In an interview with PRIMICIAS, the Minister of Production gives details about the elimination of tariffs with China, once a trade agreement is signed.
The trade agreement between Ecuador and China will be signed after March 2023, after completing several processes, including the adaptation of legal texts and their translations.
“Until the end of March, we should be ready to sign the trade agreement,” says the Minister of Production, Julio José Prado.
In total, there were 17 negotiating tables with China; among them are those of access to markets, resolution of phytosanitary mechanisms, commercial defense and electronic commerce.
In an interview with PRIMICIAS, the Minister of Production says that there will be a progressive elimination of tariffs with China for exports and imports.
How did the negotiations of the agreement with China close?
99% of Ecuadorian exports to China will have tariff preferences. If we analyze the entire exportable supply of Ecuador, we would be talking about 98%.
Of that percentage, at least 60% of the products will enter China with zero tariffs from the entry into force of the trade agreement.
The rest of the subheadings are divided into two groups, which will have tax relief terms of up to five and 10 years.
In the coming weeks, once China has reviewed the translation of the texts, we will detail the tariff reduction by subheading (or product).
Will the main products that Ecuador exports to China, such as shrimp, bananas and flowers, have zero tariffs immediately?
The vast majority of products that we already export to China will enter with zero tariffs.
But the relief of products such as shrimp, which has a 5% tariff, will not be immediate.
Shrimp represents 70% of non-oil exports to China.
What product from Ecuador was left out of the treaty?
The only product that had a specific request from the Ecuadorian industry so that it is not part of the trade agreement is tuna.
That product will not have a specific preference.
Why did the Ecuadorian tuna boats make that request?
The local industry feared that fishery products from China could enter, especially tuna, which could put Ecuadorian production at risk.
With the exclusion of Ecuadorian tuna, the product from China will not enter Ecuador with preferences either.
Is there a clause in the event that China negotiates treaties with countries whose exportable supply competes with that of Ecuador?
We are not incorporating a specific clause that obliges China to grant us terms equal to those it negotiates in the future.
What we do commit to is to continue perfecting the baskets of the two countries. Once the free trade agreement is signed, we will evaluate and refine it. There we can include products that were left out, through a new round of negotiation.
Under what conditions will imports from China arrive in Ecuador?
Certain imported products will enter immediately with zero tariffs, such as cell phones, computers, other technological devices, machinery and supplies, spare parts, and agrochemicals.
This is so because they benefit the population and because they are important to various industries, such as medical.
Other Chinese import products will be subject to progressive tariff reduction, in terms of between five and 20 years. These include cars, trucks, motorcycles, and forklifts.
And are there import products excluded from the agreement?
In consensus with the local industry, we established that 10% of the tariff subheadings or close to 800 products are excluded from the agreement with China.
The sectors that benefit from this decision are textiles, mechanical metal, footwear, certain household appliances and certain ceramic products.
The exclusion does not mean that these products cannot be sold here, but rather that they do not have preferential treatment, such as tariff reduction.
What is missing to finalize the signing of the treaty?
There are three pending steps. The first, which would take place in three weeks, is the formal authorization to deliver information about what was negotiated in the trade agreement. That once China complies with all its internal processes.
The second is the adequacy of the legal texts and their translations, which in the case of China are very important. That process can take about three months.
Until the end of March we should be ready to sign the trade agreement. President Guillermo Lasso has asked us to do it in Beijing, if times and the pandemic allow it. Otherwise, the signature will be virtual.
And the third step is the approval of the trade agreement in the Constitutional Court and the National Assembly of Ecuador.
Has the Government had approaches with the Assembly for the approval of the treaty with China?
Yes, we deliver all the information to the Assembly in detail. Now that we have closed the agreement, we will go to the Economic Development and International Relations commissions to communicate what has been negotiated and under what conditions.
We are doing all the political and technical management. Finally, it will be the responsibility of the Assembly to approve the commercial agreement.
When would the agreement go into effect?
As soon as the Court and the Assembly approve the text, the agreement will be published in the Official Register and the next day the tariffs will decrease.