Ecuador explores a possible FTA with Canada, where purchasing power is nine times more than that of local consumers

Ecuador and Canada announced this week the start of exploratory discussions on a possible Free Trade Agreement (FTA). This, in the framework of the bilateral meetings before the Summit of the Pacific Alliance in Mexico City.

The announcement was made by Mary Ng, Minister of International Trade, Export Promotion, Small Business and Economic Development of Canada, and Julio José Prado, Minister of Production, Foreign Trade, Investment and Fisheries of Ecuador. Both authorities agreed last April, electronically, to start this process.

Canada and Ecuador agreed to start the process for a trade agreement

Bilateral merchandise trade between Ecuador and Canada continues to grow and in 2021 reached approximately $759 million. The deepening of the relationship between Canada and Ecuador is reflected in the opening of the new commercial office of Ecuador in Ottawa, scheduled for December 1.

However, the non-oil trade balance is favorable to Canada, although from 2021 to 2022 the gap has shown a reduction.

According to figures presented by the Ecuadorian Federation of Exporters (Fedexpor), from January to September 2021 the difference was favorable to the North American country for $195 million ($126 million in exports and $321 in imports).

However, in the same period of 2022, Ecuadorian exports to Canada grew by 60%, reaching $201 million, shortening the difference with imports, which were also reduced to $273 million (-15%), which was reflected in a trade balance of only $72 million in favor of Canada.

In 2021, Canada became the thirteenth destination for the country’s non-oil exports. Currently, this market hosts around 239 exported products, including minerals and metals, flowers, cocoa beans, shrimp and broccoli; which concentrates 78% of non-oil exports to this country. In addition, 396 local companies are linked to exports to this market.

Canada and Ecuador agreed to start the process for a trade agreement

In the case of imported products, there are: cereals, fertilizers, machines and mechanical devices, vegetables, and electrical machines and devices; that concentrate 91% of non-oil imports. Non-oil imports from Canada increased by 70% in 2021.

Fedexpor highlights the high potential to increase the trade flow with Canada: the trade relationship is complementary because Ecuador has the potential to supply high-quality, certified agribusiness products, as well as manufactured products that can be inserted into industrial value chains in Canada. . At the same time, Canada is an important supplier of machinery, fertilizers and cereals that are not necessarily produced in the country. Deepening this commercial relationship is an opportunity to position the non-traditional exportable offer in a market of more than 38 million inhabitants with a purchasing power that is around nine times that of a national consumer, and consolidate the country as a supplier of premium products.

Meanwhile, the ministers highlighted the possible opportunities and benefits for workers, companies and consumers of the two nations that a possible FTA could offer by improving market access conditions and creating a commercial environment more predictable and transparent. (YO)