The trade agreement between Ecuador and China, which is being considered by the Committee on International Relations and Human Mobility of the National Assembly for its approval and entry into force, continues to generate reactions for and against various sectors such as textiles, automotive, agricultural exporters, among others, and technology.

This time, the industrial sector presents its arguments regarding the commercial instrument. The Chamber of Industry of Guayaquil has shared the technical report it presented to the Constitutional Court (CC) in the phase before the positive ruling issued by the body. Likewise, the union defended the agreement signed on May 10 in Quito and approved by the CC on November 1.

The competition of Chinese products worries companies that take their positions before the Assembly, which is working on a trade agreement with China

The union’s defense of the agreement is backed by trade figures between the two nations, which have grown in both directions over the past five years, making the country Ecuador’s biggest trading partner, but with the advantage that exports to the Asian giant have grown faster than imports. Thus, exports increased from USD 1,508 million in 2018 to USD 5,810 million in 2022, while imports increased from USD 3,390 million in 2018 to USD 5,573 million in 2022, steadily reducing the trade balance deficit, which went from a negative balance from USD 1,883 million in 2018 to a positive of USD 151 million in 2022.

In this context, the Union lists the main benefits that, according to its analysis, this agreement will bring to the country. Among them is the opening of exports to a larger number of customers within the market of about 1.4 billion consumers.

Also the possibility of increasing non-oil exports in the next ten years, especially agricultural, agro-industrial and food products. Achieve better terms of access to the Chinese market for 99.6% of the current export supply, with 0% tariffs on some products immediately and on others will be achieved gradually.

The Chamber predicts that the agreement, due to the effect of its implementation, will cause Ecuadorian exports to China to grow by 8.4% on an annual average until 2030 and imports from China by 7.8% in the same period, which in turn will also boost GDP growth by 0.53 percent.

The trade agreement foresees a gradual reduction of tariffs on Chinese cars until 2038, imported furniture will not be reduced

They also emphasize the possibility of diversifying the export offer by introducing new products such as avocados, dragon fruit, dairy products, frozen meat, handicrafts and others with reduced customs duties. In addition, due to the reduction of tariffs on inputs, equipment and tools, the domestic industry will be able to obtain technology at lower import costs.

Other advantages that the union highlights are access to the import of raw materials (fertilizers, seeds, fabrics, threads) at lower prices and the processing of sanitary and phytosanitary certificates in an agile manner for new Ecuadorian products for export.

“83% of excluded tariff lines are from the production sector”

As for sensitive sectors, the Chamber assures that they were careful with exclusions and long periods of relief. “The most sensitive sector is the processing industry, which is why 83% of excluded tariff lines correspond to this sector.”

In the technical report presented to the Constitutional Court, the Council stated that among the sensitive products, producers from the following industries are excluded from the agreement: