Decoupling oil from the debt with China and the start of talks to sign an FTA were what marked the dialogue between Guillermo Lasso and his Chinese counterpart, Xi Jinping

The signing of a memorandum of understanding to move towards a free trade agreement (FTA) and starting talks to decouple oil from the debt that Ecuador has with China are part of the main points of agreement addressed between the presidents of Ecuador, William Lasso, and the People’s Republic of China, Xi Jinping.

Lasso presides over an official visit to the People’s Republic of China, a journey he undertakes from February 3 to 6, in search of agreements on economic matters.

This Saturday he held a face-to-face meeting with his counterpart Xi Jinping and with the delegation of ministers of state of the two nations, from which came a first agreement framed in promoting the dialogues to sign a free trade agreement, for which a memorandum of understanding.

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The Foreign Minister of Ecuador, Juan Carlos Holguin, described this presidential meeting as successful, highlighting the statement by the Ecuadorian government to request the Chinese head of state to decouple oil from debt instruments.

For this, a work table will be formed between the ministers of Economy and Finance of the two countries, who will address “the oxygenation of debt quotas, and these guarantees that oil has within those financial instruments,” Holguín said in a statement. virtual press statement in which the Minister of Production participated, Julius Joseph Prado.

The Foreign Minister confirmed that the debt with Chinese institutions amounts to over $5 billion, of which $2.077 million They are backed by oil.

According to Holguín, the proposal consists of disassociating third-party oil intermediation from the debt, which will allow Ecuador to obtain more than $400 million in income per year, since it was observed that the intermediation carried out by some companies, especially in freight oil, is tied to debt.

The representative of the Ecuadorian diplomacy explained that when Lasso returns to the country —on Tuesday or Wednesday— he will be informed of how these high-level meetings and consultations will take place.

He revealed that during the last three weeks there has been progress in talks between Ecuadorian authorities and representatives of three Chinese companies that are the creditors of these financial instruments: the China Development Bank, Bank of China and Exim Bank of China.

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Regarding the free trade agreement, the national government hopes that between November and December of this year the agreement will be sealed.

The Minister of Production, Julio José Prado, announced that the first step taken was the signing of the memorandum of understanding for this FTA, which will allow opening a market of more than $1,000 million in product exports.

In detail, he hoped that between November and December the negotiations will be closed in Guayaquil, for which a negotiating team will be activated that will have to manage the “terms of reference” of said agreement.

The expectation, according to Prado, is to double exports to China in various products, such as shrimp, bananas, cocoa, chocolate and snacks. In addition, there should be an opening for the pitahaya fruit to enter.

In other areas, the Government of China would have committed its support to Ecuador with the donation of 2.5 million vaccines Sinovac, to counteract COVID-19; and the donation of appliances for the inhabitants of the La Gasca neighborhood Quito, affected by a flood recorded on January 31.

The declaration Joint meeting between the Republic of Ecuador and the People’s Republic of China on the Deepening of the Ecuadorian-Chinese Comprehensive Strategic Association highlights the start of these negotiations to explore the potential of trade, optimize the value chain and promote the liberalization and facilitation of trade and investment, promoting the sustainable, stable and diversified development of bilateral trade.

This bilateral agreement will include the digital economy and green development; In addition, it was agreed to promote cooperation in agriculture and fishing; technical cooperation for the prevention and treatment of plant pests and diseases, among other areas. (I)