Trade deal with China opens door for agriculture exports and lower-priced consumer imports

Feb 8, 2024 | 0 comments

In what Ecuador’s Trade Ministry calls “a victory for the economy,” the National Assembly on Wednesday approved a trade agreement with China. The agreement was signed by the two governments in May 2023 but stalled when former president Guillermo Lasso dissolved the Assembly in his cross death proclamation.

According to Ecuador trade officials, the agreement approved Wednesday by the National Assembly will significantly increase activity at the national ports.

“This agreement will have an impact similar to the one with the European Union and will open and expand markets for Ecuadorian products and make essential consumer products less expensive for the public,” the Trade Ministry said in a statement.

In particular, Ecuador’s banana, cut flowers and shrimp industries will benefit as Chinese tariffs will be eliminated. In addition, exports of cocoa, coffee and a variety of fruits will benefit.

More than 6,000 products are covered under the agreement, which officials say is similar to agreements China has with Chile, Colombia and Costa Rica. Tariffs will be eliminated entirely on about half the products as soon as “technical details” are worked out between the countries, with other tariffs dropped over a 15-year period. There are 600 exclusions to protect small and artisanal Ecuadorian businesses.

Chinese imports to Ecuador that will arrive tariff-free include agricultural and industrial products, such as fertilizers, seeds, light and heavy tractors, electric transformers; earth-moving equipment; hydraulic pumps and tanks; and medical equipment.

Among consumer tariff-free consumer imports are bicycles; computers, computer accessories and printers; digital cameras; medicine; LED lights and equipment; exercise equipment; televisions and sewing machines.

Imports that will see tariffs eliminated over five-, 10- and 15-year terms include automobiles; motorcycles; kitchen equipment, including microwave ovens; food products, including fish, anchovies, eels, canned goods, and preserves; clothing; toiletries; cosmetics; and hygiene products.

According to the Trade Ministry, car and truck sales will see a major benefit. “China is already the largest supplier of motor vehicles to Ecuador, and the market share will increase as tariffs are reduced,” the Ministry said. “We also expect increasing imports of electric vehicles as this is a market Chinese automakers are developing.”

According to an Ecuadorian auto sellers association, prices of Chinese vehicles are currently 20% lower than comparable models from Europe, the U.S. and Japan.

The trade agreement faced resistance in the National Assembly over a provision some claimed would allow China to “dump” industrial and domestic waste in Ecuador. Chinese trade officials said the concern was the result of a “language translation problem” and agreed to a wording change that prohibits dumping.

Another objection in the Assembly involved lack of protection for small Ecuadorian industries, especially artisanal workshops. Although Chinese officials agreed to include more exemptions to the agreement, some members said the protections did not go far enough.

The agreement passed with 76 of the Assembly’s 137 votes.

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