Mexico and Ecuador are continuing their negotiations to reach a Free Trade Agreement (FTA), while they have reactivated their merchandise trade after the Covid-19 pandemic.
From Mexico to Ecuador, product exports showed the following trajectory: 2019 (US$625 million), 2020 (US$469 million), 2021 (US$600 million) and 2022 (US$658 million).
To take into account: the U.S. dollar has been the legal tender in Ecuador since March 2000.
As a result, Ecuador cannot implement an active and independent monetary policy, which limits its ability to respond to external risks, while contributing to macroeconomic stability.
As a dollarized economy, fiscal policy is the main instrument of macroeconomic adjustment available to Ecuador.
Conversely, Ecuador’s goods exports to Mexico took this direction: 2019 (US$141 million), 2020 (US$130 million), 2021 (US$182 million) and 2022 (US$223 million).
FTA
Among the products that were or have been more complicated to negotiate are tuna, shrimp and bananas, in which Ecuador is competitive.
The background? In September 2019, both nations signed the «General Framework for the Negotiation of a Productive Integration Agreement between Ecuador and Mexico» and the «Modalities for the Exchange of Tariff Offers in Access to Goods Markets between Mexico and Ecuador».
With the signing of these instruments, both countries formalized the start of trade negotiations.
The General Negotiation Framework contemplated the negotiation of 19 chapters, which seek to develop disciplines with high standards, in accordance with the current international context and which will provide certainty and guarantees for trade and investment operators of both parties.
From 2020 to 2021, seven rounds of negotiations were held, in which substantial progress was made in the various chapters of the new trade agreement.
The negotiation of this agreement will not only seek to promote an increase in trade and investment flows, but also has among other objectives that of favoring Ecuador’s accession process to the Pacific Alliance, whose requirements establish the existence of a bilateral free trade agreement with the member countries of the Alliance.
Mexico and Ecuador have held nine rounds of negotiations. The last round was held May 23-27 in Quito, Ecuador.
Currently, both countries are holding bilateral meetings with the objective of accommodating interests and reaching an early conclusion in this negotiation process.
