The trade relationship between Mexico and Ecuador is going through a difficult time, due to issues that recently disturbed the peace within the Mexican embassy in the South American country, which is now compounded by the imposition of a 27% tariff on Mexican products by the Ecuadorian government.
The recent imposition of a tariff by the government of Daniel Noboa has been interpreted as a measure with a more political than economic background.
“We were very surprised by the imposition of the 27% tariff, both because of the figure, because the quantification is not clear where and why that percentage is taken from, and because of the moment in which it is given,” said José Luis Valencia, general director of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce) Veracruz , in an interview .
Among the Mexican products most affected by this measure are medicines, medical products, electronics, screens, monitors, projectors, automobiles and auto parts .
Although the impact on the Mexican economy will not be significant at the macroeconomic level, it could affect specific sectors.
“Maximizing the impact, we can say that it will not significantly impact GDP, but it may affect bilateral relations between national companies and their Ecuadorian counterparts,” said the general director of Comce Veracruz.
Furthermore, as has happened with other tariff barriers, the final cost will fall on Ecuadorian consumers , Valencia warned.
Despite political tensions, the Mexican business sector seeks to maintain open trade relations with Ecuador .
“We will do everything possible to minimize the impact on costs for Ecuadorian businessmen,” said Valencia.
To this end, alternatives in logistics and transportation are being explored , taking advantage of the maritime connectivity between both countries through the ports of Manzanillo, Lázaro Cárdenas and Veracruz .
Valencia also stressed the importance of private initiatives to maintain trade ties, even when diplomatic relations are deteriorating.
“It will be complex through the Ministry of Foreign Affairs and the diplomatic representations of Mexico in Ecuador, but this is where the private sector comes in to provide that support,” he said.
The outlook for trade relations between Mexico and Ecuador will largely depend on the outcome of the upcoming elections in the South American country.
“There is no tariff that lasts more than 100 years. As soon as the negative effects it has on the consumption of products are seen, a rethinking will have to be done,” said Valencia.
Although the Mexican government has dismissed this measure and the commercial impact is limited, José Luis Valencia believes that this should be taken with the necessary seriousness, since Ecuador remains a strategic market.
“There are no small customers. Despite representing less than 1% of Mexico’s foreign trade, it is still a country with which we have had long-standing trade relations,” said Valencia.
While the situation is being clarified, the private sector will continue to work to minimise the negative effects of these decisions and keep bilateral trade as stable as possible.
Mexico – Ecuador relationship
For years, attempts have been made to reach a Free Trade Agreement (FTA) between the two countries, however talks have been stalled since 2023.
One of the main obstacles in the FTA negotiations, according to José Luis Valencia, has been Ecuador’s insistence on including tariff preferences for its shrimp and plantain exports, something that Mexico does not consider viable.
“Ecuador has been very aggressive in wanting to introduce into this treaty a preference for its shrimp and plantains towards Mexico,” he explained.
Mexico, being self-sufficient in bananas and not a major importer of crustaceans, has not seen this requirement as appropriate.
As mentioned by the President of Mexico, Claudia Sheinbaum, Mexican exports to Ecuador represent only 0.4% of the country’s total exports .
However, according to the Mexican government website, in commercial terms, Mexico’s main export to Ecuador in 2023 was medicines consisting of mixed or unmixed products, preparations for therapeutic or prophylactic uses, with a value of 68.2 million dollars (mdd) .
The main exporting states were Mexico City (US$202 million), State of Mexico (US$123 million) and Nuevo León (US$63.3 million).
On the other hand, Mexico’s main import from Ecuador in 2023 was cocoa beans , whole or split, raw or roasted, with a value of US$60.8 million . The main recipients of these imports were Mexico City (US$121 million), Jalisco (US$32.8 million) and Chihuahua (US$14.7 million).
Regarding foreign direct investment (FDI) , between January and September 2024, Ecuador invested $5.63 million in Mexico.
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