72796 v1 World Trade Indicators 2009/10 República Bolivariana de Venezuela Trade Brief Trade Policy strained the country’s trading relationship with Colombia. In April 2009, the government restricted The República Bolivariana de Venezuela’s latest MFN annual imports of vehicles from Colombia to a quota Tariff Trade Restrictiveness Index (TTRI),1 was 6.5 of 10,000 cars.4 More recently, the Venezuelan percent, indicating that its tariff regime is more open government announced its intention to further reduce than that of an average Latin America and Caribbean imports from Colombia, through greater trade with (LAC) or upper-middle-income country (with TTRIs Argentina and Brazil.5 of 8 and 7.4 percent, respectively). It ranks 72nd of 125 countries (where 1st is least restrictive). The 2008 simple average of the MFN applied tariff is a high 13.3 External Environment percent, and when taking into account the preferences, it is slightly lower at 12.7 percent. This is somewhat The República Bolivariana de Venezuela’s latest higher than the average for both LAC and upper- Market Access TTRI6 (including preferences) was 0.4 middle-income countries of 9.3 and 9 percent, percent, indicating that its exports (which are mostly respectively. The República Bolivariana de Venezuela’s oil products) faced very low tariff barriers abroad. The maximum tariff on all goods (excluding alcohol and weighted average of the rest of the world tariff faced tobacco) is 40 percent. The trade policy space, as by the country’s exports was 0.5 percent in 2008. Over measured by the wedge between bound and applied the course of 2008, the real effective exchange rate of tariffs (the overhang), has remained stable at 23.2, with the bolivar appreciated by 18.9 percent. The official all tariff lines bound. Broad foreign exchange controls fixed exchange rate is 2.15 bolivars to the U.S. dollar, are often used as a tool to restrict imports. Regarding but parallel markets indicate a weakening currency as the extent of its commitment to trade liberalization in oil income has dropped significantly. services, the country ranked 74th out of 148 countries A Generalized System of Preferences (GSP) according to the GATS Commitment Index. In the beneficiary with a number of industrialized countries, last few years, the it has nationalized many industries The República Bolivariana de Venezuela is also a including oil, oil services and other hydrocarbons, member of regional organizations such as the telecoms, electricity, mining, and steel Association of Caribbean States and the Latin In response to rising food prices and domestic American Integration Association (ALADI). It left the scarcity, the government banned exports of rice and Andean Community of Nations (CAN), but its effort corn in September 2007, and extended the ban to to become a MERCOSUR member is still pending other products in 2008.2 In September 2008, in order ratification by the Brazilian and Paraguay legislatures. to strengthen ties between itself and the Russian The República Bolivariana de Venezuela launched the Federation, the government removed anti-dumping Bolivarian Alliance for the Americas (ALBA) as an duties that it had placed on Russian steel imports a integration initiative which includes Bolivia, Cuba, decade earlier.3 Geopolitical disagreements have Nicaragua, Ecuador, Honduras, St. Vincent and the Grenadines, Antigua and Barbuda, and Dominica.7 Unless otherwise indicated, all data are as of August 2009 Behind the Border Constraints and are drawn from the World Trade Indicators 2009/10 In terms of the conduciveness of its institutional Database. The database, Country Trade Briefs and environment to business, The República Bolivariana Trade-at-a-Glance Tables, are available at de Venezuela ranked 177th out of 183 countries in the http://www.worldbank.org/wti. 2010 Ease of Doing Business index, reflecting a If using information from this brief, please provide the cumbersome business environment. It performs better following source citation: World Bank. 2010. “República in the Logistics Performance Index, a measure of the Bolivariana de Venezuela Trade Brief.� World Trade Indicators ease of trade facilitation, in which the country scores 2009/10: Country Trade Briefs. Washington, DC: World Bank. 2.62 on a scale from 1 to 5 with 5 being the highest Available at http://www.worldbank.org/wti. performance. This is compared with 2.57 for the LAC World Trade Indicators 2009/10 República Bolivariana de Venezuela Trade Brief region and 2.85 for countries in the upper-middle- Notes income group. It ranked 69th in the world and 8th in the LAC region (with Chile leading the regional 1. TTRI calculates the equivalent uniform tariff that group). The area in which it performed the best was would keep domestic welfare constant. It is weighted by the timeliness of shipments and it needs most import shares and import demand elasticity. improvement in increasing the efficiency and 2. United States Trade Representative, 2009. effectiveness of customs procedures. 3. Economic and Social Commission for East Asia, 2008. 4. WTO, 2009. 5. Caribbeannetnews, 2009. Trade Outcomes 6. MA-TTRI calculates the equivalent uniform tariff of trading partners that would keep their level of imports The República Bolivariana de Venezuela’s real growth (in constant 2000 U.S. dollars) in total trade of goods constant. It is weighted by import values and import and services slowed down to 11.1 percent in 2008, and demand elasticities of trading partners. is expected to shrink by 3.8 percent in 2009. Having 7. SICE, 2009. fallen in 2007 by 5.6 percent, real exports grew by 5.3 8. Banco Central de Venezuela, 2009. percent in 2008. Imports decreased by 14.5 percent in 2008. Both real exports and imports of goods and References services are expected to decline in 2009. Baeza, Valle, Alejandro and Gloria Martínez González. The country’s economy remains highly dependent on April 1, 2009. “La Alternativa Bolivariana para oil revenues, which account for over 90 percent of América Latina y El Caribe (ALBA).� Bilaterals.org., total goods exports. Other exports include aluminum, 20 July 2009 . products, but these account for a small percentage of Banco Central de Venezuela, 2009. Balance of Payments the export basket. In nominal U.S. dollar terms, goods Statistics. . exports increased by 37.9 percent in 2008. This is Caribbeannetnew, August 21, 2009 “Venezuela Says It largely due to increases in the price of fuel in the early May End Colombia Imports in One Year.� part of 2008. However, fuel prices fell as did world . demand, leading to a drop in total goods exports of Economic and Social Commission for East Asia. 46.1 percent for the fourth quarter over the same October 2008. E-TISNET Monthly News. United quarter 2007. National statistics show that exports in Nations. July 2, 2009 . and 51 percent respectively.8 The República Economist, The. May 12, 2009. “Venezuela’s Government Bolivariana de Venezuela’s main destination markets Takes Over More of the Oil and Gas Industry.�. 20 include the United States, which buys one-fourth of all July 2009. . in these economies has impacted both oil prices and ———. May 14, 2009. “Expropriating Accounts quantities demanded. As a result the dollar value of Payable.� 20 July 2009. . foreign exchange inflows) drop, import growth rates ———. May 29, 2009. “Despite a Rise in the Oil Price, are expected to decelerate from 7.5 percent in 2008. Venezuela’s Government is Short of Cash.� 20 July Goods import growth stayed low but positive in the 2009 . 2009, as the economy registered negative GDP ———. June 18, 2009. “Hard Times on the Streets of growth, imports also declined by 11.9 percent. Foreign Caracas.� 20 July 2009. . percent of GDP in 2007. International Monetary Fund (IMF). August 2009. International Financial Statistics (Country Tables). IMF. July 2009. . República Bolivariana de Venezuela Trade Brief World Trade Indicators 2009/10 United States Trade Representative. 2009. 2009 National World Bank PREM Trade Group. January 14, 2009. Trade Estimate Report on Foreign Trade “The World Bank, Update on the Impact of the Barriers. Washington, DC. Financial Crisis on Trade and Trade Finance.� The Valery, Yolanda. July 20, 2009. “Venezuela’s Socialist World Bank Group. 29 June 2009 . 0/8142344.stm>. World Trade Organization (WTO). 15 July 2009. “Report Venezuela National Statistics Institute. 2009. Economic to the TPRB from the Director-General on the Statistics: International Trade. 29 July 2009 . Developments.� WTO, Geneva.