Vehicles from China will have a tariff reduction period of 15 years, after the entry into force of the trade agreement with Ecuador.
Ecuador’s imports from China totaled USD 6,165 million in 2022. The range of products is wide, among the main ones are cars and electronic equipment.
Once the trade agreement to be signed by China and Ecuador enters into force on May 10, 2023, 90 % of the subheadings of Chinese products will benefit from lower import taxes or tariffs.
This is equivalent to 92% of the value of merchandise imported from China, according to the Chamber of Industries and Production.
With a 4% share, light automobiles lead imported products from China.
Currently, Chinese vehicles pay a tariff of between 35% and 40% to enter Ecuador.
With the trade agreement, most vehicles of Chinese origin will be exempted from tariffs within 15 years.
And only two types of items, linked to trucks and 4×4 cars, will have tax relief for a period of 20 years.
China is Ecuador’s main vehicle supplier . Between January and March 2023, 12,175 cars of Chinese origin were sold in the country, which represents 35% of the total number of vehicles sold, according to the Chamber of the Ecuadorian Automotive Industry (Cinae).
On the other hand, the parts of vehicles and motorcycles, known as CKD, will have immediate relief.
However, CKDs already pay zero tariffs, regardless of origin, clarifies David Molina, director of the Chamber of the Ecuadorian Automotive Industry.
Laptops and cell phones, which are among the most imported products from China, do not pay tariffs from any destination as of October 2019, due to Ecuador’s connectivity policy.
10 % of all tariff subheadings were excluded from the agreement; that is, it reserves the right to continue applying tariffs. There are 820 groups of products or protected tariff lines.
The purpose is to safeguard the competitiveness of the Ecuadorian industry in these lines.
Among the products subject to import duties are Chinese televisions.
The fees for these devices range from 5% to 20% of the value of the equipment, plus another fee with specific amounts, depending on the inches of the screen.
While China’s CKD for TV assembly will have a 20-year tariff rebate. However, the tariff they pay is only 2%.
In addition, subheadings belonging to sectors such as textiles and clothing, metal-mechanics, footwear, white goods, wood and furniture, plastics, and ceramics were excluded from the agreement.
Ecuador can take advantage.
In 2022, China consolidated itself as the largest market for Ecuador’s non-oil exports. The value of the exportable offer to China was USD 5,706 million, according to the Central Bank.
After the entry into force of the agreement, exports from Ecuador to China are expected to increase by an additional USD 1 billion in the first three years, calculates the Ecuadorian Federation of Exporters (Fedexpor).
Ecuador’s exportable basket is less diversified than China’s. In it there are frozen shrimp and prawns, which account for 67% of exports.
Currently, these products pay between 5% and 7% tariffs to enter China. The tariff reduction will be in five years, after the agreement enters into force.
Other Ecuadorian products, such as copper and gold minerals, do not pay tariffs to enter China.
And there are products from Ecuador’s non-traditional export offer that will be able to access China without tariffs or with a five-year tax relief, including frozen meats, fruit juices, mineral waters, wines, dairy products, and fruits such as pineapple. , broccoli and pitahaya.