Of the three agreements that Ecuador proposed for 2022, only the one with Costa Rica has been closed

About ten days before the end of 2022, the Government was able to close the first of the three agreements that had a deadline this year. This, once the President of the Republic, Guillermo Lasso, announced last Monday from the United States the technical closure of the negotiations with Costa Rica. The agreements with China and Mexico have yet to be closed, processes that had delays in their planning.

For example, an announcement was expected on December 14 regarding Ecuador’s entry into the Pacific Alliance, but the bloc’s summit scheduled for that date in Lima was suspended due to the dismissal of the president of Peru, Pedro Castillo. That day, in Guayaquil, Ecuador was also scheduled to sign a technical memorandum with China during the XV China-LAC Business Summit, but it was not given to wait for the negotiations to end first. Both processes are currently open and are expected to be finalized before the end of this year.

Ecuador and Costa Rica close negotiations of the Trade Association Agreement

Meanwhile, with respect to Costa Rica, the projection is that with the implementation of this agreement, Ecuador’s total exports to that destination will increase by $2.9 million, according to the Ministry of Production, Foreign Trade, Investment and Fisheries, which detailed that from January to last October Costa Rica was the 54th destination of Ecuador’s non-oil exports to the world, which means a participation of 0.14% of total non-oil exports that in this period reached $17,623 million.

The State portfolio specified that from January to December 2021, non-oil exports from Ecuador to the Caribbean country had a balance of $21 million, this is a decrease of 32.1% compared to the same period in 2020 (-$ 10 million).

During the last five years, the average of non-oil exports has reached $27.6 million. On the other hand, in the period from January to October 2022, non-oil exports recovered and reached an amount of $25 million, with a growth of $8.4 million compared to the same period in 2021, that is, 51, 1 %.

The main products in the non-oil export basket are: canned fish, paper and cardboard manufactures, fish, other metal manufactures, other chemicals and pharmaceuticals. According to information from the National Customs Service of Ecuador (Senae), from January to November of this year, 129 Ecuadorian companies exporting non-oil products whose final destination is Costa Rica were registered.

According to the Ecuadorian Federation of Exporters (Fedexpor), this market currently receives around 240 exported products.

Regarding non-oil imports from Costa Rica, these reached $59 million in 2021, with a growth of 45.3% compared to the same period in 2020 ($19 million).

During the last five years, the average of non-oil imports has reached $44.7 million. On the other hand, in the period from January to October of this year, non-oil imports had an FOB value equivalent to $61 million, they grew by 21.4% ($11 million) compared to the same period in 2021. This results in a deficit non-oil trade balance for Ecuador (-$36 million).

“This balance balance responds to the fact that non-oil exports from Costa Rica are 59% higher than non-oil imports,” the Ministry explained.

The main products that come from Costa Rica are: medicines, metal waste and scrap, industrial machines and their parts, other paper and cardboard, and tires.

Meanwhile, the successful closing of the negotiations was also announced on the Costa Rican side.

“Costa Rica and Ecuador have concluded the negotiations of our Trade Association Agreement. We resume the path of our incorporation into international markets as part of our strategy to generate greater economic growth and more jobs in Costa Rica”, said Manuel Tovar, Minister of Foreign Trade of Costa Rica.

In this regard, Julio José Prado, Minister of Production, Foreign Trade, Investment and Fisheries, highlighted the speed of the negotiation process that only took six months.

“It is a very important trade agreement for the Ecuadorian productive sector, industrialists, manufacturers, the textile and footwear sector that are seeking to enter that country. In addition, Costa Rica has high technology, we can import machinery, telephones, chips and all those issues related to the software used in that country,” said Prado from the United States, who assured that they will continue to advance in other trade agreements, “but this It is the first that we can announce that we have completely closed at this time ”.

Regarding Costa Rican Foreign Investment (FDI) in Ecuador, the Ministry reported that during the last five years the average reached an amount of $25 million, with 2021 being the year with the highest flow with $85 million, which corresponds mainly to the sector of the manufacturing industry with 98.5% ($84 million); the rest of the sectors have a participation of less than 1%, which together accumulate the remaining $1 million.

Meanwhile, during the first semester of 2022, an FDI from that country of $5 million was registered, of which trade represented 51.6% ($2.5 million), followed by manufacturing industry with 44.5% representation. ($2.2 million).

Meanwhile, from Fedexpor they indicated that export opportunities to a market like Costa Rica are framed within the possibilities of positioning the non-traditional, agro-industrial and, especially, manufacturing offer of the country. “Currently, 54% of non-oil, non-mining exports that go to Costa Rica correspond to manufactured products,” the union specified.

How was the short process for the agreement?

The first round of negotiations between the technical teams of both nations began on August 8 in a virtual format, after the announcement of the will to start talks made by the presidents of Ecuador and Costa Rica, Guillermo Lasso and Rodrigo Chaves, respectively; on June 9, in the framework of the IX Summit of the Americas.

Trade agreement with China is ‘virtually closed’, although the technical memorandum has not been signed

Prior to the process, a feasibility study was carried out in 2017, thanks to which Ecuador and Costa Rica evaluated the possibility of negotiating a trade agreement. In April 2019, the Foreign Trade Committee approved the start of negotiations between the parties and the general framework for the negotiation was agreed, including this country as a priority in its trade agenda.

Between 2021 and 2022, the meetings of the chief negotiators and coordinators of the agreement were resumed, with the aim of modernizing the general framework of the negotiation and strengthening the bilateral relationship. (YO)