The new agreement is with the block formed by Switzerland, Norway, Iceland and Liechtenstein. The main export products are bananas, cocoa, roses, fish oils and other fruits. On June 25, the Inclusive Economic Partnership Agreement was signed between the Republic of Ecuador and the States of the European Free Trade Association (EFTA).
This is the third open trade agreement that Ecuador subscribes; the first was with the Andean Community of Nations and the second with the European Union (EU). The EFTA block is made up of Switzerland, Norway, Iceland and Liechtenstein, countries that are not part of the EU.
The agreement was signed in Iceland between the Minister of Foreign Trade and Investment of Ecuador, Pablo Campana, and their counterparts from the four countries and the Secretary General of the EFTA. Minister Campana noted that “about 99% of Ecuador’s exports will be duty-free access to the EFTA countries, a community of approximately 14 million people with high purchasing power.”
“The negotiations were carried out from the beginning in a very cooperative, effective and constructive way. The fact that we have been able to conclude a very complete agreement in just five rounds is a testament to the political investment on both sides and the dedication of our negotiators, “said Guðlaugur Þór Þórðarson, Iceland’s foreign minister and director of the European bloc.
The agreement includes provisions on access to markets for goods, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, trade facilitation, competition, services, intellectual property, public procurement, trade and sustainable development, cooperation, among others.
Among the main products exported by Ecuador to the EFTA countries are bananas, gold, cocoa, roses, fish oils, shrimp, fruits and vegetables. On the side of imports, Ecuador buys medicines, fertilizers, chemicals, watches, medical equipment, among others.
Daniel Legarda, executive president of the Ecuadorian Federation of Exporters (Fedexpor), said that this agreement is an important step in the country’s trade agenda. He added that although EFTA is a relatively small market, it is high consumption and complements very well with the agreement with the EU. “With this the country has already consolidated Europe, as a single destination with the best conditions of access to markets with zero tariffs”.
The leader explained that the negotiations, which began in 2016, followed a very similar basis to the EU rules. For example, if a company already exports to the EU, it can also do so to EFTA since both blocks require similar standards.
Merchants point to EFTA as a market for non-traditional goods that Ecuador has. The EU is already working to improve the quality and access requirements for this type of product, said Legarda.
Richard Salazar, executive director of the Banana Marketing and Export Association (Acorbanec), said signing the agreement is important. “It shows that there is the political will of the Government to continue improving access to our export products.” The EFTA was one of the markets in which the banana had a low competitiveness, because on average it paid a tariff of 25%, in comparison to other countries that already had the agreement.
According to the figures of the Acorbanec, from January to December 2017, Ecuador exported 1’540,000 boxes of bananas; a weekly average of almost 29,600 boxes. “The expectation of purchase is about 100,000 boxes per week, that is around 5’200,000 boxes per year,” said Salazar.
José Antonio Camposano, president of the National Chamber of Aquaculture (CNA), said that the Ecuadorian exportable offer grows annually, so it is important to continue with a commercial agenda that guarantees new markets for export products. He added that more markets are needed to support this growth in volume and to diversify destinations, and thus avoid dependence on one or a few destinations.
On the impact on shrimp exports, he said that it is very difficult to calculate at this time. The EFTA markets have a considerable purchasing power, but today there is no important culture of shrimp consumption.
“However, with the effects of globalization we believe that in the medium term there will be consumption as in the countries, Spain, France, Italy and Germany.” On the other hand, the possible increase in imports of medicine generates concern to the Ecuadorian industry.
Mario Rafael Ayala, president of the Association of Pharmaceutical Laboratories of Ecuador (ALFE), said that there are already imported medicines that enter with zero tariffs. “While we nationals pay VAT, tariffs on inputs, capital goods, which makes our production costs and lose competitiveness in relation to imported. (I)