China and Ecuador sign a free trade agreement

On May 11th, Minister of Commerce Wang Wentao and Minister of Production, Foreign Trade, Investment and Fisheries of Ecuador Prado, representing their respective governments, officially signed the "Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Ecuador" (hereinafter referred to as the "China Ecuador Free Trade Agreement") through video. It is reported that after the signing of the agreement, both parties will fulfill their respective domestic procedures to promote the early entry into force and implementation of the agreement.

Promoting China Ecuador Economic and Trade Cooperation

Comprehensive quality improvement and upgrading

The China Ecuador Free Trade Agreement is the 20th free trade agreement signed by China with foreign countries. Ecuador has become China's 27th free trade partner and China's fourth free trade partner in Latin America after Chile, Peru, and Costa Rica.

Data shows that in 2022, the bilateral trade volume between China and Ecuador reached 13.1 billion US dollars, a year-on-year increase of 19.7%, with a growth rate exceeding double digits for two consecutive years. China is Ecuador's second largest trading partner. Ecuador is an important economic and trade partner of China in Latin America, a source of imports of agricultural, fishery, energy and mineral products, and an important partner in the joint construction of the "the Belt and Road".

On May 11th, the head of the International Department of the Ministry of Commerce introduced and interpreted the background and content of the China Ecuador Free Trade Agreement, stating that the signing of the agreement is an important consensus reached by the leaders of the two countries. The negotiations were initiated in February 2022, with the Chinese side led by the Ministry of Commerce and the Eritrean side led by the Ministry of Production, Foreign Trade, Investment and Fisheries, with the participation of relevant departments. The negotiation teams of both parties held a total of 1 ministerial level meeting, 3 departmental level first meetings, and more than 40 consultations in various fields through video over a year, and finally announced the end of the negotiations in February 2023. Afterwards, both parties jointly completed the legal review and translation of the agreement text, and fulfilled their respective domestic procedures. On May 11th, the China Ecuador Free Trade Agreement was officially signed.

It is reported that the China Ecuador Free Trade Agreement includes a preface and 17 chapters. The field of trade in goods and related rules includes six chapters: national treatment and market access of goods, rules of origin and implementation procedures, customs procedures and trade facilitation, trade remedies, sanitary and phytosanitary measures, and technical barriers to trade. Other fields include four chapters: investment cooperation, e-commerce, competition, and economic cooperation. In addition, the agreement also includes seven legal and mechanism chapters, including initial clauses, general definitions, transparency, dispute settlement, management, exceptions, and final clauses, as well as six annexes, including exceptions to national treatment and import and export restrictions, tariff commitment table, Andean price range system, rules of specific origin of products, certificate of origin, and arbitration procedure rules.

The signing of the China Ecuador Free Trade Agreement is a concrete measure to implement the "high-level opening-up" proposed by the 20th National Congress of the Communist Party of China, and is the latest practice to expand the network of high standard free trade zones facing the world. "The person in charge mentioned the important significance of the signing of the China Ecuador Free Trade Agreement, stating that the China Ecuador Free Trade Agreement will create a more favorable, convenient, transparent, and stable business environment for enterprises of the two countries, Further stimulate the potential of trade and investment cooperation between the two countries, promote the comprehensive improvement and upgrading of China Ecuador economic and trade cooperation, promote the sustained, stable, and diversified development of bilateral trade, and continuously enhance the well-being of the people and enterprises of both countries. At the same time, the signing of the China Ecuador Free Trade Agreement also reflects the common will and firm determination of the two countries to promote trade liberalization and facilitation, sending a positive signal to the international community to support multilateralism and free trade, and promote global economic stability and recovery.

On a high-level basis

Achieving a mutually beneficial and win-win outcome

The above person in charge introduced that in terms of tariff reduction in goods trade, both parties have reached a mutually beneficial and win-win result on a high-level basis. According to the concession arrangement, China and Ecuador will cancel tariffs on 90% of each tax item, of which about 60% will be cancelled immediately after the agreement takes effect. In terms of specific products, China's implementation of zero tariff products will fully cover the main export products of Ecuador. After the agreement takes effect, the tariffs on Eritrean products such as bananas, white shrimp, fish, fish oil, fresh and dried flowers, cocoa, and coffee will gradually decrease from the current 5% to 20% to zero when entering the Chinese market. At the same time, the Eritrean side will also implement zero tariffs on China's main export products. After the agreement takes effect, when most products made in China, such as plastic products, chemical fibers, steel products, mechanical appliances, electrical equipment, furniture decoration, automobiles, and components, enter the Eritrean market, tariffs will be gradually reduced and cancelled from the current 5% to 40% level. In terms of origin, the agreement mainly stipulates two aspects. According to the above person in charge, the first is the rules of origin, which provide detailed regulations on the standards of origin, cumulative and regional value components, minor content, minor processing and processing, interchangeable materials, neutral components, packaging materials and containers, spare parts and tools, complete sets of goods, direct transportation, and other regulatory content. The second is the implementation procedures for origin, which have specific requirements for the format, issuance and preservation of origin documents, obligations of the importing party, origin verification, electronic exchange of origin data, and other procedural content.

In terms of customs procedures and trade facilitation, the agreement, based on WTO rules, makes specific provisions on facilitation, tariff classification, transparency, pre adjudication, risk management, and goods release, in order to simplify customs clearance procedures as much as possible and provide efficient and efficient services for enterprises. At the same time, both sides will further deepen customs cooperation, strengthen information exchange and communication coordination.

The above person in charge said that while implementing high-level openness, the agreement has also made relevant arrangements for trade remedies, setting a "safety valve" for market openness. The agreement reaffirms the relevant rights and obligations of both parties under the World Trade Organization, and further provides detailed provisions on anti-dumping and countervailing measures, global safeguard measures, bilateral safeguard measures, as well as procedures, standards, investigation procedures and transparency for implementing safeguard measures, temporary measures, notifications and consultations, compensation, etc.

In addition, in terms of sanitary and phytosanitary measures and technical barriers to trade, the two sides agreed to further strengthen communication and cooperation between the competent authorities of the two countries in the areas of sanitary and phytosanitary measures and technical barriers to trade on the basis of WTO rules. In terms of sanitary and phytosanitary measures, the agreement reaffirms the relevant rights and obligations of both parties under the World Trade Organization, and further regulates risk analysis, regionalization, equivalence, transparency, and other aspects. With regard to technical barriers to trade, the agreement further stipulates standards, equivalence, conformity assessment, transparency, information exchange, technical cooperation, etc. on the basis of reaffirming the relevant rights and obligations of both parties under the WTO.

We will also discuss areas of common interest

Further negotiations

What arrangements have been made in the China Ecuador Free Trade Agreement for other fields? The above person in charge stated that in the field of investment cooperation, both parties agree to deepen cooperation in investment promotion and facilitation, mainly including sharing and exchanging investment information, improving transparency of the investment environment, simplifying application approval procedures, and incorporating sustainable development provisions such as environmental measures and corporate social responsibility.

In the field of e-commerce, both parties have made regulations on transparency, electronic transactions, electronic authentication and signature, online consumer protection, personal information protection, paperless transactions, non invited commercial electronic information, network equipment, network security cooperation, data innovation, and other aspects, encouraging enterprises from both countries, especially small and medium-sized enterprises, to explore the market through e-commerce.

In the field of competition, on the basis of recognizing the independence of competition law enforcement, both sides have reached an agreement on law enforcement principles, transparency, law enforcement cooperation, notification, consultation, information exchange, technical cooperation, consumer protection, etc. The aim is to create a good business environment by strengthening exchanges and cooperation, and promote trade and investment exchanges between enterprises of the two countries.

In the field of economic cooperation, both parties agree to encourage cooperation between government departments, industry, and relevant institutions in areas such as agriculture, fisheries and aquaculture, small and medium-sized enterprises, export promotion, tourism, technology and innovation, education, culture, traditional medicine, and the environment.

In addition, in the future, both sides will further negotiate on areas of common interest and upgrade the free trade agreement.

Regarding the expected entry into force of the China Ecuador Free Trade Agreement, the above-mentioned person in charge said that after the agreement is signed, both parties will respectively fulfill their domestic legal approval procedures to promote the early entry into force and implementation of the agreement. The agreement text will be posted on the China Free Trade Zone Service Network( http://fta.mofcom.gov.cn )Announced on for public consultation and reference.