Ecuador and Chile take the first steps to negotiate an FTA

Ecuador and Chile seek to modernize and update commercial exchange. That is why it is expected that this week begin negotiations in Quito to reach a free trade agreement (FTA) between the two countries.

The current trade exchange that governs between both nations is based on the Economic Complementation Agreement (ACE) and the majority of goods that are exchanged do not pay tariffs.

Rodrigo Yáñez, head of the Directorate of International Economic Relations of Chile, explains that the objective of the free trade agreement is to deepen and modernize the ACE through the negotiation of an agreement that contains state-of-the-art disciplines. Among them, telecommunications, electronic commerce, trade in services, gender, SMEs, labor and the environment.

The exchange of goods and services between Chile and Ecuador last year amounted to USD 2 109 million, an increase of 8.6% compared to 2017.

Chilean exports reached USD 493 million, while Ecuador’s exports amounted to USD 1,616 million. However, in non-oil trade there is a deficit of USD 166 million for Ecuador.

The trade figures inspire us to continue working to increase bilateral exchange and diversify our exportable offer, giving the negotiations a clearer, more modern and transparent legal framework “, says Yáñez.

The negotiations of an FTA with Chile will be key to continue with the Ecuadorian commercial opening.

Daniel Legarda, president of the Ecuadorian Federation of Exporters (Fedexpor), says that having a trade agreement with Chile will be positive, since that country is among the 10 most important trading partners that Ecuador has.

According to the Fedexpor spokesperson, there are interests in the service area. From Ecuador, he says, services are provided in financial software and Chile has a presence in education.

Legarda believes that the negotiation rounds could be two or three and that the agreement would be closed this year.

A possible FTA with Chile generates positive expectations among exporters and importers, since although now most ACE products are taxed at 0% tariff, a broader agreement will allow incorporating more products and services, as well as technical aspects that facilitate the commercial exchange.

A segment with potential for Ecuadorian producers is that of banana derivatives. The fruit has a good reception among Chilean consumers.

According to the latest figures from Trade Map and the Banana Marketing and Export Association (Acorbanec), during 2018 Chile imported 231,883 tons of bananas; of them, 229 471 arrived from Ecuador.

Richard Salazar, president of the Acorbanec, points out that the Chilean market prefers the whole fruit, so exports almost entirely are of that type. In a small portion, derivatives such as baby food compotes are sent.

According to data from Fedexpor, the country’s non-oil exports total more than 450 products from some 630 Ecuadorian companies. Among the main products are bananas, canned tuna, plastics and manufactures, fruit and vegetable preserves and shrimp. On the Chilean side, the products that most arrive in Ecuador are fruits, food preparations, drugs, paper and plastic products.

The Leaders Magazine in its edition of this June 24 presents an extensive report on the commercial relationship between these two countries, as well as the scenarios of the negotiation of the FTA. In context For Ecuador, having a free trade agreement with Chile is a necessary step to enter the Pacific Alliance. To complete this task, the exporters say, the country must already think about negotiating a commercial agreement with Mexico.

Source: https://www.elcomercio.com/actualidad/ecuador-chile-negociacion-acuerdo-comercial.html