With this week's ratification of the Free Trade Agreement between the European Union, Peru and Colombia, and a partnership agreement with Central America, Ecuador will be under more pressure to find a mechanism to obtain tariff benefits to avoid losing competitiveness.
However, the way towards an agreement will not be easy, as the country has not been able to resume the negotiations, leaving it dependent for another year on a Generalised System of Preferences (GSP, plus) that allows for certain reductions. But important items, such as bananas, are not included in it.
Consequently, Ecuador's direct competitors will enjoy preferential tariffs from 2013, say the exporters. Colombia and Peru obtained tariff reductions for their bananas, and it is worth noting that Costa Rica, another banana competitor, enjoys equal benefits.
Exporters state that, without the agreement with the EU, Ecuadorian bananas shall be subject to the tariff reduction which was agreed after the end of the "banana war"; a deal signed by 11 Latin American countries with the EU. That pact was signed last month under the supervision of the World Trade Organization (WTO), although in practice it is already in effect since 2010.
The EU, which imposed a quota system that Latin American countries considered discriminatory, pledged to gradually reduce the tariff from 175 Euro per ton to 114 Euro in the next 10 years.
Cecilio Jalil, director of the Ecuadorian Banana Industry Association, affirmed that this reduction will not suffice to maintain the competitiveness of Ecuadorian bananas, as Colombia, Peru and Central America obtained better deals with their agreements. In his opinion, this will reduce export capacity, "as we will pay higher tariffs than our competitors," he assured.
Source: El Universo