China–Ecuador Free Trade Agreement Moves Closer
Bilateral trade up 19.7% as China looks for a Gateway into Latin America
China and Ecuador issued a joint statement in 2022 announcing the launch of free trade agreement (FTA) negotiations. After more than 10 months, the two countries have now concluded the bilateral FTA negotiations at the technical level.
Recognising this, the Chinese Ambassador to Ecuador, Chen Guoyou, has made the following remarks this week concerning bilateral trade, investment and development between the two countries:
“Ecuador is an important economic and trade partner of China in Latin America. Over the years, China and Ecuador have carried out cooperation following the principles of equality, mutual benefit, and a win-win situation, and achieved fruitful results.
China-Ecuador Investment Projects
In recent years, driven by bilateral relations and Chinese investment and financing, Chinese enterprises have actively participated in the development of local infrastructure such as electricity, transportation, petroleum, and mining, and strategic areas such as oil and mining, as well as the construction of hospitals, housing, schools, and other infrastructure projects.
The two countries have numerous landmark cooperation projects, mainly including the power station project cluster represented by the Coca Codo Sinclair Hydropower Station, The Ecuadorian 500kV Power Transmission and Transformation Project, the ECU911 Integrated Security Service, the infrastructure project cluster for post-earthquake reconstruction in 2016, the Mirador Copper Mining Project, and the oil block development project, amongst others.
As the promoters of pragmatic cooperation between the two countries and the practitioners of building a community with a shared future between China and Ecuador, the majority of Chinese enterprises in Ecuador have actively integrated into the local community, fulfilled their social responsibilities, and insisted on localized employment, creating thousands of jobs annually, bringing significant economic and social benefits to the country, and strongly contributing to the economic recovery and improvement of people’s livelihoods.
At the end of 2018, the Chinese and Ecuadorian governments signed a Memorandum of Understanding on the joint construction of the BRI, which has further deepened the pragmatic cooperation between the two sides in various fields. Looking to the future, we look forward to further deepening cooperation in traditional areas such as trade, investment, and financing, as well as infrastructure, continuously expanding exchanges and cooperation in emerging areas such as 5G and new energy.
We will develop new cooperation under the framework of high-quality construction of the BRI and overall cooperation between China and Latin America to achieve a higher level of mutual benefit and a win-win situation for both countries. The cooperation will open up broader prospects for economic and trade development between the two countries.
With joint efforts, after more than 10 months of intensive consultations, China and Ecuador have concluded the bilateral FTA negotiations at the technical level. At present, the two sides are stepping up the completion of their respective domestic procedures to announce the conclusion of the negotiations as soon as possible.
It is believed that the signing of the FTA will definitely inject a strong impetus to upgrade the quality of bilateral trade and is conducive to promoting the two countries’ market access, industrial interchange, and integration of interests, which will effectively benefit the two countries and the two peoples.
Ecuador As A China Gateway To Latin America
China and Ecuador are comprehensive strategic partners. Over the past 43 years since the establishment of diplomatic relations between the two countries, mutual political trust has been deepened with the increasing expansion of pragmatic cooperation and humanistic exchanges.
It is especially worth mentioning that economic and trade cooperation has become the most active and fruitful area in the comprehensive strategic partnership between the two countries. In recent years, the China-Ecuador economic and trade cooperation, which is based on complementary advantages and mutual benefits, has withstood the test of international changes and the COVID-19 pandemic, fully demonstrating its resilience and vitality.
At present, China has become the second largest trading partner and the largest non-oil product trading partner of Ecuador. Ecuador is the 8th largest trading partner of China in Latin America, with bilateral trade continuously progressing in a balanced and sustainable direction.
According to Chinese statistics, in 2022, bilateral trade between China and Ecuador reached US$13.08 billion, up 19.7% year-on-year, of which Ecuador’s exports to China amounted to US$6.8 billion, up 24.6% year-on-year. The two countries have also been cooperating on major projects driven by Chinese investment and financing.
Since President Lasso took office in May 2021, he has attached great importance to the development of relations with China, and the two sides have maintained close communication and reached many important agreements on deepening practical cooperation in trade, investment, and other fields.
Bilateral economic and trade cooperation between China and Ecuador has ushered in new development opportunities, and we are confident about the prospects of bilateral cooperation.”
Other Ecuador Trade Developments
Ecuador is also pursuing a Free Trade Agreement with Russia and the Eurasian Economic Union. Russia is the second largest destination for Ecuadorian bananas, accounting for an average of 22% of exports. According to the Banana Cluster, this percentage has remained stable in recent years, even though it presented slight reductions in 2019 and 2020 due to various logistics and production factors, but also to the decrease in banana imports by Russia.
There are benefits for Russia too, that curve beyond the import and export of bananas. Ecuador is a member of the Andean Community (CAN) which includes Bolivia, Colombia, Ecuador and Peru, a market of 100 million and a GDP of about US$900 billion. CAN also has trade agreements with the Mercosur bloc which includes the powerful LatAm nations of Argentina, Brazil, Paraguay and Uruguay. An FTA with Ecuador would give Russia and the EAEU an initial foothold into the LatAm markets, which are projected to grow by 5.9% in 2021 and to continue upwards. Russia’s eyes however, like China, will be on LatAm’s resources, which contain significant mining and other energy potential. From bananas to a commodity presence in Latin America makes sense for Russia – and for China.
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