General

Ecuador is an important economic and trade partner of China in Latin America and a source of imports of agricultural, fishery, energy and mineral products, as well as an important partner in jointly building the "the Belt and Road" for international trade. On May 11th, the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Ecuador (hereinafter referred to as the China Ecuador Free Trade Agreement) was officially signed. Experts generally say that the China Ecuador Free Trade Agreement will further stimulate the potential of trade and investment cooperation between the two countries, and promote the comprehensive improvement and upgrading of China Ecuador international trade and economic cooperation.

The agreement has milestone significance

The negotiation of the China Ecuador Free Trade Agreement was initiated in February 2022, and after one year of efficient negotiations, it was announced to be concluded in February 2023. After the agreement was officially signed, Ecuador became China's 27th free trade partner and China's fourth free trade partner in Latin America after Chile, Peru, and Costa Rica. Meanwhile, this is also the first free trade agreement signed between Ecuador and Asian countries.

Chen Yuanting, associate researcher of the Latin American Institute of the Chinese Academy of Social Sciences, said in an interview with the China Trade Daily that the FTA is a milestone for China and Ecuador to further deepen bilateral relations and expand cooperation in the field of international trade and economy, and also adds substantive connotation to the comprehensive strategic partnership between the two countries. In addition, the current world economic situation is complex, and many Latin American countries have a positive willingness to develop bilateral trade cooperation with China. Ecuador's signing of a free trade agreement with China expresses the confidence of Latin American countries in developing cooperation with China and achieving mutual benefit and win-win results through actions.

The head of the International Department of the Ministry of Commerce stated that the signing of the China Ecuador Free Trade Agreement is a concrete measure to implement the "high-level opening up to the outside world" proposed by the 20th National Congress of the Communist Party of China, and is the latest practice to expand the global network of high standard free trade zones. The China Ecuador Free Trade Agreement will create a more favorable, convenient, transparent, and stable business environment for enterprises in both countries, promote the sustained, stable, and diversified development of bilateral trade, and continuously enhance the well-being of the people and enterprises of both countries. At the same time, the signing of the China Ecuador Free Trade Agreement also reflects the common will and firm determination of the two countries to promote trade liberalization and facilitation, sending a positive signal to the international community to support multilateralism and free trade, and promote global economic stability and recovery.

On the same day, the Minister of Production, Foreign Trade, Investment and Fisheries of Ecuador, Julio Prado, stated at the signing event that the signing of the Free Trade Agreement between Ecuador and China is of historic significance and will expand opportunities for economic and trade cooperation between the two countries, promote the development of bilateral trade, and bring tangible benefits to Ecuador. China has a huge market with a population of 1.4 billion, and the signing of this agreement is good news for Ecuador's exporters, producers, and consumers. On the one hand, the free trade agreement will help improve the competitiveness of Ecuador's agriculture and manufacturing industries, further promoting the diversification of Ecuador's exports, such as exporting more categories of tropical fruits to China; On the other hand, Ecuador can also import industrial raw materials and acquire technology from China at lower prices.

Stimulating the Potential of Trade and Investment Cooperation

The reporter learned that the China Ecuador Free Trade Agreement includes a preface and 17 chapters. In the field of trade in goods and related rules, it includes six chapters: national treatment and market access of goods, rules of origin and implementation procedures, customs procedures and trade facilitation, trade remedies, sanitary and phytosanitary measures, and technical barriers to trade. In other fields, including investment cooperation, e-commerce, competition, economic cooperation, and other four chapters. In addition, the agreement also includes seven legal and mechanism chapters, including initial clauses, general definitions, transparency, dispute settlement, management, exceptions, and final clauses, as well as six annexes, including exceptions to national treatment and import and export restrictions, tariff commitment table, Andean price range system, rules of specific origin of products, certificate of origin, and arbitration procedure rules.

According to the agreement, China and Ecuador will cancel tariffs on 90% of each tax item, of which about 60% will be cancelled immediately after the agreement takes effect. In terms of customs procedures and trade facilitation, the agreement, based on WTO rules, makes specific provisions on facilitation, tariff classification, transparency, pre adjudication, risk management, and goods release, in order to simplify customs clearance procedures as much as possible and provide efficient and efficient services for enterprises. At the same time, both sides will further deepen customs cooperation, strengthen information exchange and communication coordination.

Chen Yuanting told reporters that China mainly exports industrial products such as telephones, metal products, household appliances, cars, and machinery to Ecuador, while Ecuador mainly exports products such as crude oil, agricultural products, minerals, and wood to China. In her opinion, the signing of the free trade agreement will have immediate effects on the development of trade between both sides. The China Ecuador Free Trade Agreement allows 99.6% of Ecuador's export products to enter China duty-free, which will expand Ecuador's exports to China, especially bananas, shrimp, fish, flowers, coffee and other products, providing opportunities for Ecuador to further expand its market in China.

According to data from the Ministry of Commerce of China, the bilateral international trade volume between China and Ecuador reached 13.1 billion US dollars in 2022, a year-on-year increase of 19.7%, with a growth rate exceeding double digits for two consecutive years. China is Ecuador's second largest trading partner, and Ecuador is China's eighth largest trading partner in Latin America. According to data from the Ecuadorian National Aquaculture Chamber of Commerce, China is the largest international trade export market for Ecuadorian shrimp, with a year-on-year increase of 43% in procurement volume in the first quarter of this year to 189651 tons, which is also a record breaking quantity in the Chinese market. In March, China imported 71188 tons of Ecuadorian white shrimp, a year-on-year increase of 46%.

According to the agreement, in the field of investment cooperation, China and Ecuador agree to deepen cooperation in investment promotion and facilitation, mainly including sharing and exchanging investment information, improving transparency in the investment environment, simplifying application approval procedures, and incorporating sustainable development provisions such as environmental measures and corporate social responsibility.

The signing of the free trade agreement will greatly promote bilateral investment between China and Ecuador, "Chen Yuanting said. Chinese enterprises have invested more in Ecuador, but later due to political changes in Ecuador, investment has slightly stagnated. However, with the signing of the free trade agreement, the degree of trade facilitation between the two countries has increased, which will promote Chinese enterprises to increase investment in Ecuador, such as energy, mining, infrastructure, logistics, green industries, etc Investment in fields such as e-commerce.

In addition, in terms of sanitary and phytosanitary measures, the China Ecuador Free Trade Agreement reaffirms the relevant rights and obligations of both parties under the World Trade Organization, and further stipulates risk analysis, regionalization, equivalence, transparency, and other aspects. With regard to technical barriers to trade, the agreement further specified standards, equivalence, conformity assessment, transparency, information exchange and technical cooperation on the basis of reaffirming the relevant rights and obligations of both parties under the WTO.