China trade agreement will have ‘extraordinary impact’ on Ecuador’s economy, foreign minister says
By Alexandra Valencia
As Ecuador and China concluded four days of meetings on a free trade agreement, Ecuador’s Foreign Minister says the deal could have an “extraordinary impact” on Ecuador’s economy once it’s en force. “I believe we could see a 35 percent increase in our exports to China,” said Julio Jose Prado on Monday. “This growth will require the need for rapid expansion and new infrastructure in several industries, which means more jobs and an overall boost to the economy.”
On Sunday, the two countries said they had reached an understanding on the framework of a trade agreement and that details will be worked out in the coming months. “We are hoping to have a final agreement in place by September or October with products beginning to move between our countries shortly afterward.”
China became Ecuador’s top lender over the past decade, with millions of dollars in long-term credit tied to the handover of crude oil, large investments in hydro-electric and mining projects and other loans. China is a leading buyer of Ecuadorian products including shrimp and bananas and a major importer to the Andean country.
According to President Guillermo Lasso, the understandig on trade with China encompasses a “broad reach” of products and services. “Besides imports and exports, the agreement will cover such areas as intellectual property, public purchases, infrastructure and computer systems defense.”
Though Ecuador will seek to reduce tariffs on products shipped to China to a minimum, it will also look to protect local industries including steel, textiles, shoes and assembly works that are sensitive to competition from imports, Prado said. “For those products we would need to seek large tax exemption periods to allow the industry to be more competitive, to reinvent,” Prado said.
Some products may be excluded from the deal, he said. “We will want to protect some segments of our economy, including workers in the artisanal trades. Having the formal trade deal will make the rules of the game for imported products fairer and clearer.”
Non-oil Ecuadorian exports to China between January and November last year totaled some $2.8 billion, while imports in the same period totaled $3.96 billion, according to the central bank of Ecuador. Ecuador’s oil exports to China are tied to debt re-payments, which Lasso is seeking to renegotiate.
Ecuador also expects to sign trade deals with Mexico, South Korea and the Dominican Republic this year, Prado said. It also is seeking a trade deal with the United States, Prado noted.
“Ecuador needs to open itself to the world, it needs to open itself to the United States, and we’ll keep seeking that deal long-term,” Prado said. “While that progresses, it’s necessary to look to Asia in the same way we’ve looked previously to Europe.”
Credit: US News and World Report