On Tuesday, October 22, 2024, the European Union (EU) celebrated the seventh anniversary of its trade agreement with Ecuador, which has fostered increased economic ties and delivered significant benefits for both parties. With a focus on expanding the range of Ecuadorian products in European markets, particularly organic goods, and enhancing foreign investment flows into Ecuador, the EU and Ecuador are now looking ahead to deepen their partnership further.
This occasion was marked by a forum held in the port city of Guayaquil, where public and private sector representatives convened to reflect on the achievements of the trade agreement with Ecuador and explore opportunities for maximizing its impact. The EU Ambassador to Ecuador, Jekaterina Doródnova, delivered the keynote address, emphasizing the potential that remains untapped under the current agreement.
“I believe the trade agreement with Ecuador still has great potential to achieve much more—more agricultural products to export, more small and medium-sized enterprises (SMEs) that can bring their quality products to the European market, and, above all, more opportunities to attract foreign investments,” Ambassador Doródnova stated.
The Agreement’s Impact on Trade
Since the trade agreement with Ecuador was enacted in 2017, the economic relationship between Ecuador and the EU has grown significantly, resulting in consecutive trade surpluses for Ecuador. Doródnova highlighted that the trade agreement with Ecuador has yielded an accumulated surplus of more than 8 billion euros for the Andean country. This financial surplus reflects Ecuador’s increasing export capacity, especially in critical sectors such as agriculture and aquaculture.
In 2023, Ecuador’s most significant exports to the European Union included bananas, shrimp, tuna, and flowers—four essential products that have bolstered the country’s trade surplus. Ecuador exported 1.2 billion euros’ worth of bananas to the EU, along with 1 billion euros of shrimp, 670 million euros of tuna, and 350 million euros of flowers. These numbers underscore the importance of the agricultural sector in Ecuador’s overall trade strategy with Europe. The ambassador also pointed out that Ecuador has maintained its position as the leading exporter of organic products to the EU for three consecutive years.
This success has benefited large-scale producers and SMEs, which have found new markets in Europe. The trade agreement with Ecuador has enabled smaller Ecuadorian businesses to bring their unique, high-quality products—from organic cocoa to specialty coffee—to European consumers. By doing so, these SMEs can diversify their revenue streams and contribute to the broader development of the national economy.
Contributions from the European Union
Ecuador’s economic relationship with the European Union is not one-sided. In her remarks, Doródnova also highlighted the critical role that European exports have played in enhancing Ecuador’s productive capabilities. Exports from the EU to Ecuador, which include machinery, pharmaceuticals, and vehicles—primarily capital goods—have supported Ecuador’s industrial and technological growth. These products help Ecuador modernize its production processes, improve efficiency, and increase the value-added content of its exports. As a result, Ecuador’s industries are becoming more competitive on the global stage.
Moreover, Doródnova celebrated a significant milestone in the EU-Ecuador relationship: the recent decision by the EU Council to approve a measure that will allow for the full implementation of the trade agreement with Ecuador starting on November 1, 2024. This decision, she explained, will provide a greater degree of legal certainty to businesses and investors engaged in bilateral trade, further strengthening the financial and commercial ties between the two parties.
The Role of Sustainability and the European Green Deal
One of the key themes during the forum was sustainability, a topic that has become increasingly important in global trade agreements. The French Ambassador to Ecuador, Philippe Létrilliart, addressed this issue by lauding the trade agreement with Ecuador as a “modern agreement” with a strong focus on sustainable economic development.
“In this context, the European Green Deal represents a firm commitment towards a more sustainable future where food production—and we can talk about cocoa, including chocolate—is carried out in an environmentally respectful manner, with consideration for local communities,” Ambassador Létrilliart said.
The European Green Deal, introduced by the European Commission, sets ambitious targets for the EU to become climate-neutral by 2050. For countries like Ecuador that export agricultural products to Europe, this means adapting production practices to meet stringent environmental standards. This includes reducing the use of pesticides, protecting biodiversity, and promoting sustainable land use. Ecuador’s leadership in organic exports aligns well with these objectives, providing a competitive advantage in the European market.
However, both ambassadors recognized that challenges remain while much has been achieved. Ambassador Létrilliart noted that one of the primary obstacles is increasing trade exchanges further and reducing the barriers that hinder seamless trade flows. These barriers include regulatory differences, logistical inefficiencies, and a lack of harmonization between the two markets’ standards.
Government Efforts to Address Trade Challenges
Ecuador’s Minister of Production, Foreign Trade, Investment, and Fisheries, Luis Jaramillo, also spoke at the event. He emphasized the importance of the European Union as Ecuador’s top market for SME exports. He acknowledged that while the trade agreement with Ecuador has been successful, Ecuador still faces challenges in meeting the high quality and sustainability standards required by European consumers.
“Meeting the stringent environmental protection standards is one of the main challenges for Ecuadorian exporters, particularly for small and medium-sized enterprises,” Jaramillo stated.
To address this, the Ecuadorian government has been adapting domestic production processes to comply with EU regulations and diversify the country’s exportable offerings. This includes investing in technology and innovation, strengthening traceability systems, and improving logistics networks to facilitate exports. Jaramillo also mentioned that the government supports efforts to help SMEs overcome these challenges, enabling them to compete more effectively in the European market.
Investment and Future Prospects
In addition to trade, foreign direct investment (FDI) was a central topic of discussion during the forum. Several business leaders pointed out that while Ecuador offers numerous opportunities for investors, obstacles still need to be addressed. These include regulatory complexities, bureaucratic inefficiencies, and concerns about political stability.
Eduardo Egas, CEO of the Ecuadorian Corporation for the Promotion of Exports and Investments (Corpei), proposed negotiating an investment agreement with the European Union. “That’s the task we didn’t accomplish with the previous trade agreement with Ecuador because the conditions weren’t right, but today, we have seven years of positive results, which qualify us to consider what we were once afraid of. The time is now,” Egas said.
Such an agreement would provide more precise rules and greater security for European investors looking to do business in Ecuador, encouraging more FDI inflows. Egas argued that with seven years of positive trade outcomes, now is the ideal time to expand the economic relationship to include investment protections, creating a more favorable environment for European companies to enter the Ecuadorian market.
Looking Ahead
As the EU and Ecuador look to the future, there is a shared commitment to further strengthening their economic ties. The trade agreement with Ecuador has already delivered significant benefits, but both parties recognize that more can be done to unlock its full potential. By focusing on sustainability, improving trade facilitation, and creating a more favorable environment for foreign investment, the EU and Ecuador can continue to build a mutually beneficial partnership that supports economic growth and development for years to come.