China and Ecuador inked a free trade agreement on Wednesday that the South American country hopes will boost its non-oil exports by up to $4 billion over the next decade.
The agreement covers 99.6 percent of Ecuador’s exports and “opens the door to the largest market in the world: 1.4 billion consumers”, trade minister Julio Jose Prado told reporters.
China was Ecuador’s main non-oil trading partner in the first half of 2022, Quito’s trade ministry said.
Bilateral trade last year reached a record $13.09 billion, according to the central bank.
Beijing and Quito began negotiating the free trade agreement in February 2022, when Ecuador’s conservative President Guillermo Lasso visited China.
Prado called the agreement “tremendously interesting” for exporters and sectors that buy Chinese raw materials.
“The agreement is focused on trade issues. We have not negotiated issues of services, investments, public procurement and other sectors that may become more sensitive,” he said.
Total tariff relief for Ecuador’s traditional exports, such as bananas, cocoa, shrimp and roses, will take between five and 10 years, while relief for other goods will be immediate, he added.
China, the world’s second-largest economy, has similar trade pacts with Latin American nations Peru, Costa Rica and Chile.
Ecuador’s non-oil exports to China are expected to grow between $3 billion and $4 billion, according to the production portfolio.
It is also hoped to create more employment opportunities, with 1.2 million jobs already linked to the export sector, which Prado said could double in the next decade.
To protect Quito’s local manufacturing, around 800 Chinese products are excluded from the agreement, such as textiles, footwear and ceramics.
With growing influence in Latin America, China became Ecuador’s largest financier during the administration of president Rafael Correa, who was in office 2007 to 2017.
At the time, Ecuador’s debt reached $5 billion, or four percent of current GDP.
In September, President Lasso said his government had secured a deal to extend payment terms and lower interest rates on $3.2 billion in debts held with two Chinese state-affiliated banks.
Lasso’s government has said it is also open to pursuing a free trade deal with the United States.
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