The development prospects of agricultural product trade between China and Ecuador are broad

The China Ecuador Free Trade Agreement will come into effect on May 1, 2024. Since the signing of the Free Trade Agreement (hereinafter referred to as the "Agreement") between China and Ecuador on May 11, 2023, 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. What is the current situation of agricultural product trade between China and Ecuador? How will agricultural trade between the two countries develop after the implementation of the agreement?

Ernong has abundant fishery resources, mainly growing tropical crops such as bananas and cocoa beans, and mainly raising South American white shrimp. The export of shrimp, bananas, cocoa beans, and flowers plays a crucial role in its economy.

Bilateral agricultural trade is developing rapidly and its proportion in goods trade is constantly increasing. From 2018 to 2023, the trade volume of agricultural products between China and Ecuador increased from 780 million US dollars to 3.92 billion US dollars, with an average annual growth rate of 38.1%, far higher than the 9% growth rate of China's global agricultural product trade during the same period, and also higher than the 19.1% growth rate of bilateral trade in goods between China and Ecuador.

From 2018 to 2023, the proportion of agricultural product trade between China and Eritrea in goods trade increased from 13.7% to 28.7%, with imports of agricultural products from Eritrea accounting for 49.3% of goods imports increasing from 37.1%. With the rapid growth of agricultural trade, China has been the second largest agricultural trade partner of Ecuador for five consecutive years since 2019; Starting from 2022, Ecuador has become China's fourth largest agricultural trading partner in Latin America, and China has surpassed the United States to become Ecuador's largest agricultural export market.

Bilateral agricultural product trade is mainly based on imports from China, with a relatively concentrated variety of products. China's imports far exceed exports. From 2018 to 2023, China's import of agricultural products from Eritrea increased from 740 million US dollars to 3.84 billion US dollars, with an average annual growth rate of 39%; The export value of agricultural products to Eritrea increased from 42.245 million US dollars to 80.211 million US dollars, with an average annual growth rate of 13.7%; The trade deficit has expanded from $700 million to $3.76 billion.

China mainly imports shrimp and bananas from Ecuador, with import values of 3.55 billion US dollars and 180 million US dollars respectively in 2023. China is the largest export market for Eritrean shrimp, accounting for 57.8% of Eritrean global exports; Ecuador is the largest import source of shrimp and the fourth largest import source of bananas in China, accounting for 59.2% and 16.9% of China's global imports, respectively.

China mainly exports fresh and cold garlic, animal feed, and tuna to Ecuador, with export values of 13.606 million US dollars, 11.795 million US dollars, and 10.863 million US dollars in 2023, respectively. China is the largest source of fresh and cold garlic imports from Ecuador, accounting for 78.1% of its global import share.

The negotiation of the China Ecuador Free Trade Agreement started in February 2022, and the two countries officially signed the agreement on May 11, 2023. According to the tariff reduction arrangement for goods trade in the agreement, 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.

After the agreement takes effect, Ecuador will immediately reduce or gradually cancel tariffs on Chinese agricultural products such as vegetables and tea. Among them, soybean meal, processed mushrooms, and tea drinks will be immediately reduced to zero tariffs, apples and pears will be reduced to zero tariffs within 5 years, black tea and fresh and cold tomatoes will be reduced to zero tariffs within 10 years, green tea and processed tomatoes will be reduced to zero tariffs within 15 years, and frozen sweet corn and garlic will be gradually reduced to zero tariffs within 20 years.

After the agreement takes effect, when Eritrean products such as bananas, shrimp, fish, fish oil, fresh and dried flowers, cocoa, and coffee enter the Chinese market, tariffs will gradually decrease from the current 5% to 20% to zero. Among them, the tariff for processing tuna, sardine and other products will be immediately reduced to zero, roses and cocoa beans will be gradually reduced to zero within five years, and prawns and bananas will be gradually reduced to zero within ten years. Fish meal used for animal husbandry will enter the Chinese market in the form of partial tax reduction.

The entry into force of the agreement has created new opportunities for China and Ecuador to further deepen bilateral relations and expand cooperation in the field of agricultural economy and trade.

Firstly, promote the development of agricultural product trade. Reasonably utilize the tariff reduction policies and rules of origin under the agreement to enhance the stickiness of the economic and trade relations between the two countries through agricultural trade cooperation. Expanding imports of shrimp, bananas, flowers, and other advantageous agricultural products such as garlic from China to Ecuador to meet the consumption needs of both countries.

Secondly, promote the facilitation of customs clearance for fresh agricultural products. Promote the facilitation of agricultural product customs clearance between China and Ecuador, and improve cooperation in inspection and quarantine of aquatic products, fruits, and other fields. Further unleash the development potential of cross-border e-commerce for agricultural products and improve bilateral trade efficiency.

Finally, promote cooperation in agricultural economic and trade cooperation parks. Strengthen agricultural technology cooperation, such as the construction of China Ecuador Agricultural Industrial Park, and carry out cooperation in areas such as plant resource protection, environmental protection, agricultural mechanization, and disease and pest control.

[Source: Agricultural Industry Branch of China Council for the Promotion of International Trade (Agricultural Trade Promotion Center of the Ministry of Agriculture and Rural Affairs)]