The Minister of Foreign Trade, Pablo Campana, plans to sign today (June 24, 2018), in Iceland, the Commercial Agreement of Inclusive Economic Association with the European Free Trade Association
Products such as cheeses, antibiotics, clocks, fertilizers and industrial machinery will come at a lower price from the Nordic countries. The tariff preferences will come into effect three months after the treaty is ratified by the nations.
According to the Swiss ambassador, Rita Hämmerli-Weschke, her government expects this process to take place during the second half of 2019. EFTA is a market of 12.5 million inhabitants with high purchasing power.
It is made up of Switzerland, Norway, Liechtenstein and Iceland. Since the agreement enters into force, some pharmaceutical products, fertilizers, medical technology supplies (hearing aids or implants), among others, will enter the country with a 0% tariff.
While there will be a progressive reduction for various food preparations, energy drinks, baby food or cookies. In addition, a quota was set to import 140 tons of cheese from Switzerland free of tariffs. There are also benefits for the entry of cosmetics, vehicles and jewelry, among others.
Ecuador imports mainly pharmaceutical products from Switzerland. With the agreement, according to the ambassador of that country in Ecuador, there is potential for growth in the entry of machinery and its spare parts, electrical equipment, products of the chemical industry, cosmetics, watches and jewelry.
There is also potential in chocolates, cookies, drinks and “of course the cheese”. For Juan Javier Sánchez, owner of Almacenes Estuardo Sánchez, trade agreements not only benefit the importer but also the final consumer for two reasons.
The first is that the portfolio of products and brands for the buyer is extended. The second is that when import tariffs fall, there is an offer of items with more affordable prices. Sánchez says that more than 90% of its products are imported from Asia, mainly from China.
However, the entrepreneur has observed good consumption options. “The consumer would be happy to be able to buy a Swiss watch at a lower price,” he says. From Norway industrial machines, electrical consoles and plastic boxes for CD and DVD will be imported. Luis Alberto Salazar is the administrator of sales points for sewing machines. He imports about 35,000 units per year, between industrial and domestic, mainly from China, since it is the cheapest. The majority of its clients correspond to people who have workshops and factories or who wish to start a business.
The average investment required for these projects is USD 5 000, which is usually covered with credits. Salazar expects the commercial agreement with the EFTA to facilitate the import of machines from the EFTA.
Among other inputs that will reach the lowest cost in the Nordic countries are fertilizers and fungicides, which benefits the agricultural sector. These products represent, for example, 30% of the production costs for rice farmers and sugarcane growers.
Ecuadorians will be able to acquire Icelandic products without tariffs, such as orthopedic and prosthetic devices, power generators, among others. The Ministry of Foreign Trade estimates an increase in imports from the bloc of 4.6%, mainly in capital goods for the industry. With Switzerland and Norway a growth of 5% is expected, while the flow of products from Iceland could increase by 3%.
The tariff preferences will include 1,002 items. Of these, 98% is non-agricultural production. The non-oil trade balance with the EFTA is in deficit. In 2017, Ecuador imported USD 121 million and exported USD 29 million. But what is most bought from the block is medicine and machinery. (I)