Ecuador's National Assembly approves the free trade agreement between Ecuador and China on February 7, 2024. The approval marks the completion of all legal approval procedures for the agreement on the Ecuadorian side. Photo: VCG

 
The free trade agreement (FTA) between China and Ecuador will be effective from May 1, China's Ministry of Commerce (MOFCOM) said on Monday, aiming to further unleash the potential of trade and investment cooperation between the two countries.

According to the agreement, China and Ecuador will cancel tariffs on 90 percent of tax items, of which about 60 percent will be canceled immediately after the agreement comes into effect.

When most Chinese products such as plastic products, chemical fibers and steel products enter the Ecuadorian market, Ecuadorian import tariffs will be gradually cut to zero from the current 5 to 40 percent. 

When Ecuador's major export products such as bananas, shrimps, fish and fish oil enter the Chinese market, China's import tariffs will be gradually reduced from the current 5 to 20 percent to zero. 

The gradual elimination of tariffs between China and Ecuador will play an important role in expanding bilateral trade, promoting industrial chain integration and mutual investment, MOFCOM said. 

The effective implementation of the FTA will enhance the level of trade and investment liberalization and facilitation between the two countries, further stimulate the potential of trade and investment cooperation, promote the all-round improvement and upgrading of bilateral economic and trade cooperation, MOFCOM added. 

The biggest advantage of the FTA signed between China and Ecuador is its significant reduction or exemption of bilateral trade tariffs and the cutting of trade barriers, Wang Youming, director of the Institute of Developing Countries at the China Institute of International Studies in Beijing, told the Global Times on Monday.

Ecuador will gain numerous benefits. As a country with a much smaller economic stature compared to China, the ability to establish such an agreement with such a vast market undoubtedly presents "huge advantages" for Ecuador, Wang said.

On February 7, Ecuador's National Assembly approved the agreement between Ecuador and China, Xinhua News Agency reported, citing local authorities.

The approval marks the completion of all legal approval procedures for the agreement on the Ecuadorian side.

China and Ecuador signed the FTA in May of 2023, after a year of negotiations, making Ecuador China's 27th free trade partner, and China's fourth FTA partner in Latin America, after Chile, Peru and Costa Rica.

China is Ecuador's second-largest trading partner. In 2022, bilateral trade reached $13.1 billion, up 19.7 percent year-on-year, according to data from the General Administration of Customs.

MOFCOM also said on Monday that there will be new institutional arrangements established for bilateral cooperation after the agreement comes into effective. 

The two sides will establish a closer communication and cooperation mechanism in the areas such as rules of origin, customs procedures and trade facilitation, MOFCOM confirmed.