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Ecuador’s 11 Trade Agreements: Exploring International Economic Partnerships With Mexico And Beyond

The diplomatic-political crisis between Mexico and Ecuador generated by the police raid on that country’s embassy in Quito to capture former Vice President Jorge Glas on April 5 moved this week to the commercial sphere, after the Foreign Minister of Mexico, Alicia Bárcena, stated this Thursday, April 11, that Mexico suspended trade relations with Ecuador.

The Mexican official explained the scope of the aforementioned suspension: “We were negotiating a free trade agreement and those talks have been suspended. What the other States are going to do in relation to the economic and commercial issue is a decision of each State and also, I would say, of the regional mechanisms such as Mercosur for example, in short…”, mentioned Bárcena, who was sincerely heard by the president of Mexico, Andrés López Obrador.

The negotiations and the FTA referred to by the Mexican chancellor remained in stand by in December 2022 and to date there have been 16 months of inactivity in these talks, which according to Ecuador were 99% complete, in accordance with the report prepared by the previous Government, according to what former Minister Daniel Legarda told this newspaper.

However, this is not the only agreement that Ecuador negotiated with Mexico and there is even one in force that has been updated and renegotiated throughout the 41 years it has been in force since it was signed on April 30, 1983.

This is Partial Scope Agreement number 29 that was signed under the protection of the Latin American Integration Association (Aladi). The last update of this instrument was on September 2, 2022 when the changes derived from the New Law of General Import and Export Taxes (new Ligie) of Mexico were included, this included more tariff preferences to the treaty and repealed the last renegotiation of December 27, 2020.

According to the Mexican consulting firm Salles Sainz Grant Thornton, in this last renegotiation Mexico included more percentage preferences for imports from Ecuador, which ranged from 40% to 100%, such as the merchandise indicated below:

  • Red salmon
  • Turbot
  • Jellies for diabetics
  • Pineapples
  • Disconnectors or switches
  • Air valves for tires and inner tubes
  • Tomato juice
  • Liqueurs

Ecuador did not sign an agreement with Mexico and was left out of the Pacific Alliance “due to the wrong political decision of President López Obrador,” said former Minister Legarda.

The former Minister of Production, Foreign Trade, Investment and Fisheries Daniel Legarda confirmed that the agreement has had some adjustment protocols (basically adding products), but that it only covers approximately 50% of current trade, and not all of them have a 0% tariff. but a partial reduction.

“The agreement has been positive, but it is already insufficient. Furthermore, we are the only country in the Pacific that does not have an FTA with Mexico; from the United States to Chile, everyone does, including Uruguay,” Legarda analyzed.

Returning to the FTA negotiations between Ecuador and Mexico, former Minister Legarda rejected Mexico’s indication that the negotiations are now suspended due to the diplomatic conflict and reaffirmed that the process had already been inactive since December 2022.

However, he noted that if Mexico decided to change the status of the process from open (but inactive) to suspended, the Ecuadorian Government should have received notification. “In practice the circumstances do not change because the negotiations were open, but they did not advance because no type of solution could be reached due to the position that the Mexican president had… It is evident that at the moment the negotiations are not going to be resumed ”.

For his part, Alberto Acosta Burneo, editor of Weekly Analysis, He described the statement by the Mexican Foreign Minister, Alicia Bárcena, regarding the suspension of the FTA process with Ecuador as imprecise and pointed out that she is mixing two times.

“What the chancellor forgot to say is that the suspension of the negotiations of the free trade agreement occurred a few months ago, it had nothing to do with this diplomatic impasse, it had rather to do with the mistaken protectionist policy of Mexico, where President López Obrador did not allow Ecuador’s star products to enter: shrimp and bananas,” the analyst recalled.

Meanwhile, Julio José Prado, also former Minister of Production, Foreign Trade, Investments and Fisheries, who was in the negotiation process with Mexico, pointed out that the commercial relationship with Mexico is not paralyzed, although it is undoubtedly affected. “What paralyzed the Mexican Government – 16 months ago, not yesterday (April 11) – were the FTA negotiations. The Mexican Foreign Minister said that ‘it breaks commercial relations with Ecuador’, which is a terrible use of terms. Not negotiating an FTA does not mean breaking trade relations and I hope that the politicians of neither country think of proposing a closure of exports and imports, which could be sued in the WTO and would be detrimental to the population and companies,” he wrote. in your X account.

Prado assured that the agreement with Mexico should have been the first to be closed, before that with China and Costa Rica. He recalled that on November 23, 2022 he accompanied President Guillermo Lasso to close the agreement with his counterpart Andrés López Obrador. “We negotiated face to face and there was an apparent opening to close immediately. On December 2, 2022 we received the proposal for the technical closure including shrimp, banana and tuna. “There was white smoke.”

And he added that “both ministers and teams agreed to hold one last meeting, we even already had a joint press release announcing the technical closure of the FTA with Mexico. On December 7 at 7:00 p.m. they informed us that by order of President AMLO (Andrés López Obrador) the closure proposal was withdrawn,” said the former minister. “The FTA between Ecuador and Mexico did not end because of the current diplomatic dispute. AMLO killed him 16 months ago. And with that our desire to join the Pacific Alliance also ended. We focused on China, Korea and Costa Rica…all three were successfully closed.”

Ecuador has eleven trade agreements currently in force, including the partial scope one with Mexico, according to the Ministry of Production, Foreign Trade, Investment and Fisheries.

These are the current trade agreements of Ecuador:

  1. Cartagena Agreement (Subregional Integration with the Andean Community of Nations): signed in 1969.
  2. Partial Scope Agreement for Economic Complementation No. 46 (AAP.CE No. 46): signed in 2000.
  3. Partial Scope Agreement number 29: signed in 1983.
  4. Economic Complementation Agreement with Mercosur.
  5. Economic Complementation Agreement No. 75 with Chile: signed in 2020.
  6. Partial Scope Agreement for Economic Complementation with Guatemala: signed in 2013.
  7. Multiparty Trade Agreement with the European Union (EU): signed in 2016.
  8. Partial Scope Agreement with Nicaragua: signed in 2017.
  9. Partial Scope Agreement for Economic Complementation with El Salvador: signed in 2017.
  10. Inclusive Economic Partnership Agreement with the EFTA countries (Iceland, Liechtenstein, Norway and Switzerland): signed in 2018.
  11. Agreement with the United Kingdom: signed in 2019. (I)

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