Colombia-Venezuela Trade Group Calls For Barter System

sg.biz.yahoo.com Thursday March 20, 6:25 AM By Dan Molinski Of DOW JONES NEWSWIRES

BOGOTA (Dow Jones)--As dollar restrictions in Venezuela continue and Colombian exporters wait to be paid $300 million for products already delivered to their neighbor, a trade group in Bogota is calling for a system of barter trade between the two countries.

"This is not some crazy idea," Maria Luisa Chiappe, president of the Colombian-Venezuelan Chamber of Trade and Integration, told Dow Jones Newswires Wednesday. "We're proposing a barter system through which Colombia will buy Venezuelan products and trade them for Colombian products, without cash changing hands."

The Venezuela government, led by President Hugo Chavez, halted foreign currency sales in January to stem a hemorrhage in international reserves and has since enacted tight restrictions on foreign currency sales.

The Venezuelan government has allowed importers of food, medical supplies and other necessities to buy dollars to pay for their goods. But importers of nonessential products such as clothing apparel and leather shoes have not been given access to greenbacks, so far.

Chiappe said she would present this proposal to the two countries' governments this week or next.

She added that the chamber will meet with textile and leather exporters Thursday to discuss the idea. In this meeting, they plan to discuss how products would be priced under a barter system. It's likely all product prices would be converted into dollars, Chiappe said.

Officials at Colombia's Trade Ministry were not available for comment.

Colombia exports more of its products to Venezuela than to any other country except the United States. Textile and apparel makers in Colombia send 20% of their products to Venezuela.

Colombia exported $1.1 billion worth of goods to Venezuela last year and imported $788 million worth.

Chiappe suggested the barter could involve Venezuela trading its iron and steel for Colombian textiles and apparel.

Barter Trade Unnecessary If Central Banks' System Works

Last week, the central banks of Colombia and Venezuela revived a long-standing agreement to act as a clearing house for exporters and importers to guarantee payments on shipments.

Chiappe said this plan, arranged by the Aladi Latin American Trade Grouping, may be all that's needed.

"The Aladi system is good, but the problem is we still don't know whether (Venezuela importers) who can't buy foreign currency, such as importers of clothing apparel, will be allowed to take part in this system, given Chavez' restrictions," Chiappe said.

If the Venezuelan government decides to authorize all its importers to take part in the Aladi clearing system, then the need for the barter system won't exist, Chiappe said.

"The Aladi system, indeed, would be better than the barter system, as it contains many guarantees and has the backing of the central bank of each country," she said.

Javier Diaz, president of Colombia's main exporters association, Analdex, said he also supports a bartering system if the Aladi system with the central banks doesn't work out.

"The bartering system would be more complicated than using the central bank as a clearing house," Diaz said. "Because as a Colombian exporter, I would have to look for an importer who needs goods from Venezuela."

He added: "But if bartering is the only way to keep our trade lanes open, then I'm all for it."

The last time Colombia utilized the bartering system was during an economic crisis more than 30 years ago, Diaz said. At that time, Colombia bartered its world-renowned coffee to the then-Soviet bloc nations of Russia, Czechoslovakia and Yugoslavia, and received automobiles in exchange.

In Argentina last year, barter clubs gained a following within the country as its currency lost value amid an economic meltdown.

-By Dan Molinski, Dow Jones Newswires; 571-600-1980; colombia@dowjones.com