colombia’s argument, which has harmed the companies Mydibel (Belgium), Aviko (Netherlands) and Agrarfrost (Germany), is that since 2017 or so, European frozen foods have been sold below their cost, an unfair figure known in slang like dumping. For that year, according to official analysis, imports of the brands of French fries investigated were sold 34.1% below the prices of national producers. Ildikó Szegedy-Maszák, director of the master’s degree in Economic Law at the Javeriana University, explains: “Colombia could have established a customs percentage for the entire world. But they chose the most important companies and established margins of 44% for the Netherlands, 8% for Bélica and 3.21% for Germany.”

The problems came when the Twenty-Seven managed to demonstrate that the Colombian formula to establish the alleged dumping mixed different varieties of potatoes. The international mechanism defines that the weighted sales price of the same product in a domestic market, in this case the variety called French fries, must be compared against the export price: “The Europeans showed that the prices were not well calculated.” nor export prices, and that, on the one hand, an arithmetic formula was used and on the other a weighted one,” says Szegedy-Maszák.

The potato, along with bananas and eggs, was the product that dropped the most in price during the first quarter of this year, according to a survey carried out among 400 people by the digital market research firm LookApp. After a season of inflationary pressure on food, some items have already fallen for several months despite the effects generated by the droughts of the climatic phenomenon of The boy.

According to figures from the Colombian Federation of Potato Producers, in 2022 about 110,000 tons of French potatoes were imported into the country, and last year the figure was reduced by about 70,000. A news celebrated from agricultural sectors pending global movements. The common reasoning is: the advantages and subsidies of European farmers and the conditions of marketing their products through large companies on Colombian soil pose an existential threat to a sector whose exports of all varieties barely reach 3,000 tons. annual.

Colombia now faces increasing pressure from Brussels. With this, in the opinion of the Javeriana academic, the chosen tactic is to maintain the tariffs while violating the rules and exhausting each and every one of the arbitration tools available: “The Government has just challenged until 2027. Three more years, while the WTO special group reviews compliance with the 2022 ruling point by point. A reasonable amount of time to marginalize European participation in the market and give a respite to local politicians and other international actors embedded in the union, such as MCcain, and its game of alliances and attacks in various jurisdictions on the global board.

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