Correa has a ‘Plan B’ if a trade agreement with the EU is not signed this year

President Rafael Correa says that Ecuador industries that export their products to the European Union will be protected if a trade agreement with the EU is not signed this year. Special trade preferences on a number of products will expire on December 31.

President Rafael Correa

“We have a ‘Plan B’ to protect our economy if the trade agreement is not completed in December,” Correa said. “We are still optimistic that a deal will be reached and are working hard toward that goal,” he said. He added that if an agreement is not signed this year, it will be next year.

According to Correa, Plan B will be $100 million in government subsidy to businesses affected by lack of an agreement. The largest portion of the subsidy would go to banana and seafood exporters.

Correa says the EU trade agreement means $400 million to $500 million annually for the Ecuadorian economy. “This is part of a long-term plan to expand Ecuador’s exporting base by opening markets that have been closed to us,” he said. “In turn, we open our market to European products at lower prices and this helps our consumers.”

Vice President Jorge Glas visited seven European capitals last week to push for a speed-up in negotiations and to attempt to resolve disagreements EU members have with Ecuador’s trade position.

If an agreement is reached, Ecuadorian tariffs and consumption taxes would be eliminated over a four- to seven-year period. Products such as liquor, wine, clothing and electronics would see a 50% reduction in price while prices on cars would drop about 40%.

For more on Ecuador’s trade negotiations with the EU, click here.