This January 1, 2024, Ecuador and the European Union enter the eighth year of validity of the trade agreement signed in 2016, which entered into force on January 1, 2017. Eduardo Egas, who in the process performed several roles as Deputy Minister of Foreign Affairs of Trade, the Minister of Industry and the representative of the President of the Republic in the negotiations with the Europeans, analyzes the results achieved and recalls the details of the difficult and long negotiations.

How do you categorize the results so far?

Very positive, as trade grew in both directions. Our exports have grown in value and volume, and the export basket has diversified. Likewise, value-added products, especially agro-industrial products, have increased. In addition, the number of exporting companies has increased, especially small and medium-sized enterprises.

What are the most notable and measurable achievements?

Ecuadorian exports increased from USD 2.7 billion in 2016 to USD 3.9 billion in 2022. EU imports increased from USD 1.5 billion in 2016 to USD 2.8 billion in 2022, with the majority the import of inputs that are not produced in Ecuador, industrial machinery and technology, all of which are necessary to increase the competitiveness of the country’s manufacturing sector. The trade balance remains positive for Ecuador at close to $1,000 million in 2022, something that is important to maintain dollarization.

More than 450 new export companies have appeared, many of which are small and medium-sized enterprises. More than 150 new export products were incorporated and more than 25,000 new jobs were created, according to data from the Ministry of Production, Foreign Trade, Investments and Fisheries.

The agreement with the EU increased the sales of European vehicles by 507% in six years. What will happen in 2024 with zero tariff?

There are also unsolved tasks, what are they?

We still have unsolved challenges that deserve to be part of a public-private strategy. Among them, the need for faster diversification of the export offer, new goods and services or greater value embedded in them. The opportunity is open, since 100% of industrial or transformed goods of the country’s production offer can enter the EU market without customs duties. We need to enter much more strongly those markets of EU member states where we are not yet present (we have concentrated sales on only six or seven European markets, out of 27).

How do you remember those negotiations and what role did you play in them?

The negotiation process was long and unstable, Ecuador entered and exited the negotiations. The process begins in Taria, Bolivia, when the EU invites members of the Andean Community of Nations (CAN) to start the process of trade negotiations. You remember that this process did not progress, so the EU individually invited the Andean countries that want to progress in the negotiation process. The invitation was accepted by Peru and Colombia, but not by Ecuador and Bolivia. Ecuador decides to enter later, but after a short time leaves again, only to re-enter a few years later and conclude these trade negotiations with the EU.

Was there at any time a danger of abandoning the negotiations altogether?

Ecuador abandoned the negotiation process several times. It was a delicate process, especially because there was strong resistance from an important part of the main actors of the then Government. Sometimes the internal negotiations were more complex than those conducted with the Europeans themselves.

At one point, after President Rafael Correa received an invitation from the German chancellor to rejoin the negotiation process with Peru and Colombia, he was on the verge of rejecting the invitation due to pressure from other important members. A government that preferred Ecuador to become a full member of Mercosur in order to negotiate with the EU from that stronger forum. Thank God if that idea had not prospered, today we would be waiting for Mercosur to conclude these negotiations with the EU

Who made up the negotiating team that achieved the signing of the agreement?

A few prominent negotiators who in most cases remain part of the country’s negotiating team. In particular, Ambassador Mentor Villagómez, who was the main negotiator at the beginning of the process while intra-bloc negotiations, namely CAN-EU, were still ongoing.

Francisco Rivadeneira, as Deputy Minister and later Minister of Foreign Trade, and Ambassador Roberto Betancourt as the main negotiator during the stages of convincing the Europeans to return to the negotiating table after the withdrawal of Ecuador, in the negotiation process and technical closure of the agreement and in the process of negotiations with the European Parliament to extend the validity of the GSP+ until the date of entry into force of the agreement with the EU.

Ambassador César Montaño was also an important pillar in the negotiation process; and finally, former minister Juan Carlos Cassinelli, who effectively led the political and institutional process of ratifying the agreement.

Ecuador signs a multilateral trade agreement with the European Union

Ecuador is the latest country to join the multilateral agreement, which already included Colombia and Peru. In these seven years, has Ecuador managed to equalize in terms of competitiveness in the EU with these competitors?

Without a doubt, we have managed to level the playing field at the tariff level. Without the customs privileges granted to us by the EU, we would be out of the European market today, because our export offer is very similar to that of Colombia and Peru.

There are Ecuadorian products where we are more competitive than neighboring countries (generally traditional). There are others where our competitiveness is lower than that of our neighbors. But it is still difficult to compete with them when, on the one hand, they can competitively devalue their currency, and we cannot because we are dollarized, and, on the other hand, when they have long-term government policies to promote their exports, and we do not.

This year Ecuador signed agreements with China, South Korea and Costa Rica, how do you evaluate the signing of those agreements, are they as necessary as the agreement with the EU was then?

The agreement with the EU served as a basis, a precedent, for all the negotiations that the country later conducted, thereby clarifying and facilitating the process. All negotiations are important. The EU was important because that market has historically been one of the main destinations of our exports to the world.

China and South Korea are outstanding because of the size and importance of their markets, but especially because they allow us to diversify our exports into Asia, where historically we have not had a significant presence. We hope that both agreements will be able to be ratified by the competent authorities in the country. Costa Rica is important in the context of regional integration and is transcendental for manufacturing exports and Ecuadorian MSME exporters.

What we still lack is a trade agreement with the United States, which is one of our main markets and partners.