Export sector supports agreement with China to better compete against other nations

Only in the shrimp sector can represent savings in tariffs of $ 100 million a year.

To enter the Chinese market, the Ecuadorian bananas must pay 10 % in tariffs and the shrimp 5 %, a component that, despite the quality of national products, affects at the time of competing with other nations that do not have this tariff load for having agreements with China.

Hence, the banana and shrimp sectors have been the first to go out to support this Thursday the announcement of President Guillermo Lasso to seek a commercial agreement with the Asian giant. To this support the exporters of cocoa and banana have been added. The latter, although they do not sell in China, look at an opportunity in that market.

The Ecuadorian president had a first approach on Sunday night with his Chinese counterpart, Xi Jinping, to analyze the possibility of a free trade agreement with that country.

José Antonio Camposano, executive president of the National Chamber of Aquaculture, described as positive that Ecuador is looking for an agreement with a market that receives 50 % of shrimp exports.

The union leader considered that an agreement will allow a significant reduction of tariffs to enter to compete equally with other nations that have treated with that country.

Camposano estimated that only in his sector could an annual savings of $ 100 million mean for tariff issues.

Last year, Ecuador exported $ 3,193 million to China, of which $ 2,000 million came from shrimp, bananas, frozen fish and cocoa.

"If we achieve a commercial agreement, the offer can grow significantly, because China is a potential market with around 1.4 billion inhabitants," said Camposano.

Entrepreneurs pointed out that an agreement with China should not be feared, but that intelligent negotiation must be carried out and that it considers the asymmetries of the countries. They recalled that within this type of agreements there are times for the sensitive sectors to prepare for opening, and there are certain exclusions.

For the banana sector, an agreement would be an incentive, as they currently cancel 10 % tariffs, which remains competitiveness against bananas from other countries that do not pay that percentage.

China represents 4 % as a destination of banana exports. The Chinese market has been contracting in recent years by several factors. In 2020, shipments represented $ 156.62 million, a decrease of 29 % compared to 2019 in FOB price.

José Antonio Hidalgo, Executive Director of the Association of Banana Exporters of Ecuador, estimated that an agreement with China would allow to duplicate exports, because with a tariff it is difficult to compete, despite the fact that a promotion of the quality of the Ecuadorian banana has been carried out.

"The competition has signed trade agreements at the region level. They are positioning within the East and at the level of Southeast Asia; they are entering with zero tariff bananas," said Hidalgo.

Within Latin America, countries such as Costa Rica, Chile, Panama and Peru keep agreements with the Chinese market. Negotiations have taken one to three years.

María Auxiliadora Rodríguez, president of the Banana Exporters Association, said that an agreement generates employment sources and also opportunities to access other markets. His sector has not been able to reach China, but an agreement would help break the commercial barriers.

For the cocoa sector, China is its fourth export destination, after Malaysia, Indonesia and Japan. More than $ 82 million have sold to that country in recent years.

"A commercial agreement with China could be of great importance and benefit to our industry, because it would help to streamline and save the route of our cocoa to the eastern country, motivating buyers to pay even greater prices and acquire larger volumes," said Francisco Miranda, president of the Association of Exporters and Industrials of Cocoa del Ecuador.