Stephen Potter says Ecuador can look at the experience of Peru, which saw a doubling of exports to Canada under FTA.

On January 31, Ecuador and Canada concluded negotiations for a trade agreement that began in April 2024.

Internal processes are now underway in each country in order to ratify the treaty and put it into effect.

Canadian Ambassador to Ecuador Stephen Potter said that Ecuador has a lot of potential and could study the experiences of its neighbors to better understand the North American market.

The non-oil trade balance with Canada showed a deficit for Ecuador, with US$ 70.2 million, at the end of 2024, which implies that imports are greater than Ecuadorian exports, according to data from the Central Bank.

- What does this agreement with Ecuador represent for Canada?

For us, we are going to complete a “necklace” of free trade agreements (FTAs) with this Pacific region of South America. We are completing the FTAs that we have had for fifteen or more years with Colombia, Peru and Chile. Ecuador is a market for our producers, not as big as Chile, but it has a lot of potential.

- What opportunities do you see in Canada that can be taken advantage of with this agreement?

We are already selling products to Ecuador; we sell wheat, which is the main export.

We think we can increase the market for agricultural products, but where there is more potential is in sectors such as machinery or telecommunications, in which Canada has competitive products.

There are sectors here (in Ecuador), such as aquaculture, where there are possibilities to sell Canadian equipment or machinery or services.

- What would be the tariff reduction for Canadian products entering Ecuador?

It will depend on the products, but the tariff reduction is rapid for both countries. It is much faster for Ecuadorian exports than imports from Canada. About 75% of Canadian products will be tariff-free from the start of the agreement; then, in 3 years and in 8 years, practically 100% will be applied.

- How can Ecuador take advantage of the trade agreement?

I think that the opportunities are greater, at least initially, in the agricultural sector: exports of fruit, preserves, juices. There are immediate advantages for roses, for example, which now have a 10.5% tariff. There are also immediate opportunities for tuna and other preserves.

In the medium term, and perhaps even in the short term, there may be increases in exports of products such as ceramics from Cuenca, for example, wood, footwear, and handicraft products.

One should not only think about what is being marketed now, but also about new opportunities. Ecuador can look at Peru's experience, which is more similar in terms of exports. With the FTA, Peru saw a doubling of exports to Canada.

- What aspects of these experiences can Ecuador learn from?

Companies with export potential will need to carefully analyze the Canadian market: what are the needs and opportunities for Ecuadorian products, what are the demands of the Canadian market.

This market is not super easy. This will require an effort from exporters and the Ecuadorian government. The good thing is that this experience already exists in the Andean region.

- How can SMEs leverage themselves to benefit from the agreement?

This is the challenge for the Government of Ecuador, for Fedexpor (Ecuadorean Federation of Exporters), for exporters. We do have certain technical assistance for SMEs, including indigenous ones, incorporated into the FTA.

- What is the status of the internal processes for the validity of the agreement?

Both sides (Ecuador and Canada) are doing the legal review of the text. Then it goes to a translation. In Ecuador it has to go through the Constitutional Court, to give its approval or suggest some changes.

This may take two or three months, perhaps. Then we sign the document and both countries have to go through ratification in the two Parliaments. As soon as the text is passed to the Parliaments, the document is opened for public review.

- Would the aspiration be to complete these processes before June?

The revision and translation, yes, perhaps. Ratification may take longer. On our side there is a commitment, an interest in moving quickly with ratification; but, like Ecuador, we will have elections this year. I think that on the Canadian side there is a very good disposition of the parties to support this relationship.

- What is anticipated in terms of trade growth as a result of the agreement?

Canadian analysts estimate that the FTA could generate positive benefits for both countries. According to the analysts, bilateral trade could increase by US$ 404.4 million by 2030.

Studies also suggest that the FTA could increase Ecuador's GDP by US$49.3 million (0.025%) by 2030.

Reducing or eliminating tariffs would generate savings for exporters in both countries.

For example, it could generate tariff savings totaling C$55.6 million or US$38.4 million for Canadian exporters, and C$4.5 million (US$3.1 million) for Canadian importers.

- What do you think of social organizations that oppose the agreement and claim that large Canadian mining companies will benefit from it?

I think there have been certain assumptions about the content of the agreement. But (mining) does not have a chapter; I don't even know if it has the word mining or mine in the text.

The focus of the treaty is commercial. Canadian companies have many investments here in Ecuador; we have a strong mining sector and we have the most advanced practices.

What the agreement does have, which may affect the mining, oil and other productive sectors, are guarantees, on both sides, that the highest environmental standards will be maintained in terms of environmental consultations or prior consultation; for example, inspection standards, labour standards, because at this level Canadian companies can compete.

What we don't want is to compete with other companies that have lower standards. So I think those critics should review the text when it comes out to see just that.

- Regarding the announcement by the United States to impose tariffs on Canada, how does your country plan to deal with this?

We will have to see what the tariffs, which were postponed for a month, are supposed to be applied to.

Our Prime Minister (Justin Trudeau) a month ago, just before the supposed imposition of these tariffs, announced a package of counter-tariffs from Canada starting with US$30 billion of new immediate tariffs on sensitive American products and a package of 130, if I'm not mistaken, US$1 billion on other products to be imposed in two or three weeks later.

I imagine that if President Trump persists in imposing these tariffs, this will be the reaction from Canada.

Our Prime Minister Trudeau has made it clear that it is the Americans who are going to pay more for this. This is going to result in tremendous inflation for the US.