With the Ecuadorian government’s announcement that it would not renew trade benefits with the United States, exporters from the country could now face much higher tariffs to enter the North American market.
The Andean Trade Promotion and Drug Eradication Act (ATPDEA) – rejected last week by president Rafael Correa – provides tariff preferences for a variety of products exported from four Andean countries, including Ecuador, for fighting drug trafficking.
President Rafael Correa was emphatic in the irrevocable resignation of ATPDEA, citing the “threat, insolence and arrogance of certain U.S. sectors for the Snowden case.”
Concern has arisen in the nation’s export sector, however, regarding the disappearance of preferential tariffs.
Ecuadorian Exporter Federation’s president Felipe Rivadeneira told www.freshfruitportal.com, “unfortunately, due to this political impasse, the good work being done by the private and public sectors, as well as the U.S. Embassy, will be lost.”
“Now we have, more or less, US$480 million in exports at risk that benefited from these tariffs. We’ll have to consider the possibility of estabilishing compensatory measures at an internal cost and reducing internal costs to remain competitive,” he said.
“Pineapples, papayas, etc., and all canned goods will be going into the North American market with 13%-14% greater cost.”
Ecuadorian Mango Federation president Bernardo Malo described the political move as largely symbolic.
“The preference is effective until July 31, 2013. All Ecuadorian products covered by the preference will continue to enter without a tariff. Customs will not modify its system just because one person 0r country renounced its right,” Malo said.
He added that, by any means, the agreement would not have been renewed anyway.
“What has happened it that its a symbolic refusal of an agreement that was not going to be renewed. There are a lot of criteria differences between the two governments and it was unlikely that the efforts for renewal would give results. Before there were more countries that applied pressure, but now they have free trade agreements. Ecuador only had these preferred tariffs,” Malo said.
In addition to ATPDEA, other products like mangoes are reviewed by the Generalized System of Preferences (GSP), which is also expected to expire on July 31.
“The system should be renewed but we have heard that the U.S. Congress’s schedule is very full, which will make it unlikely that the topic is reviewed by then,” Malo said.
Later, however, Malo explained it is likely the GSP will be renewed.
“The GSP could be renewed at an uncertain date and probably will take effect retroactively, which normally occurs. The tariffs paid during the expiration of the GSP could be returned,” he said.
Rivadeneira expressed hope that the two countries would come to a diplomatic agreement.
“We have called for calm. Ecuador does not achieve anything by moving away from business and political relations with a country like the United States,” Rivadeneira said.
“We hope that the adequate decisions are taken for the country and its citizens.”