Signing with the North American country is the final step to join the Pacific Alliance. The government aims to close both issues in the first half of 2022.
The idea of reaching the end of 2021 with the signing of a trade agreement with Mexico is diluted. Initially, the Government’s objective was to finalize the treaty this year, but now the goal is to reach it until the beginning of 2022.
In fact, until the first trimester It is the tentative date that the Undersecretary of the Cabinet of the Presidency of the Republic, Francisco Briones, advanced weeks ago; which was confirmed last Friday by President Guillermo Lasso in the framework of the binational cabinet with Colombia.
The signing of the agreement with Mexico is expected to be completed in the first quarter of 2022
However, although there is 80% progress in terms of negotiation, to reach that treaty there are still issues to solve.
The Ministry of Production, Foreign Trade, Investments and Fisheries (MPCEIP) He explained that the pending issues are in the tables of access to markets and origin with the most sensitive products of each country. Meetings at the highest authorities level to deal with these pending have taken place this month and, if necessary, will also be activated in January, said Production.
In fact, the same Mexican president, Andrés Manuel López Obrador, said in recent days that it is seeking to resolve these issues considered “controversial.” On the side of Ecuador, among the sensitivities is the white line and the assembly of vehicles; and, on the Mexican side, shrimp and bananas.
Ecuador requires of a trade agreement with the North American country to be accepted as a member of the Pacific Alliance, a bloc also made up of Colombia, Peru and Chile. This is one of the main impulses to accelerate the signing with the North American nation.
With the block, the entry of Ecuador is expected in the first semester of 2022.
From the industrial sector it is considered that, beyond establishing a date or goal, all the red dots between Ecuador and Mexico.
For David Molina, Executive Director of the Chamber of the Ecuadorian Automotive Industry (Cinae), trade agreements are being analyzed from a dogmatic rather than a pragmatic perspective. “There is a priority to sign, but not to negotiate.”
Molina believes that the agreement should be closed when it is “The best possible negotiation and effective and wide access is achieved for all the exportable offer of Ecuador”. In the specific case of the automotive sector, he pointed out that there are abysmal differences between the two countries. For example, what Mexico produces in one day, Ecuador reaches it in at least one year.
For this reason, the industrialist affirms that in the negotiation process “there is a political decision, beyond the technique to close the deal”.
Xavier Rosero, Executive Vice President of the Ecuadorian Federation of Exporters (Fedexpor), considers that, although it is a success to accelerate the opening of markets through an aggressive commercial agenda, it must be accompanied by a negotiation that ensure effective access under conditions that equate preferences with direct competitors for all the products of our exportable offer.
Ecuador’s entry into the Pacific Alliance would be postponed until the first half of 2022
For Fedexpor, the cost reduction resulting from greater access to markets has to be complemented with an internal agenda to face the increase in costs due to the current international context.
In this sense, according to David López, a technician from the Quito Chamber of Commerce (CCQ), the Government, along with the work to achieve commercial opening, must consider that “it is essential to work in a competitiveness agenda which, until now, has been stagnant ”.
The exchange with Mexico has been historically asymmetrical. In 2020, sales of products from Mexico to Ecuador were $ 560.5 million, that is, five times what the country sent to that market.
Ecuador focuses on selling products from the agri-food supply, such as cocoa, canned fish, extracts and vegetable oils.
| Year | Exports (in millions of dollars) | Imports (in millions of dollars) |
|---|---|---|
| 2017 | $ 129,4 | $ 660 |
| 2018 | $ 148,4 | $ 732,3 |
| 2019 | $ 132,4 | $ 700,2 |
| 2020 | $ 90,9 | $ 560,5 |
One year without some goods under the US GSP
The Ministry of Production, Foreign Trade, Investments and Fisheries (MPCEIP) explained that practically all this year the benefit of the Generalized System of Preferences (GSP) of the United States, “Because the Congress of that country has not yet finished approving its renewal, which will be retroactive”.
The GSP is a unilateral mechanism through which the North American country grants conditions of preferential access to a selection of products from some 121 developing countries.
Production explained that the agreement will be approved, however, there are delays because the discussion has revolved around the modification of requirements to be a beneficiary. In this sense, the Government highlights that Ecuador has no problem regarding the requirements.
In 2020, by decision of the North American country, some goods left the GSP. Among them, wooden boards and tubers.
Due From the non-renewal, Fedexpor estimates a US duty charge value of $ 45 million in 2021.
For Fedexpor, the weakness of the permanent uncertainty about the renewal of a unilateral preference scheme, such as the GSP, “makes urgent the negotiation and signing of a long-term trade agreement with that country”. (I)
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