Ecuador’s banana and other industries have done the homework with a free trade agreement (FTA) signed with China, but now they have a slightly longer waiting period before they can enjoy the benefits. The delay comes after Ecuador’s President Guillermo Lasso dissolved the National Assembly on 17 May, 2023 and brought forward elections to halt an attempt by the opposition to impeach him. The National Assembly is needed to ratify the agreement. The new FTA, signed with China on 10 May 2023, will see tariffs on bananas decrease by 1% per year over 10 years, from 10% to 0% tariffs.
The virtual FTA signing ceremony between Ecuador and China earlier in May.
The implementation of the FTA, which took several years to negotiate is, impacted by the political movements in Ecuador. José Antonio Hidalgo, Executive Director of the Association of Banana Exporters of Ecuador (AEBE): “Right now the General Assembly is dissolved. We have to wait for a new National Assembly, which will be constituted later this year, perhaps around October, then follow the process for them to approve and ratify the agreement into law to start. We see the FTA long-term. When we reach 10 years, we will have a better development within the China market.”
Ecuador’s Banana Marketing and Export Association (Acorbanec) stated that currently, Ecuador entered a position of advantage. This could mean a considerable increase in the shipment of fruit, as well as the conquest of other markets in the Chinese territory, since currently Ecuador is ranked the 4th supplier of bananas in this country, behind the Philippines, Vietnam and Cambodia. According to data from the TradeMap General Customs Administration of China, in 2022 Ecuador sent just over 200,000 tons, which represents 11.05% of the total imported by the Asian nation.
Richard Salazar, executive director of Ecuador’s Banana Marketing and Export Association (Acorbanec) says: “It represents a unique opportunity that will allow China to become one of the main shipping destinations for the fruit over time. Our export expectations are to triple or quadruple the numbers exported during the year 2022.”
Another market with crippling import tariffs of 30% is South Korea, which is next on the Ecuadorian’s list to improve trading conditions. Ecuador’s top Asian export markets are China that receives 1.8 million boxes, South Korea receiving 125,000 boxes, Japan receiving 778,000 boxes, Singapore only 3,240 and Taiwan receiving nothing until February 2023.
Hidalgo says they are actively working with the Ecuadorian government to improve trading conditions in South Korea. “We want to work and finalise the Korean trade agreement and we hope in the future we can start with Japan.”