China-Ecuador Agreement: Lowering tariffs helps to enter, but it does not give you security due to the sanitary requirements imposed by the Chinese market

For Eduardo Egas, executive president of Corpei, a trade agreement with China allows Ecuador to get rid of the bad taste of the failed negotiation with Mexico and this added to the advanced negotiations with South Korea and a possible rapprochement with Japan make the aspiration of entering the Pacific Alliance is less important than before for the country. Egas, who was part of the negotiating team that reached the agreement with the European Union, analyzes where Ecuador and China are in the process and what remains for the final signature.

How do you rate the closure of technical negotiations with China reached by Ecuador?

It is a very important milestone for the Ecuadorian productive sector and for the commercial relationship between China and Ecuador, undoubtedly due to the size of the market, due to the strength of Chinese industrial development, due to the importance of Ecuador as a supplier of food if this agreement reaches a successful conclusion. Finally, in my opinion, it will mark a before and after for what is the insertion of Ecuador in international markets.

Agreement with China excludes about 800 highly sensitive products; and includes relief with terms of up to 20 years for sectors of medium sensitivity

What impact will the closing of this agreement have on international markets?

An agreement with China comes to complement a very important commercial geographic space for the country because if at the same time we are able to close a commercial agreement with South Korea and we encourage Japan for a greater commercial rapprochement with Ecuador, that area, that triangle Asian, would be totally decisive for Ecuadorian production, for the expansion of investments in Ecuador, for the expansion of the productive sector and for the generation of employment.

At what stage of the agreement is Ecuador right now?

Based on the information that the Government has given us, we have covered the first stage of the process, which is precisely the technical negotiation of the agreement, which is nothing more than agreeing on how we are going to open our markets, at what level, with what products, with what exclusions, with what conditions, etc; It is a negotiation that is held between technicians basically. Once an undoubted technical agreement is reached, there is a next step that is political and legal.

What is missing to move to these legal and political instances?

In the legal case, in order to get started on it, it is important that both countries formalize having closed the technical agreement, that is to be done in a few weeks, we understand, by the People’s Republic of China. In a week, China will have fully reviewed what was agreed by the technicians on both sides and will give it its amen, its blessing, to say: ok, this is the agreement that we want to sign with Ecuador. Once that is done, Ecuador is empowered at that moment to reaffirm the same and initiate a process of legalization, of constitutional approval of an agreement of this level, which is an agreement that falls into the type of international agreements that Ecuador has to respect beyond any other type of law or external provision.

What are the steps in Ecuador once China has formalized its agreement with the technical negotiation?

The Government of Ecuador must review this carefully, it must inform the Comex, it must be sent immediately to the National Assembly so that they make a first analysis of the legality and constitutionality of the international agreement that would be signed, the Assembly will send it to the Constitutional Court that It will ensure that each of the terms agreed with China does not violate any constitutional norm, that is the most important thing. If it does not violate any constitutional norm, the Constitutional Court approves it and returns it to the Assembly for its legislative and political consideration as such.

These are the 10 products that Ecuador imports and exports the most to and from China, the country with which it will sign an FTA

What if the Court finds some provision of the agreement that is unconstitutional?

Well, it will ask to modify and renegotiate this type of provision in order to be able to approve the agreement in its entirety. Once the Assembly has a favorable report from the Constitutional Court, there is an internal voting process that I imagine goes first through the International Affairs Committee and then goes to the Plenary for a vote. After this there are additional processes that have to be done. When you have left the Assembly, you can legally say that the agreement is already valid, it is legally sealed, and consequent activities for its implementation will begin.

After this, what will be the challenge for Ecuadorian exporters?

This is great news for the country, (but) the size of the market will force a rethinking of global strategies by Ecuadorian companies in terms of importance, the redefinition of markets that become priorities, to where should I prioritize the shipment of my merchandise, how am I going to serve a nascent and large market like China; will force new investments to be able to expand production capacity and to implement promotion strategies, to approach the Chinese market, to look for buyers, to participate in fairs, and it will also be necessary to invest in the possible readjustment of the exportable offer because the market China has its standards and its requirements, within these the sanitary, phytosanitary and technical standards are very strong, for many Ecuadorian exporters they see more problems with these standard requirements than with the tariff itself, that is, lowering tariffs is going well , it helps to enter, but it does not give you the security of being able to enter due to the sanitary requirements that they impose on me. (YO)