- February 9, 2022
- Posted by: medium
- Category: National
The document was signed during the meeting between the presidents of China, Xi Jinping; and from Ecuador, Guillermo Lasso, in Beijing.
In November or December the Free Trade Agreement between China and Ecuador would be sealed, after the signing of the Memorandum of Understanding that begins formal negotiations. This was one of the topics that the presidents of both nations discussed,Xi JinpingandGuillermo Lasso, in their meeting this Saturday in Beijing.
The Minister of Production, Julio José Prado, cataloged the form of the memorandum as the first step that will allow Ecuador to open a market of more than $1,000 million in product exports.
Prado hopes that the closing of the negotiations, by the end of the year, will take place in Guayaquil, for which a negotiating team will be activated, who must manage the 'terms of reference' of said agreement.
The expectation, according to Prado, is to double exports to China, in products such as shrimp, bananas, cocoa, chocolate and snacks. In addition, there is an opening for the entry of pitahaya fruit.
The signing of this memorandum is viewed with optimism by the Ecuadorian business sector, which has insisted that these negotiations begin as soon as possible.
Gustavo Cáceres, president of the Ecuadorian Chinese Chamber of Commerce, maintained that there is a lot of expectation at the beginning of the negotiation rounds with China and assured that the agro-export sector will be one of the sectors that will benefit the most from the future agreement by allowing more products to enter with fewer or even zero tariffs.
"Let us remember that China is our second trading partner, it is a market of around 1.4 billion people and currently we have not yet managed to exploit everything that we could offer as a country to this great market," said Cáceres, who maintained that in the Currently, Ecuador already consumes many Chinese products.
The union leader indicated that the agreement will allow Ecuador to have the opportunity to offer many more products to China and for all the Chinese products that Ecuador already consumes to have more competitive prices.
Cáceres also recalled that between the first and second week of next November, Guayaquil will host the China Latin America Summit, the main tool of the Chinese Government to strengthen relations between China and the region.
“As we go hand in hand with the negotiations for the review of a trade agreement, the fact that Ecuador hosts this event of great importance for China and the region, I believe, will speak very well of the political will it has,” highlighted Cáceres. .
Meanwhile, specific sectors such as cocoa also have high hopes for the liberation of the Chinese market with a trade agreement.
According toFrancisco Miranda, president of the National Association of Cacao and Industrialized Exporters of Ecuador (Anecacao)China is a market with severe restrictions for Ecuadorian cocoa beans, processed products and chocolate, but it is also a market with enormous potential.
Ecuador is the second largest exporter of cocoa to China and Ecuadorian cocoa exports represent 20% of China's total imports, according to Anecacao figures. Ecuadorian cocoa beans and chocolate pay 8% ad valorem, butter 22% and cocoa powder 15%.
“Giving us the correct tools to open the market could be one of the probable future markets of great Ecuadorian export,” said Miranda, who projected that one of the most benefited segments would be the chocolate maker.
“Their chocolate market is not very developed, so the opening of their products to us would have little consequence in the Ecuadorian chocolate industry, while the opening of our products, whether called chocolate, grains or processed, to their markets has an attractive very big with the right conditions,” explained the leader.
The banana export sector also sees the memorandum as great news.José Antonio Hidalgo, executive president of the Ecuadorian Association of Banana Exporters (Aebe),He highlighted the setting of a date to close negotiations for the agreement, which would be in November or December of this year.
Hidalgo indicated that it would be important for bananas to stop entering China with the 10% tariff. He indicated that in 2021 the sector closed with10.9 million boxesexported to China, a decrease in-37,71%, due to lack of competitiveness and a trade agreement, compared to 2020 when they exported17.5 million boxes.
“All this effort is worth it! China represents a market of 1.4 billion inhabitants, a growing middle class of 800 million people, new consumer trends that are towards online stores, smart stores and in addition to China's food balance that is in deficit and the consumption of fruits per capita which is 60 kilos, of which 60% is imported fruit,” said Hidalgo, who pointed out that it is expected that there will be progress in the China Latin America Summit.
ForFelipe Rivadeneira, president of the Ecuadorian Business Committee and the Ecuadorian Federation of Exporters (Fedexpor),The signing of the memorandum is very important, as it highlighted that China is the third destination for Ecuadorian non-oil exports in the world with more than $3 billion.
He indicated that shrimp and banana, the main Ecuadorian export products, undoubtedly have a great opportunity for growth, however, he assured that China is a market with a great consumption capacity and when other Ecuadorian products enter that at At the moment they cannot do it, which will generate exponential growth that is very difficult to calculate.
“That is something really positive for our economy, for the trade balance. In recent years, Ecuador has depended a lot on the growth of non-oil exports and what better way to have great access to that important market like China,” said Ribadeneira.
Meanwhile, Cáceres maintained that it will be important that the negotiations must be agreed upon with civil society and the business sector.
"The benefits that having a trade agreement with China will bring to the vast majority must be constantly communicated, through the Government's communication channels, so that people can have a better expectation or greater acceptance." of what the trade agreement with China may be,” concluded the leader.
Debt with China
Meanwhile, another topic discussed at the presidential meeting was the request of the Ecuadorian Government to the Chinese head of state to unlink oil from debt instruments.
To this end, a working group 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 these financial instruments,” he specified.Ecuadorian Foreign Minister, Juan Carlos Holguín, in a virtual press statement in which the Minister of Production, Julio José Prado, participated.
Prado confirmed that the debt with Chinese institutions amounts to more than $5,000 million, of which $2,077 million is backed by oil.
According to Holguín, the proposal consists of untying the oil intermediation of third parties in the debt, which will allow Ecuador to obtain just over $400 million in income per year, since it was observed that the intermediation carried out by some companies, especially in oil freight oil, are linked to debt.
Holguín explained that upon Lasso's return to the country - between Tuesday or Wednesday - information will be given on how these high-level meetings and consultations will be carried out.
He revealed that during the last three weeks progress has been made in conversations between Ecuadorian authorities and representatives of three Chinese companies that are the creditors of these financial instruments. Among these, the China Development Bank, the Bank of China and the Exim Bank of China.
In addition, it was reported that China will donate 2,500,000 additional vaccines for children aged 3 to 5 years and household appliances for families affected by the flood in the La Gasca sector in Quito.
“China has donated millions of vaccines against COVID-19 to Ecuador. We show our gratitude to the Chinese people and the Government for their support in the vaccination plan. It is a reason for joy to inform you that work will continue in this matter, which is essential for the reactivation,” Lasso said.