Ecuador on Friday signed a free trade deal with the European Union, joining its free trade agreement with Colombia and Peru.
The protocol of accession was signed at a ceremony by EU trade commissioner Cecilia Malmstrom, Slovak Economy Minister Peter Ziga, whose country is holding the rotating presidency of the EU, and representatives from Ecuador, Colombia, and Peru.
The deal now needs the consent of the European Parliament and is expected to be provisional implemented from Jan. 1, 2017.
The agreement will eliminate tariffs for all industrial and fisheries products, increase market access for agricultural products, improve access to public procurement and services, and further reduce technical barriers to trade, the European Commission said in a statement.
The EU said the deal will benefit all parties’ main exports. These include automobiles, alcoholic beverages and dairy products on the EU side, and fisheries, banana, cut flowers and cacao on the Ecuadorian side.
Once fully implemented, the savings for EU exporters will be at least 106 million euros in tariffs annually, and Ecuadorian exports will save up to 248 million euros in removed duties.
However, the tariff-cuts will be implemented only gradually over 17 years, with the EU liberalizing almost 95 percent of tariff lines upon entry into force, and Ecuador about 60 percent.
Meanwhile, the benefits for the EU will be significant. For example, the EU agriculture sector will benefit from increased market access for its products, as well as from the protection of about 100 EU geographical indications on the Ecuadorian market.
Gains can also be expected for the EU in specific sectors, including new market access for cars and machinery.
“This agreement is a milestone in relations between Ecuador and the EU and creates the right framework to boost trade and investment on both sides,” Malmstrom said.
“We need to create more trade between us because trade is a key factor for growth and jobs in the EU but also for an economy like Ecuador, which wants to diversify and integrate into global value chains. It creates a foothold for European business and an anchor for reforms in Ecuador,” she added.
In 2015, the EU was Ecuador’s second largest trading partner while Ecuador was the EU’s 60th trading partner, with 13.2 percent and 0.1 percent respectively of each other’s external trade. The volume of EU-Ecuador trade reached 4.5 billion euros in 2015.
The EU’s trade agreement with Colombia and Peru was signed in June 2012. It has been provisionally applied with Peru since March 1, 2013 and with Colombia since Aug. 1, 2013. Ecuador suspended its participation in the negotiations for the initial agreement in 2009. Negotiations to access the agreement resumed in January 2014 and were concluded in July 2014.