Ecuador makes strides in integration process in trade facilitation and infrastructure

July 15, 2022

Together with the Ministry of Foreign Trade, CAF presented the 2021 Economy and Development Report, which analyzes the limited use of regional space as a complement to a global export expansion strategy, and puts forward three areas of action to prioritize: trade facilitation, physical infrastructure and productive integration.

 

Over the past 30 years, most Latin American countries have implemented trade opening policies, both unilaterally, multilaterally, and as part of regional and extra-regional trade agreements. These policies resulted in reduction of tariffs and non-tariff barriers, thus leading to increases in trade and investment, which on average have been lower than expected.

Ecuador’s performance in this area has matched the region’s in terms of trade openness in the period 1980–2019, in which the percentage of GDP rose from 32% to 44%, in line with the modest performance of the region in general, which went from 52% to 62%. 

These were some of the findings of CAF’s Economy and Development Report (EDR2021), entitled “Pathways to integration: Trade Facilitation, Infrastructure and Global Value Chains” presented in Ecuador with opening remarks by Jorge Arbache, CAF Vice President of the Private Sector, and Julio José Prado, Minister of Foreign Trade, Production, Investment and Fisheries.

 

“Ecuador is a country with entrepreneurial capacity, talent, natural wealth and potential to integrate economically with the region,” said Arbache, and added that trade and investment are the most suitable channels to attain this goal.  In this connection, he underscored that the report presented by CAF includes broad ideas, but in a practical framework to support public and private policies, with a view to boosting relevant aspects such as productivity, trade, competitiveness, income and job creation in Latin American countries.

Furthermore, Minister Prado emphasized the contribution of CAF’s publication as an input for strategies and actions around the new dynamics that foreign trade is experiencing. He also commented on the work conducted by the Ministry of Foreign Trade, Production, Investment and Fisheries through the Ecuador Compite Strategy, which seeks to prioritize an agenda that boosts the nation’s competitiveness, through three strategic pillars: Productive Ecuador, Global Ecuador, and Ecuador Innovates.


"Although the signing of numerous free trade agreements within Latin America and the Caribbean has helped us eliminate tariffs, which suggests that almost 85% of trade is not subject to these, in the region, as well as in Ecuador, trade showed a moderate increase, mainly explained by a low level of intraregional trade” said Lian Allub, chief economist at CAF’s Socioeconomic Research Directorate and who presented the report during the event.


Allub noted that Ecuador still has room for improvement in terms of trade facilitation, particularly in cooperation with external and internal border agencies, availability of information, or appeal processes, and in relation to transport infrastructure, especially related to international trade. As regards the promotion of productive integration, he noted that streamlining and harmonization of rules of origin and the attraction of foreign direct investment could boost the nation’s integration into regional and global value chains.

The presentation of the report was followed by a panel of experts featuring Equair CEO Gabriela Sommerfeld, Public-Private Partnerships and Delegated Management technical secretary Roberto Salas, Center for Competitiveness and Innovation Executive President Nathalie Cely, Millenium S.A. CEO Pablo Campana, and Sergio Guerra, principal economist of CAF’s Directorate of Macroeconomic Studies, as moderator.

The panelists agreed that Ecuador has tremendous trade opportunities in several industries such as agribusiness, and that transforming the logistics system is essential to greater competitiveness. Similarly, participants ratified the importance of having cluster strategies, public-private agendas, long-term public policies and improvement plans where academia, the productive sector and—in particular—decentralized autonomous governments contribute based on their country vision.

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