The three reasons why Ecuador puts Mexico as a commercial priority

Mexico is the largest investor in Ecuador; important companies have a presence in the country

Mexican brands are present in the daily life of Ecuadorians in some areas. From the traditional tortillas, through cell phone, plastics, drinks andsnacks.

During the last years they won presence when some important companies in that country entered the market directly or began buying Ecuadorian businesses in progress to compete.

And those intentions of purchased have not stopped. This year, the Mexican Group Arca received the endorsement of the control authorities to buy the Ecuadorian company Carlisnacks.

Of course, Ark Continental, FEMSA (FYBECA), Mabe and Bimbo are part of those important Aztec companies in the country. Only five o'clock, in the middle of the complex year of the pandemic, they made revenues above the $ 1.9 billion in 2020, according to data from the Superintendence of Companies.

Mexico is currently an important player in investment. For Ecuador, Mexico represents the main private investor, with items that in the last ten years exceed $ 5,000 million, guilds refer.

That is precisely one of the reasons why this government decided to include Mexico as one of the priorities in its commercial and investment agenda.

President Guillermo Lasso, who on Tuesday met in Veracruz with his Mexican counterpart Manuel López Obrador, alluded to the presence of emblematic Mexican companies in Ecuador as one of the reasons that should lead both countries to deepen their relations with a bilateral commercial agreement and further encourage investments.

The route to go to that agreement was marked on Tuesday afternoon when at the end of the bilateral meeting both leaders arranged that their trade teams resume the process for the culmination of an agreement "in the shortest term."

Alberto Acosta Burneo, editor of the publicationWeekly analysis, points out that Mexico being the main private investor becomes a fundamental market, especially if it is seen that in recent years it has been growing in the productive sector, with purchases of large Ecuadorian companies.

"It is a market that has potential to continue investing in Ecuador, they can continue buying companies or grow with their own businesses," says Acosta.

Within the business sector, it refers that having a dollarized economy is one of the factors that attracts Mexican companies, which also take as reference others that have arrived before the country.

On the other hand, the analyst considers that when signed a commercial agreement with Mexico, the entrance door to the Pacific Alliance opens, a block from which Ecuador wants to be a partner to have opportunities with Asia. To enter, Ecuador must have agreements with the Member States and only an agreement with Mexico is pending.

Being a country with more than 120 million inhabitants, Ecuador has export opportunities for certain products such as oils, cocoa, confectionery, but also sensibilities for other items when they are competing equally with an industrialized country.

The trade balance with Mexico is deficit for Ecuador, that is, the country imports more from Mexican territory than what it sells. In 2019, the total trade balance was -$ 540.2 million and in 2020, -$ 447 million, according to Tramap data that manages the Binational Chamber of Ecuador -Mexico Trade (Comecuamex).

The main products that are exported are cocoa and their elaborators, shrimp, devices and mechanical artifacts, while there are vehicles, parts and parts, pharmaceutical products, hygiene items, televisions.

Alexandra Mosquera, executive director of Comecuamex, explains that Ecuador currently has a partial scope agreement with Mexico that dates back 30 years and covers about 4 % of the tariff universe.

"What Mexico raises is that negotiation would have to occur in terms similar to what would mean annexing to the Pacific Alliance," says Mosquera.

The Pacific Alliance has 92 % of the tariff universe and until 2030 has plans to deduct the additional percentage of the missing items.

Mosquera asserts that since it is a free trade agreement it is important to consider asymmetries with Mexico, which is a much larger economy. Hence, everything would not be described from day one, but through relief baskets with times.

Within the national private sector it is mentioned that there are sensitive sectors such as textiles, clothing, metalworking, appliances, parts and pieces of vehicles, agricultural products, which would expect to enter a gradual deduction schedule. (YO)

What did Mexico and Ecuador agreed bilateral?

-Gade the importance of deployed investments, Mexico and Ecuador agreed to organize business missions in both directions.

-The governments will seek to strengthen cooperation ties in energy, education, technology and tourism, including an exchange of experiences in the oil sector.

-The will to work together in the fight against the illicit traffic of people and migrants, for which the work between the authorities of both countries will reactivate.

-To trying to restore the visa suppression agreement, governments will hold the II Working Group Meeting on Migratory and Consular Affairs.

-Coincided to strengthen the community of Latin American and Caribbean states (CELAC) and recognized the need to boost regional integration processes.