AN OCEAN OF POSSIBILITIES

Ecuador, today committed to treading the free market path, seeks to extend its commercial reach and escape a costly decade of debt.

ESTABLISHED ON APRIL 28, 2011, the Pacific Alliance champions the regional integration of member states Chile, Colombia, Mexico, and Peru as well as the unfettered mobility of goods, services, and resources, including talent. And with associate membership among Australia, Canada, New Zealand, and Singapore, its commercial footprint spans the vast Asia Pacific territories. With such alliances inevitably fostering greater local and regional competitiveness among firms, membership is a no-brainer to those on the outside looking in, notably Associate Member Ecuador. Erstwhile left-leaning president Rafael Correa (2007-2017) had opposed membership, a position vehemently reversed by President Moreno and incumbent President Lasso.

AN INTERESTING CHINESE TAKEAWAY

China and the US have been slugging it out over influence in Latin America, and the former has made inroads through credit lines to willing borrowers. Ecuador has faced repayments to Beijing of around USD5 billion tied to the handover of crude oil and substantial infrastructure schemes in hydroelectric and mining projects, among others. It now wants to pursue growth under its own steam. In fact, the anti-US stance of the Correa era, in alienating Washington, had prompted Ecuador’s turn to an all-too-willing-to-lend China. After all, Ecuador boasts petroleum, aquaculture, and bananas, not to mention copper, gold, and silver. In 2022, Quito and Beijing seem set to commence debt re-negotiations. When President Lasso met Chinese counterpart Xi Jinping at the opening ceremony of the Olympic Winter Games Beijing 2022 in February, he was likely pondering Ecuador’s Olympian debt schedule.

EYING UP THE PRIZE

The XIV Pacific Alliance Summit in Lima in 2019 set the pace for Quito. There, the governments of Chile, Colombia, Mexico, and Peru inked the Lima Declaration, promising to accelerate procedures for Ecuador’s full membership. Meanwhile, Ecuador doubtless monitored Singapore’s January 26, 2022 signing of an FTA with the Pacific Alliance, a bloc boasting a combined GDP north of USD2 trillion. Over 100 diverse Singaporean companies now operate in Pacific Alliance countries, while prominent firms from Alliance nations, such as Ecopetrol, have also set up shop in Singapore. A Work Plan between the Pacific Alliance and the Association of Southeast Asian Nations (ASEAN) has been adopted for the 2021-2025 period, promising still juicier cooperation.

MEXICAN WAVE

Moves toward joining the Alliance build on an earlier setting of terms of reference with Mexico, a nation with which Ecuador sees annual trade of around USD1 billion. Mexico endorses Quito’s full membership, a bid President Lasso reiterated in Mexico last year at a Community of Latin American and Caribbean states (CELAC) summit.

The first round of negotiations requires homework on access to markets, rules of origin, sanitary and phytosanitary measures, trade facilitation, intellectual property, good regulatory practices, and competition policy. Structurally, Ecuador is headed in the right direction according to COMERxEC, Ecuador’s sole entity specialized in foreign trade, customs, and investment in the country. Partner Sonsoles García told TBY that “The landscape is changing with President Lasso’s administration [where] the investment climate is more stable […] there is more confidence in Ecuador [and] legal certainty has increased.” The net result is a rise in foreign investor interest in exploring the landscape.

EFFICIENCY DRIVE

As Xavier Rosero, Vice President of the Ecuadorian Federation of Exporters (FEDEXPOR), puts it, “The Pacific Alliance is an interesting platform on which to focus on the markets that are more representative for us [where] Japan, Korea, and China [offer] potential for expansion,” nothing that the “Pacific Alliance can provide us momentum to reach these markets easier, since they are the most dynamic in this context of global recovery.”

Ecuador will continue to seek to expand its international reach through the Pacific Alliance, and today’s commercial and legal climate appears more conducive. Sonsoles García notes that being party to the WTO Trade Facilitation Agreement, “Ecuador [has] passed around 70% of the related regulations […] though in areas of implementation it has reached 30%, mainly in areas to facilitate trade.” Further housekeeping would expedite graduation to member status.