Chilean Senate unanimously approves Trade Integration Agreement with Ecuador

RIO DE JANEIRO, BRAZIL – The Senate Chamber unanimously approved the Trade Integration Agreement between Chile and Ecuador. After this approval, the Chamber of Deputies will send an official letter to the President of the Republic, Sebastián Piñera, officially communicating that the National Congress has given its approval to the project, with which the President will proceed to its promulgation and publication in the Official Gazette for its entry into force.

The Undersecretary of International Economic Relations, Rodrigo Yáñez, said that for Chile the conclusion of this agreement “is another example of our commitment to the integration of our economy with the region and the world; with an international trade system based on clear rules; and with the development of a broad network of trade agreements, which we seek to modernize and deepen together with our partner countries, and in coordination with civil society, the public and private sectors of our country”.

The Undersecretariat for International Economic Relations authority also added that trade openness “has contributed to the creation of new business opportunities in practically all regions of the world, fostering the diversification of exports, the attraction of foreign capital, and the internationalization of the Chilean economy”.

“The Ministry of Foreign Affairs has worked hard to insert Chile into the international economy, integrating the country into the most dynamic economic and commercial forums, encouraging the opening of new markets and promoting Chilean exports of goods and services, elements of the highest importance, especially now when we are experiencing the effects of the pandemic, and we must redouble our efforts for a rapid reactivation”, said Undersecretary Yáñez.

The first agreement with Ecuador, ACE 32, was signed in 1994. Later the same instrument was expanded in 2010, with the entry into force of ACE 65. The Trade Integration Agreement, signed in August 2020, aims to complement the tariff concessions and trade disciplines previously agreed by both countries and to agree on new commitments in cutting-edge matters, such as trade in services, e-commerce, telecommunications, labor issues, environment, gender, and SMEs.

Concerning the so-called new trade issues, commitments were defined for cooperation and protection in environmental matters, a chapter through which both countries undertook to enforce their legislation in this area and promote high levels of protection. In labor matters, both countries agreed to implement their legislation, recognizing the Parties’ right, according to their priorities, to regulate and establish their own levels of labor protection.

In addition, with the incorporation of a Gender Chapter, it established the exchange of experiences and practices regarding the design to encourage the participation of women in the national and international economy.

The treaty also includes a Chapter on Services, in which a framework of legal certainty was established, guaranteeing non-discriminatory treatment for Chilean service exporters and commitments to openness on the part of Ecuador. It also contains e-commerce matters that will impact micro, small and medium-sized enterprises by facilitating electronic transactions and improving the conditions under which Chilean service providers and digital products operate in the Ecuadorian market.

The agreement also encourages the participation of Chilean suppliers of goods and services in public procurement tenders on equal terms with Ecuadorian companies.

Regarding Regional and Global Value Chains, a modern regulatory framework was defined and the search for opportunities for the generation of productive linkages between Chilean and Ecuadorian companies and direct investments.

In addition, the agreement opens up opportunities in the Ecuadorian market for Chilean goods that previously did not enjoy tariff preferences, such as agricultural and agroindustrial products like beef, poultry and pork, seeds and vegetable oils, and all industrial products that were exempted. Once it enters into force, 99.3% of all tariff items will enjoy preferential access in Ecuador.

BILATERAL TRADE

Ecuador is a key destination for Chilean SMEs, the thirteenth in the world and sixth in Latin America. Of the 3,809 Chilean SMEs that exported in 2020, 7% registered shipments to Ecuador.

In 2020, total exports to Ecuador amounted to US$434 million. The main products were beverage bases, fresh apples, medicines, machinery, cereal flour, grapes, pears, and wood boards.

Imports from Ecuador accounted for 1.5% of Chile’s total imports, with Ecuador being the thirteenth origin of Chilean imports. Petroleum derivatives accounted for 70% of total imports, followed by bananas, tuna, shrimp, flowers, cocoa, and cement. Imports, excluding oil, amounted to US$ 269 million.