Trade Relations
In 2019 trade relations between Ecuador and the EU took a giant leap forward with the signing of an ambitious, comprehensive Trade Agreement.
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Internationalize Mipyme - Implemented by Fedexpor.
Copyright: EU Delegation to Ecuador
Bilateral Trade
The EU-Ecuador bilateral trade exchange recovered in the first four months of 2021 compared to the strong contraction registered in 2020 due to the Covid-19 pandemic. Bilateral trade increased from €1,656M to €1,706M, 3.03% compared to the (-1.55%: €1,656M) of the previous year.
Ecuador's exports to the EU grew from €1,085M to €1,088M(0.17%) in the first four months of the year. The major EU importers were the Netherlands (+ 29%), Spain (-28%), Italy (-16%), Germany (+ 8%) and Belgium (+ 2%). It is important to highlight that Ecuador's exports to Bulgaria grew exponentially (227%). There was also a significant growth in Ecuadorian exports to Slovenia (59%) and Denmark (+ 43%). Ecuador maintained its historic trade surplus of €469M with the EU.
On the other hand, EU exports to Ecuador increased to €618M (+ 8.5%) compared to €570M in the same period the previous year. Germany (+ 13%), Spain (+ 9%), Italy (+ 62%), and Belgium (-24%) continued to lead EU exports to Ecuador. Other countries that had interesting increases in their exports were Austria (+ 30), Portugal (+ 33) and Romania (+ 167%).
The evolution of foreign investment (FDI) in Ecuador
The European Union and its Member States are supporting Ecuador for a green and inclusive recovery through their development cooperation, using instruments such as attracting private investment and facilitating capital for public investment.
The possibility of using these instruments is raised in the MIP 2021-27 (Multiannual Indicative Plan) of the EU's cooperation with Ecuador, as well as in the EU's “Team Europe” initiative with its Member States. This cooperation can amplify the government's efforts to attract more investment and improve the business climate in Ecuador.
In the last decade, Ecuador has managed positive regulatory measures to boost FDI, but there is still work to do to encourage them. Although in 2020 Ecuador's FDI grew 5.8% to $1,017M year-on-year, it only represented 1.1% of its GDP, that is, less than Colombia (2.1%) and Peru (1.3%). The European Union is the largest investor in Ecuador. In 2020, EU FDI accounted for 31% ($317M) of the total FDI entering the country.
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Internationalize Mipyme - Implemented by Fedexpor.
Copyright: EU Delegation to Ecuador
Important Aspects of the Trade Agreement
Removal of trade barriers
Since the entry into force of the Agreement, the EU has succeeded in removing some trade barriers such as origin labelling for imported alcoholic beverages and customs duties, which shows Ecuador’s willingness to adhere to international standards. However, there is still room to continue to simplify procedures and adjust domestic regulations to facilitate trade between the two partners. On the other hand, controls ensuring the safety of food, animal and plant health and other sensitive products should be strengthened.
Trade and Sustainable Development
The EU has included a new chapter on trade and sustainable development in all its latest generation trade agreements. The EU is convinced that the rise in trade must not be to the detriment of international environmental and labour conventions.
For all these reasons, the EU and Ecuador have worked on the creation of a Consultative Committee composed of representatives of trade unions, civil society and business, which carry out annual monitoring of compliance with international obligations. This is succeeding in strengthening responsible business conduct and improving labour inspections in defence of workers' rights.
In the field of the environment, the EU is supporting Ecuador to improve its practices to end illegal, unreported and unregulated (IUU) fishing and thus ensure that illegally caught fisheries do not enter the European market.
For more information on combating IUU fishing:
EU-UK Trade and Cooperation Agreement
The EU-UK Trade and Cooperation Agreement began to apply provisionally on 1 January 2021, as from the departure of the United Kingdom from the European Union.
The agreement covers a number of areas of mutual interest for the EU and the UK and consists of a Free Trade Agreement, ambitious cooperation in the economic, social, environmental and fisheries fields, and a close partnership for the security of our citizens, covered by a strong governance chapter with a binding application, effective dispute resolution mechanisms and safeguard measures in the event of non-compliance with obligations.
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