“There is great disorder under the sky” is the sentence that began the official speeches of the People’s Republic of China in the 1970s. Half a century later, this disorder is lived through the increasing tension between the US and China, which affects third countries, such as Ukraine, and of the strategic alliance between China and Russia.In this international scenario, Ecuador signs a free trade agreement with China, as a continuation of the relationship that began 43 years ago and moved from political to economic bilateralism, characterized by a deep financial and commercial dependence on the Asian country.

China’s profile as a trading partner can be understood since 2001, when it joined the World Trade Organization (WTO) with only a 3.6% contribution to world exports; in two decades its contribution grew to 15.07%. Growth aligned with the modernization and industrial integration program called Made in China, which is evolving from a low-cost, quality production model to a model of high added value and technological innovation.

China is under constant pressure to adapt its business model to international norms; it has been sued in the dispute settlement system against other countries for violating the obligations contained in the WTO agreement or in its accession protocol; For example, it was the country to which the largest number of anti-dumping and countervailing duties were applied, it received the most discriminatory measures. It has been accused of implementing measures that artificially encourage its exports and protect its internal market, through exchange manipulation, subsidies and regulations that distort the free market. However, China has demonstrated its ability to adapt, is striving to achieve a better balance between an efficient market and an efficient government, and is determined to commit to an internationalized rules-based trading environment. There are currently 20 free trade agreements (FTAs) signed, of which Ecuador is the 27th partner and the fourth partner in Latin America.

The free trade agreement between Ecuador and China confirms the pattern of exchange that China has with Latin America, in which China acts as a hub for manufacturing exports and an importer of raw materials and natural resources. However, this pattern also applies in countries with free trade agreements, such as Chile, Peru and Costa Rica, as well as in countries without free trade agreements, such as Colombia and Mexico. One of the challenges facing the region is to reconcile market opening with the transition to a low-carbon economy: China emits 30.3% of CO2 into the atmosphere, while Latin America emits 3%. Ecuador’s international commitment is to cut emissions in half by 2030 and achieve net zero emissions by 2050.

Given the current geopolitical tension, the immediate concern is how this FTA will affect our bilateral relationship with the US. at the strategic moment of relocating its production chains on our continent… Without a doubt “there is a big mess under the hood”. (OR)