Andean Community: Ecuador Joins EU Trade Pact with Colombia, Peru

17 November 2016

After years of negotiations, officials gathered in Brussels on Friday 11 November to sign the protocol for Ecuador’s accession to the free trade agreement between the EU’s 28 member states and two of the Andean Community’s other members, Colombia and Peru.

The agreement aims to facilitate greater market liberalisation on both sides of the Atlantic and to foster a more predictable environment for trade and investment flows in both directions.

"We need to create more trade between us because trade is a key factor for growth and jobs in the EU but also for an economy like Ecuador, which wants to diversify and integrate into global value chains. It creates a foothold for European business and an anchor for reforms in Ecuador," said EU Trade Commissioner Cecilia Malmström.

Malmström joined Slovak Economy Minister Peter Žiga in represented the 28-nation bloc at the signing. Officials from the Andean Community included Ecuadorian Vice-President Jorge Glas, Colombian Ambassador to the EU Rodrigo Rivera, and Peruvian Ambassador to the EU Cristina Ronquillo de Blödorn.

Projected impact

Upon the pact’s entry into force, duties on up to 95 percent of EU tariff lines will be cut. Meanwhile, Ecuador has committed to do the same on 60 percent of its own tariff lines, with this phase-out slated to take place over the course of 17 years. According to EU estimates, full implementation of the agreement is projected to accrue savings of €106 million (US$114 million) in tariffs for EU exporters per year, and €248 million (US$266 million) for their Ecuadorian counterparts.

Officials note that the agreement is designed to be asymmetric in nature, in order to help support inclusive and sustainable development for Ecuador. The text therefore incorporates a slew of commitments for implementing international conventions on labour and environmental protections, including Domestic Advisory Groups to monitor progress on implementation in this respect.

The agreement seeks to increase market access for industrial, agricultural, and fisheries products, which are the sectors that make up the bulk of Ecuador’s exports to the 28-nation bloc.

For the EU, benefits will include increased market access in terms of automobiles and machinery, as well as for agricultural products, accompanied by the protection of 100 EU geographical indications.

Geographical indications are place names used in order to denominate products from a specific geographical region whose qualities or reputation are essentially attributable to that location, such as champagne or feta cheese.

In addition, proponents say, the deal secures substantial liberalisation of trade in services, greater access to public procurement markets, and further reductions in technical barriers to trade.

The EU was Ecuador’s second largest trading partner in 2015, accounting for 13.2 percent of the South American country’s external trade, while Ecuador was ranked as the EU’s 60th trading partner.

"Today, Ecuador is becoming a business associate of the EU and it is doing this with a strategic long-term vision and within a context of respect, friendship, sovereignty, and always looking for mutual benefit,” said Ecuadorian Vice-President Jorge Glas.

Long-running talks

Negotiations for a trade agreement were initially launched in January 2009 between the EU and Colombia, Peru, and Ecuador. However, Ecuador suspended its participation months later.
Eventually, talks for an agreement were concluded without Ecuador in March 2010, with application of the pact on a provisional basis commencing three years later. Peru began its implementation in March 2013 while the deal was applied in Colombia from August 2013 onwards. (See Bridges Weekly, 3 March 2010)

In the midst of the initial provisional implementation process, Ecuador indicated an interest in resuming accession talks, which finally came to a close in July 2014 after six months of negotiations.

An annual report is issued by the European Commission for submission to the European Parliament and the Council to review the accord’s implementation and to determine whether the obligations therein have been met. (See Bridges Weekly, 17 March 2010)

According to the report, the benefits to small and medium-sized enterprises have already been considerable, where 500 Colombian and 1100 Peruvian companies have successfully exported to the EU for the first time since the agreement entered into force.

Up ahead

The addition of Ecuador requires approval by the European Parliament before provisional implementation can begin from 1 January 2017 – the date currently in place as a common goal.

For full ratification, the accord must complete the necessary domestic procedures of both trading partners.

Officials have also reaffirmed that the agreement does not close any doors to the possibility for the accession of the final member of the Andean Community – Bolivia – to the agreement should there be interest. Bolivia had also been part of the original talks, having subsequently suspended its participation.

ICTSD reporting; “Ecuador Signs EU Trade Deal, Diversifying Economy from US,” TELESUR, 11 November 2016.

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