The food industries of Bolivia and Chile are suffering the consequences of a bi-national trade battle over cooking oils. Claiming unfair competition from Bolivia, Chile’s vegetable oil producers managed to push through legislation that applies a 48% import tax on all edible oil imports. This represents a tax increase of up to 50% on some edible oil coming from Bolivia. In retaliation, Bolivian authorities are planning to eliminate the import tax discount of 75%, which have allowed Chilean oils to penetrate the Bolivian market.
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As Bolivian trade officials point out, the erection of a unilateral trade barrier seems out of character for Chile which stands out among South American nations for its progress in the realm of free trade. They point out that the loss of US$10m per annum in edible oil exports to Chile comes as a serious blow for Bolivia’s agricultural sector. Edible oils account for over 43% of the total value of Bolivian exports to Chile.
This bi-national trade dispute took a turn for the worse late last month. On 27 January, the Bolivian government announced that, as of 1 February, it was levying a 30% duty on seven products imported from Chile, including dairy products, poultry, and wine.
Chile’s tax on edible oils was a blanket measure not necessarily aimed at Bolivia. In terms of export value, Chile has much more to lose from the new tax than to gain. During the first nine months of last year, Chilean exports to Bolivia were valued at US$117.2m, almost six times the US$20.8 million value of Bolivia’s exports to Chile for the period. Having weighed potential losses from the tax, the Chilean government has already hinted at making an exception for oils coming from Bolivia.
The recent soybean and oil grain harvest in Eastern Bolivia was one of the best in recent years. As a result industry and federal trade officials are hurriedly looking for other export markets other than Chile. One of the most promising nearby markets is Ecuador, where producers of soy bean oil supply only about 25% of national demand.
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By GlobalDataBy Steve Lewis, just-food.com correspondent
