Ecuador’s historic trade agreement reached last July with the European Union could be in jeopardy.
Foreign Trade Minister Diego Aulestia was summoned to Brussels this week to explain to EU officials why Ecuador has imposed tariff surcharges ranging from 5% to 45% on many EU imports. Although Aulestia has played down any connection between the trade agreement and the import tariffs, it is clear that EU officials see things differently.
“We have serious concerns about how the tariffs will impact our trade relationship with Ecuador,” said Peter Schwaiger, who headed the EU delegation that negotiated last year’s trade agreement. “We need to understand why our goods will be subjected to these surcharges,” he added.
Schwaiger and EU trade commissioner Cecilia Malmström seemed unmoved by Ecuador’s original explanation that the tariffs were a response to low oil prices and a strong U.S. dollar. “We need more information to resolve this issue,” Malmström said.
It is Aulestia’s job to provide that information.
The trade agreement that would allow most products to move between Ecuador and the EU without tariffs is not a done deal, since the members of the EU must approve it. Schwaiger suggested that some member nations affected by the recent tariffs may be reluctant to sign on. “It could have an effect on the approval, process” he said.
Aulestia says he believes he can make the case that the tariffs are justified. “We need safeguards that protect our balance of payments during a difficult economic time,” he said. “We believe that the EU will understand this, especially if the tariffs are sanctioned by the World Trade Organization (WTO),” he said. The WTO has yet to rule on the validity of the tariffs.
The pending trade agreement that Ecuador has gone to great lengths to say is not a “free trade agreement,” could mean hundreds of millions of dollars for Ecuadorian industry and agricultural producers.
The agreement, that will go into effect in 2016 if it is approved by EU member nations, would allow European cars, clothing, wine and liquor, among other things, to enter Ecuador untaxed.