Analysis of the Ecuadorian trade openness strategy Case Study of Multiparty trade agreement between the European Union and Colombia, Peru and Ecuador

Abstract

Since the last decade, the Ecuadorian trade policy has been focused on an endogenous development, promoting protectionist measures to encourage the national industry and improve results of the balance of trade. Due to this situation, foreign sector was neglected for a long time, and as a result, Ecuador lost its share in international markets and lost competitiveness in comparison to its neighboring countries. Consequently, Ecuador saw the need to increase foreign trade flows. Thus, the Government pursued a strategy of trade openness to insert the country in worlds economy by the negotiation of trade agreements with in the region and the world. In this aspect, Ecuador is shifting its protectionist policy to a more open market policy, to change its trade patterns and increase its participation and competitiveness in international trade.

Under these considerations, in 2016 Ecuador adhered to the Multiparty Trade Agreement with the European Union, Colombia and Peru. This Agreement represent a milestone for the Ecuadorian strategy of trade openness since it is the most significant trade agreement the country has signed until now.

Moreover, it is argued that the Agreement represents an important opportunity for Ecuador to promote its productive sector and increase exports.

The present study analyses the effects of the Multiparty Agreement for Colombia and Peru, which are implementing the Agreement since 2013. The analysis is based in the results of balance of trade with the EU, and the imports-exports trends and composition for the Parties. Considering the results of the study, it was possible to propose policy recommendations for Ecuador to maximize the benefits and prevent the possible negative effects regarding the implementation of the Trade Agreement.

Keywords: Multiparty Trade Agreement, European Union, Colombia, Peru, Ecuador, implementation strategy.

Student Number: 2016-25731