Colombia blasts Ecuador’s pipeline fee hike as trade war between neighbors escalates

Colombia and Ecuador Escalate Trade War with New Oil Pipeline Fees

Colombia harshly criticized Ecuador’s decision to increase transportation fees for Colombian oil tenfold on Tuesday, calling the move an act of “aggression” as tensions between the two Andean nations continue to rise.

The Ecuadorian government announced Monday it would raise the rate for Colombian companies using its oil pipelines from $3 to $30 per barrel, a decision that significantly impacts operations for oil companies in Colombia that rely on a pipeline transporting crude from western Ecuador and southwestern Colombia to Pacific Ocean ports.

Colombia’s state-run energy company Ecopetrol stands to be heavily affected by this measure, as it currently moves more than 12,000 barrels of oil daily through the Ecuadorian pipeline system.

“This is a new aggression against the people,” Colombian Energy Minister Edwin Palma declared in response to the fee hike.

The pipeline fee increase comes just days after Colombia suspended electricity sales to Ecuador, a significant blow to a country largely dependent on hydroelectric power. Ecuador has struggled with serious power outages throughout 2024 following prolonged dry weather that affected its energy production capacity.

The trade dispute began last Thursday when Ecuadorian President Daniel Noboa announced a 30% tariff on Colombian imports scheduled to take effect in February. Noboa, who has worked to strengthen Ecuador’s relationship with the Trump administration, described the tariffs as a “security tax,” claiming on social media platform X that Colombia was failing to take “firm actions” against drug cartels operating along their shared border.

“[The tariffs will remain] until there is a true commitment” from Colombia to combat drug trafficking and illegal mining, Noboa stated.

Colombian officials have rejected these accusations, pointing to record cocaine seizures under President Gustavo Petro’s administration. However, despite these enforcement efforts, cocaine production in Colombia continues to reach all-time highs due to increased laboratory efficiency and expanded cultivation areas.

In response to Ecuador’s initial tariffs, Colombia quickly imposed its own 30% tariffs on numerous Ecuadorian products, including rice, sugar, and car tires. On Tuesday, Colombia’s Minister of Commerce indicated that additional Ecuadorian goods could face similar tariffs in the near future.

Colombia’s Foreign Affairs Ministry released a statement Tuesday announcing it will pursue a meeting with Ecuadorian counterparts this week to ease tensions and potentially roll back the mutual tariffs. “Colombia prioritizes dialogue and solutions that avoid impacting communities and businesses,” the statement emphasized.

The escalating trade war threatens a significant economic relationship. Trade between the two countries totaled approximately $2.3 billion last year according to Colombia’s statistics agency, with Colombia exporting about $1.7 billion worth of goods to Ecuador, a nation with roughly one-third of Colombia’s population.

Critics suggest Noboa’s aggressive trade stance may be an attempt to divert attention from Ecuador’s deteriorating security situation. Recent statistics released by Ecuador’s Interior Ministry show the country’s homicide rate reached 50 murders per 100,000 residents in 2023, the highest in its recent history.

Ecuador’s homicide rate has increased fivefold since 2020, as drug organizations from Mexico, Colombia, and other countries battle for control of its ports. The once-peaceful South American nation, famous for the Galápagos Islands, has transformed into a major transit point for cocaine produced in neighboring Colombia and Peru.

The conflict highlights the complex interplay between regional security challenges and economic relations in the Andean region, where drug trafficking continues to undermine stability and cooperation between neighboring countries despite ongoing enforcement efforts.