Ecuador Aims to Sign 12 FTAs By 2025

The country’s foreign minister says in an exclusive interview that Quito is seeking to sign free trade agreements with China, Japan and South Korea, among other nations

Ecuador's Foreign Minister Juan Carlos Holguín
March 28, 2022 | 12:55 PM

QUITO — The Ecuadorian government’s foreign policy has focused on being pragmatic, abandoning the ideology-driven approach of previous administrations and, according to Foreign Minister Juan Carlos Holguín, the government’s goal of signing 12 trade agreements by 2025 remains unchanged.

The country aims to seal free trade deals with Canada, China, the Dominican Republic, Japan, Mexico, South Korea and Israel, among other nations.

The first agreement the country is seeking to sign is with Mexico, as that agreement is a necessity to formalize Ecuador’s entry into the Pacific Alliance. China is the second most important, and the plan is to sign that agreement by the end of this year, a goal that Holguín sees as possible.

And President Guillermo Lasso is scheduled to visit Israel in May, with the intention of reaching a memorandum of understanding toward a free trade agreement.

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The government’s immediate focus is also on finding new markets for primary exports that are suffering from the war in Ukraine, with the export of bananas, shrimp and flowers having been severely hit.

In an exclusive interview with Bloomberg Línea, Holguín also talks about the challenge of evacuating more than 700 Ecuadorians from Ukraine, and how the relationship with Russia is currently going:

Bloomberg Línea: Foreign trade has been a central policy of President Lasso’s government, what is being worked on in this regard from the portfolio you lead?

My mission in the Ministry of Foreign Affairs is, effectively, to prioritize trade diplomacy. It is the next phase after the vaccination plan and the diplomacy of vaccines, which undoubtedly was the biggest economic reactivation plan that Ecuador had last year. We continue in the line of “More Ecuador in the world and more world in Ecuador”, which basically translates into achieving at least 12 free trade agreements (FTAs) in the next three years.

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Within this strategy we are successfully following the roadmap initiated after President Lasso’s trip to China to achieve our FTA with China by the end of this year. We have also started the conversation with South Korea, with the Dominican Republic, with several other countries, to achieve this goal. At the same time, we have the good news of the approval in the International Relations Committee of the United States Senate of a law that prioritizes Ecuador as a state policy in trade, defense and security cooperation.

The war in Ukraine has hit Ecuadorian trade, especially primary exports. How is the government dealing with that?

Ecuador is directly affected at a commercial level by Russia’s attack on Ukraine since we have exports to Russia worth more than $1 billion a year, especially in bananas, shrimp and flowers. Our strategy at this moment is to open new markets, but in the immediate future looking for new possibilities for the products that usually went to Russia.

The president announced that several days ago, but it is not so easy to place, for example, millions of boxes of bananas. Which are the markets you are identifying?

The Persian Gulf market and China, especially, because, for example, bananas exported to Russia have other phytosanitary guidelines than those exported to the European Union or the United States, therefore, we have to look for immediate markets that can accept Ecuador’s product.

Is the approach made through commercial offices, or is it more direct?

President Lasso’s strategy has been to generate a direct coordination team between diplomacy and international policy with the Ministry of Foreign Trade, Production and Fisheries. We work in coordination with Minister Julio José Prado, who leads the whole strategy of openings in this contingency plan.

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Are you optimistic about finding new markets?

It is very difficult, in a war situation the work is uphill, but we must count on the solidarity of some countries that have been very open to help in these short-term solutions.

President Lasso has spoken about China, and even said that he had advanced those conversations....

He made them personally, and that helps a lot for the political will and solidarity of that market.

Is the goal of 12 trade agreements in the next three years still in place?

Totally, except for one that would be affected, the one with Eurasia, the rest of the FTAs are markets that would not be affected by this world situation.

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In the midst of this search for markets, Ecuador’s entry into the Pacific Alliance is almost a reality. Do you think that the ideological shift to the left in the region will affect the trade bloc, and how do you see Ecuador’s entry into it?

Very well, with much optimism. At the meeting in Buenaventura (Colombia) last January, all the members of the Pacific Alliance welcomed Ecuador, once it finalizes its agreement with Mexico, and Ecuador’s entry into the alliance has also been ratified by Chile’s President, Gabriel Boric. This political support gives us a lot of peace of mind, and it is a very important trade plan. The Pacific Alliance is the eighth largest economy in the world, and with Mexico we are already in the last phase of negotiations, confirmed for the month of April, and we hope to finish this process as soon as possible.

In other words, the ideological issue no longer weighs as much as it used to?

I think that something very positive about the Pacific Alliance is that it is not ideological; it represents an opportunity for the markets of each of the countries. Well-managed trade agreements translate, regardless of ideology, into better conditions for the citizens of each country, and we are very pleased to see that the new governments have not taken on any position that is different from the fundamental bases of the Pacific Alliance, and the same goes for the President of Peru, Pedro) Castillo, who supports the Pacific Alliance.

Would the same be expected with Colombia, in the event that the left-wing candidate winds in the presidential elections?

I believe that the Pacific Alliance is going through its strongest moment and, as I said before, beyond the rulers in office at the time, it is a regional integration system that allows agreements to last.

There are other important markets such as the European Union, with whom we have a five-year trade agreement, but the bloc has recommended Ecuador to make several adjustments on issues related to sustainable fishing, for example. How is work on that progressing?

The European Union is one of the examples of why FTAs are beneficial for countries like Ecuador, we have a trade balance surplus, and in this time of global conflict, the European Union has been extremely supportive of Ecuador. We had a meeting 10 days ago, led by Minister Prado, and we are working on each of the issues that require a solution, both from the European Union and Ecuador’s point of view. Fifteen days ago we also had high-level meetings with the European Union here in Ecuador, and we are working very fluidly with them to continue strengthening this FTA.

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A More Pragmatic Approach

What are the benefits of Ecuador having a pragmatic and less ideology-driven foreign policy?

Ecuador is going through a great international moment, especially because of the democratic stability that exists, and the financial stability that generates many opportunities for Ecuador to become an immediate focus of investment. I believe that this pragmatic foreign policy, related to not having short-term ideologies, as happened in the past, allows us to propose to the country a sustainable international trade policy over time. That is what we see with the Pacific Alliance, no matter who is in power, what matters are the solid foundations on which these trading blocs are based.

Regarding the trade agreement with China, is it realistic to say that it can be achieved by the end of this year, considering that neighboring countries have taken up to two years to reach an agreement?

Absolutely. It has been the commitment of both presidents in a face-to-face conversation and it was a proposal of President Xi to sign it during the China-LAC summit this year in Guayaquil; therefore, the technical teams of the ministries of foreign Trade of both countries and the foreign ministers are working with that roadmap.

Are there plans to visit other destinations in the short term, to create a more formal trade agreement?

Minister Prado is leading the strategy, he has already made trips, for example to the Dominican Republic to open the negotiation process. In May, together with President Lasso, we will travel to Israel to sign a memorandum of understanding toward an FTA.

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What other areas is the foreign ministry working on?

We have several pillars of work in this diplomacy drive that President Lasso has called “for prosperity”. A very important axis is the diplomacy for the ecological transition, where we are working hand-in-hand with the Minister of the Environment, Gustavo Manrique, to take advantage of all the international cooperation that exists around the ecological transition. We will participate in the Stockholm +50 summit to be held in June, where Ecuador will co-chair one of the most important areas. We also have a strong component of human mobility, not only linked to risky migration, but now - as we were able to demonstrate - in the process of evacuation in war.

Lessons of War

Regarding the war in Ukraine, Ecuador had to evacuate more than 700 citizens and those were days of high tension, what lessons did that teach you as a government?

We had a contingency plan with several scenarios. We would not have wanted to reach a war scenario, but we had considered that possibility based on intelligence reports. We made the decision in January to carry out a census in Ukraine, the figure was unusual, in a first census we found that there were more than 400 Ecuadorian citizens living there. The challenge was that Ecuador did not have an embassy in Ukraine, and had closed its embassy in Poland in 2014, so making a contingency plan with those shortcomings was complex, but we had an immediate response with more than 21 officials who spent 26 days at the border working on the evacuation plan of 716 people who have now arrived back in Ecuador.

There is also the issue of Ecuadorians living in Russia, and who have been told that they should return by their own means...

We are in contact with many of them, the problem in Russia is different, there are more than 2,000 Ecuadorians there, more than 1,300 students among them. Russian universities have not allowing the departure of some students because they say that there is no conflict zone there, but the Ecuadorian government has reiterated the call for Ecuadorians to leave Russia by their own means.

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The economic sanctions that have been imposed on Russia have a direct effect on the Ecuadorian citizens who are there and little by little they will have less means of subsistence because there is no way to send money to Russia.

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How is the relationship with the Russian embassy in Ecuador? Is there any communication?

Russia has an embassy in Ecuador, and we maintain our embassy in Russia, which has also turned at this moment to the attention of the Ecuadorians who are there. We have an embassy that is working and has contingency plans in place in case the situation lasts longer, or takes another path.

The Ecuadorian government has condemned the Russian invasion of Ukraine, so how is the diplomatic relationship with Russia?

There is a diplomatic relationship with the embassy, and it is very necessary at this time to ensure respect for the life and safety of our citizens there. Ecuador has condemned in a direct and frontal way the Russian attack on Ukraine, and that has been our position, we are believers in multilateralism, and in the United Nations, where we have expressed the need for this attack on Ukraine to stop now.