Before there is a concrete approach with the US, which should be evident in the conformation of the Committee on Trade and Investment, Ecuador must resolve the so-called ‘irritants’, which are barriers to trade.
The US ambassador in Ecuador, Todd Chapman, anticipated that there are about 10 irritating topics, but the commercial office of that country detailed that there are 17, in a report published last March.
The report also highlights some decisions of Ecuador such as the elimination of vehicle quotas, safeguards or the issuance of regulations so that products such as batteries can be certified by entities endorsed by the US, which reduced costs.
But other issues have yet to be resolved. For example, Ecuador requires certificates to comply with the food labeling regulation (traffic light), which is onerous and reduced shipments of products from the United States.
This country considers that sanitary certification is a long and onerous process, which may also require different approvals for a single product.
The rate of USD 42 that is charged to the packages that are purchased online and the recent customs tax, which has just been observed by the Andean Community of Nations, also appear in the list. Although the report highlights the elimination of cellphone quotas in 2017, according to the United States, high tariffs and taxes persist for these items.
To these issues are added other related to the decision to pass the data management of the credit bureaus to the Superintendency of Banks, cumbersome processes for the importation of cheeses and even corruption as an obstacle to investment.
According to Christian Espinosa, expert in foreign trade, it is not necessary to resolve all these ‘irritants’ to initiate the dialogues of the Bilateral Committee, but the country must give signals of opening and present a work agenda. According to Daniel Legarda, president of the Ecuadorian Federation of Exporters (Fedexpor), the problems in trademark registrations are yet to be solved.
A pending issue on the agenda is to reactivate the Bilateral Investment Treaties (BITs). The Foreign Ministry presented a draft of the Bilateral Investment Agreement to the countries in February.
The director of the Chamber of Commerce of Guayaquil, Juan Carlos Diaz-Granados, warns about the need to gain competitiveness and leave the collection policies. He warned that the tariff average of the region is 9% and that of Ecuador amounts to 12%.
Some obstacles to trade between the country and the US government
Technical barriers. Certificates to comply with food labeling regulations (traffic light). It is expensive and reduced shipments. Processed foods of animal origin require authorization from 3 public entities.
Phytosanitary barriers. The sanitary certification process is long and onerous, which may require different approvals for a single product (Agrocalidad approvals, the Ministry of Agriculture, etc.).
Rates. Ecuador put a rate of USD 42 to the parcel that is purchased over the Internet, through the 4×4 system. Correos del Ecuador established that all shipments of up to 2,000 grams pay USD 3,51 plus VAT.
Customs Service. On November 13, a rate of USD 0.10 was imposed on all imports, according to a special formula. The measure is a cost per contraband control service.
Intellectual property. The enforcement of intellectual property rights in Ecuador against counterfeiting and piracy are weak, including control of markets such as the Bay, in Guayaquil.
Barriers to investment. Complaints filed by investors during 2017 for breach of the terms of the Bilateral Investment Treaties, including with respect to arbitration decisions.
Other barriers Investors have expressed concern that corruption allegations among government officials can become an obstacle to a successful investment in Ecuador. (I)