China and Ecuador have finalized a free trade agreement aimed at enhancing Ecuador’s non-oil exports by up to $4 billion over the next ten years.

The comprehensive agreement encompasses 99.6 percent of Ecuador’s exports, granting access to China’s massive consumer market of 1.4 billion people.

Ecuador’s trade minister, Julio Jose Prado, hailed the agreement as a significant opportunity for exporters and industries reliant on Chinese raw materials. Notably, China emerged as Ecuador’s primary non-oil trading partner in the first half of 2022.

The negotiations for the free trade agreement commenced in February 2022 during the visit of Ecuador’s President Guillermo Lasso to China. Prado emphasized that the agreement focuses exclusively on trade matters, excluding discussions on services, investments, public procurement, and other potentially sensitive sectors.

The relief on tariffs for Ecuador’s traditional exports, including bananas, cocoa, shrimp, and roses, will be implemented gradually over a period of five to ten years. However, immediate tariff relief will be provided for other goods.

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China, as the world’s second-largest economy, has previously established similar trade pacts with Latin American countries such as Peru, Costa Rica, and Chile.

Ecuador anticipates that its non-oil exports to China will increase by $3 billion to $4 billion, fostering employment opportunities in the export sector. Approximately 1.2 million jobs are already tied to Ecuador’s exports, a figure that could potentially double within the next decade, according to Prado.

To safeguard Ecuador’s local manufacturing sector, certain Chinese products, including textiles, footwear, and ceramics, are excluded from the agreement. China’s growing influence in Latin America is exemplified by its status as Ecuador’s principal financier during President Rafael Correa’s tenure from 2007 to 2017.

At that time, Ecuador’s debt accounted for $5 billion or four percent of the current GDP. President Lasso’s administration has also pursued negotiations to extend payment terms and reduce interest rates on $3.2 billion of debts held with Chinese state-affiliated banks.