At its core, the Colombia, Ecuador, Venezuela crisis is more about politics than economics, but we may see a direct impact on trade and investment:
Venezuela is starting to block billions of dollars in Colombian imports and investment under orders from President Hugo Chavez, threatening economic havoc in both nations in response to a Colombian military attack on rebels hiding in Ecuador.
Chavez and Ecuadorean President Rafael Correa demanded international condemnation of Colombia's U.S.-allied government on Wednesday night, while Chavez predicted a sharp fall in the $6 billion in annual Colombia-Venezuela trade: "That's coming down."
"We aren't interested in Colombian investments here," Chavez said, standing beside Correa. "Of the Colombian businesses that are here in Venezuela, we could nationalize some."
I don't know if there are any Colombia-Venezuela investment treaties that would cover the investment part, but clearly WTO rules have a lot to say about a trade ban. It has been a while since we've seen a GATT Article XXI defense argued, but presumably that's what Venezuela would invoke here.
