There are 1,326 subheadings of personal hygiene products and supplies that will enter duty-free from January, according to the Guayaquil Chamber of Commerce (CCG).
With the arrival of 2022, it is also a new year since the entry into force of the trade agreement Multipartes with the European Union (EU), of which Ecuador has been a party since 2017. Among the benefits that the treaty brought, one of the most palpable is the reduction of tariffs on products that is carried out annually, which has repercussions in better prices for the final consumer.
Sweet, salty or flavored cookies, olives, shelled nuts, percussion instruments, baby milk formulas, cigarette holders and bicycles are some of the European articles whose tariffs will drop to 0%. The agreement contemplated progressive deductions at five, seven and ten years.
Cars, cheeses, spirits, processed foods and pharmaceutical items arrive from the European Union with improved prices
In this year, according to Guayaquil Chamber of Commerce (CCG), there are 1,326 tariff subheadings, which group from personal hygiene products, vehicles to industrial inputs, which would have a 0% duty.
In accordance with the terms of the treaty, other goods will reach their total relief in subsequent years; but this year they already registered a considerable reduction below 10%. For example, antiques will have a 9.20% duty; while the tires of light vehicles will be with 6.90%.
Shampoos, soaps and perfumes, which are the most demanded, have deductions to seven and ten years.
| PRODUCT | Base Tariff | Tariff in 2017 | Tariff to 2022 |
|---|---|---|---|
| Walnuts | 15 % | 12,5 % | 0 % |
| bikes | 15 % | 12,5 % | 0 % |
| Sweet, salty or flavored cookies | 20 % | 16,6 % | 0 % |
| Cucumbers and pickles | 30 % | 25 % | 0 % |
| Garments and accessories | 20 % | 18,18 % | 9,2 % |
| Shampoos | 20 % | 17,5 % | 5 % |
| Perfume | 20 % | 17,5 % | 5 % |
| Living room game | 30 % | 27,28 % | 13,80 % |
| Makeup powder | 20 % | 18,18 % | 9,20 % |
| Soap | 20 % | 18,19 % | 9,20 % |
For Miguel Ángel González, president of the CCG, this tariff reduction of more than 1,000 products it will boost household consumption on a national scale, since it opens the range of options so that businesses can offer in their showcases.
On the hangers of the supermarkets, for example, there are one or two options of european goods in each category. The offer ranges from liquors and beverages to cheeses, clothing and olive oils.
On the other hand, according to González, industrial products (raw materials) from the European Union are also among the most demanded by Ecuador. In that sense, consider that less tariffs in this new year “It is a relief for the businessman’s pocket, especially in times of pandemic where there are still heavy losses.”
Exchange with the EU
In the five years of validity of the agreement Multipartes, the non-oil trade balance between Ecuador and the European Union favors the Andean country. The figures of the central bank of Ecuador (ECB) showed that from January to October 2021 the balance posted a surplus, as exports exceeded imports.
Ecuador’s exports to the European Union have increased by 11%, according to that bloc
Until the tenth month, $ 3,121 million were sent to the European bloc, while $ 1,907 million were imported, which was favorable for the Andean country. In fact, if only shipments from 2021 are taken into account, 6% more than the total exported in 2019, a prepandemic year, was reached.
Growth is mainly driven by the export of goods from the traditional basket like bananas, shrimp and canned fish. For bananas, the EU market accounted for 27% of shipments until October; while for shrimp, countries such as Italy, France and Spain added a participation of 16% in the total shipments of the crustacean.
According to the estimate of Ecuadorian Federation of Exporters (Fedexpor), non-oil exports would close 2021 with a value close to $ 3,755 million, while non-oil imports would reach $ 2,176 million, reflecting an increase of 13% and 21%, respectively.
In turn, the increase would leave a favorable trade balance for Ecuador of more than $ 1,570 million, in 2021.
Xavier Rosero, Executive Vice President of the union, explained that the EU is the commercial partner with the highest favorable and sustained non-oil balance for the country, with more than $ 5.9 billion in accumulated surplus.
According to Rosero, this is the natural result of equating the access conditions of Ecuador’s exportable basket with the preferences of competing partners that previously had a Trade Agreement with the bloc.
The participation of MSMEs
Another element that boosted exports to that bloc was the dynamism provided by small and medium-sized enterprises (MSMEs). According to data from the Ministry of Production, Foreign Trade, Investments and Fisheries (MPCEIP), there are more than 1,200 companies that export to the EU, of which 60% correspond to MSMEs and actors of the popular and solidarity economy.
The Portfolio highlights that the purchasing power of the European market allows finding specialized niches where high-quality products can arrive, “without the need for Ecuadorian companies to produce in very large quantities as is done in the traditional offer.”
Francisco Rivadeneira, representative of the Corporation for the Promotion of Exports and Investments of Ecuador (Corpei) in Quito and the Sierra region, said that the ‘superfoods or superfoods’ in the last year have managed to position themselves thanks to the agreement due to the inclination of consumers towards healthier products.
For example, Instant soup in on a basis of quinoa, chia, guayusa or horchata tea, canned vegetables, cassava or potato sandwiches, tablets with a high percentage of cocoa and amaranth drinks are some of the goods that have a greater acceptance in this market.
“All those related to strengthening the immune system, concentrated in vitamin C or antioxidants are a segment that can continue to be strengthened,” said Rivadeneira, who added that in the EU projects that are made up of productive chains with a great impact on local farmers. (I)
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