Ecuador business interests pleased with EU trade pact but details are yet to come; some call it a ‘free trade’ deal

Although President Rafael Correa says Ecuador would never enter into free trade agreements with other countries, opposition politicians say the agreement reached Thursday with the European Union looks a lot like the one the EU signed six years ago with Peru and Colombia.

Ecuador refused to participate in those talks in 2009, calling them free trade talks and saying they were not in the country’s best interests.

National Assemblyman Patricio Donoso says he’s happy an agreement has finally been reached. “It’s definitely good news. My question is why didn’t we sign the agreement five years ago? The terms are essentially the same.”

Although most of Ecuador’s business interests are satisfied with the agreement, some indigenous groups are not. CONAIE and the Popular Front, who represent many artisanal farmers and craftspeople say some of the provisions will hurt their members. Jorge Herrera, president of CONAIE, says he worries about the protection of small business sectors. “We won’t know the damage until we see the details and right now, we only have limited information.”

Even those who say they are satisfied with the deal say they are waiting for more information.

In a statement Thursday at the conclusion of the trade talks in Brussels, Foreign Minister Francisco Rivadeneira said the agreement was a good deal for Ecuador and means an additional $500 million of trade annually. It is not a free trade agreement, he said, adding that the agreement protects some of the country’s small businesses. “After almost four years of work, finally we have closed a balanced agreement with the European Union, which maximizes opportunities, reduces to a minimum the costs, and respects the country’s development model and allows to protect our sensitive sectors,”

The deal must be approved by several Ecuadorian institutions, including the Constitutional Court and the National Assembly. It also must be approved by the European Parliament and the legislatures of the 28 EU member countries.

“This is excellent news for the country, for exporters and for the economy,” said Daniel Legarda, executive vice president of the Ecuadorean Federation of Exporters. The European Union is the main market for Ecuador’s non-oil exports and the third-largest market for manufacturing exports.

Exports for this market have been increased by an average of about 4% per year and exporters expect an additional increase of at least $500 million a year during the next three years. Ecuador sends about 30% of its non-oil exports to the EU, mainly to Spain, Holland, Germany and Belgium. Ecuador’s exports include bananas, shrimp, cocoa, tuna and roses.

Between January and May Ecuador exported to the European Union goods valued at about $1.3 billion, according to the country’s Central Bank. Its imports from the block totaled approximately $1.1 billion. Last year exports to European Union totaled $3.0 billion.

In 2009 Ecuador withdrew from talks for a trade deal that involved Colombia and Peru. Colombia and Peru each signed a free-trade pact with the European block in 2012.

Officials from the EU’s delegation in Ecuador weren’t available for comment at the conclusion of the negotiation.

Photo caption: Foreign Minister Francisco Rivadeneira.