Ecuador and the United States started a backup plan.

The Government turns to an alternative strategy because there is less and less chance that Ecuador will be able to sign a free trade agreement with its primary trading partner.

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The Government’s plan B is to include Ecuador in the tariff favors provided by the United States to the Caribbean nations to increase access to its exportable supply to that nation.

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In March 2023, Senators Bob Menendez and Jim Rish of the United States submitted a measure that would have allowed this option.

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The purpose of the legal action is to allow Ecuador to take advantage of the Caribbean Economic Recovery Law, which has been in effect since 1983.

To lay out a plan that will provide access to this statute, representatives of the Government and the corporate sector will go to Washington in June, according to Julio José Prado, Minister of Foreign Trade, Investment, and Fisheries.

According to Prado, this method might provide 0% tariff access to 50% to 70% of Ecuador’s exportable supply to the United States.

the recipients

According to Prado, tropical fruits, broccoli, bananas, shrimp, and banana goods would all benefit. in addition to textiles and tuna.

According to Xavier Rosero, vice president of the Ecuadorian Federation of Exporters (Fedexpor), Ecuador loses USD 200 million in export growth every year and continues to pay tariffs to access its products into the United States.

What are the tariff amounts?

Because they are among the imports with preferential treatment from any nation, shrimp, and bananas, the principal non-oil export products, are exempt from tariffs in the United States.

The Generalized System of Preferences (SGP), which also provides tariff reductions, protects others, on the other hand. But since 2020, this system has been shut down.

Flowers, mangos, and wires are a few of the products included in this scheme. Fresh vegetables, canned fruits, timber products, and manufactured goods are also included. These products have tariffs ranging from 1% to 17.9%.

The highest fee payers

Broccoli, with 15% import taxes, and canned tuna, with 12% to 35% import taxes, are the products that incur the highest import taxes upon entering the United States and are not covered by any preference scheme.

What rules must Ecuador follow?

Iván Ortiz, the director of the Business Center of the Ecuadorian American Chamber of Commerce (AmCham), lists the requirements that the recipient nations must meet under the Caribbean Basin Economic Recovery Law as follows:

Not living in a country where communism is practiced.
Observe the rights to intellectual property.
Don’t nationalize or take over US businesses.
Respect international laws and rules.
Contrary to the Andean Tariff Preferences and Drug Eradication Law (Atpdea), this regulation does not call for the recipient nation’s assistance in the war on drugs.

Advantage for SMEs

According to Ortiz, if the US Senate approves this bill, it will provide enterprises that export to that nation more oxygen and allow them to increase their exports.

More than 90% of businesses that export to the US are small and medium-sized businesses. According to Ortiz, these businesses are the biggest employers, so any increase in their revenues will affect employment.

According to Ortiz, pushing the trade agenda with the United States is crucial to creating more jobs, preventing illegal immigration to the country, and avoiding the recruitment of children into gangs.

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