POWERHOUSE OF GROWTH

Ecuador 2013 | ECONOMY | INTERVIEW

TBY talks to Francisco Rivadeneira, Minister of International Trade, on trade negotiations with the EU, diversifying exports, and changing the economic and productive matrix.

Francisco Rivadeneira
BIOGRAPHY
Born in 1970, Francisco Rivadeneira is an expert in foreign trade. A speaker of several European languages, he is currently the Minister of International Trade of Ecuador. He earned a Bachelor’s degree in international relations from the University of Geneva, as well as a Master’s degree in international economics and political relations from the Institut de Hautes Études Internationales et du Développement in the same city, among a host of academic achievements both overseas and in Ecuador. He is also a member of the Network of Export Consultants and has been highly active in economic, trade, and academic circles.

What is your vision for the future of Ecuador's external economy?

The trade agreement with the EU will be one of the most significant issues of my term as Minister of Foreign Trade, and international negotiations are a must. The EU is one of our main markets for non-oil exports, and based on the President's instructions, we're working toward restarting negotiations with the EU. We went on a trip to Brussels in July 2013 to meet with members of the European Commission and the European External Action Service to discuss the desire that Ecuador has to restart negotiations as soon as possible, as well as the political and technical necessities. I'm very optimistic and confident that we can successfully finalize these negotiations and reach an agreement by the first trimester of 2014.

What will be the economic impact of your efforts to geographically diversify trade?

We're going to continue our efforts to diversify the destinations of our exports. We'll concentrate on the areas where we've been working until now, like Latin America, especially the parts of the continent where we've yet to realize our full potential, such as Central America and the Caribbean, as well as countries in Mercosur and Mexico. The Andean Community and Chile are our traditional markets, and we're already strong there. The aim now is to branch out into parts of Latin America where we have little presence in terms of exporting Ecuadorean goods. Another country we want to work with more in the Americas is Canada. Outside of the Americas, we're going to accelerate our diversification in Europe, concentrating especially on those member states of the EU where we're not very strong at the moment, mainly the Central and Eastern European countries ­­­—such as Poland, Czech Republic, Hungary, and Austria, as well as the Scandinavian and Baltic countries. Outside of the EU, we're going to work with countries in the CIS region, including Ukraine, Belarus, Azerbaijan, Kazakhstan, Turkmenistan, and others—countries that have enormous potential, are growing rapidly, and buying Ecuadorean goods. We also want to work with Turkey and expand Ecuadorean goods through Turkey to the region surrounding it. Finally, we'd also like to expand in Northeast Asia, Japan, South Korea, and China in particular. Those are the main markets where we seek to diversify exports.

How important is membership in the Pacific Alliance for Ecuador, and how important is South-South cooperation for your country?

The Pacific Alliance is a very interesting initiative in which the main objective from the trade and commerce point of view is to strengthen relations between countries that are part of the alliance, looking to work together to expand their capacities to export goods and services to the other side of the Pacific, Asia, and Oceania. Ecuador is naturally very interested in following the process and seeing how we can get involved based on our vision of international trade and showing our interest in the process. That's why Ecuador first chose to enter the Pacific Alliance as an observer. We were accepted in that status at the last meeting in Cali, Colombia. Now that we're a part of the process, we'll analyze the possibility to continue, advance, and participate directly in some areas. We could begin by participating in export promotion activities and strategies. This would involve joint promotion of our member states' goods in areas of the world where we don't have so much experience, or where the overall supply we offer as a group is more important than our individual capacities, so we can all work together to be able to satisfy that demand. We have to look into the future and see the possibilities of stronger integration. One possibility we're working to have in the future is a free trade zone (FTZ) in goods with other countries in the Pacific Alliance. The only member of the Pacific Alliance with whom we need to strengthen relations at the moment is Mexico.

“We're going to continue our efforts to diversify the destinations of our exports."

Ecuadorean exports to Andean countries increased 11% in 2012. What role do you envision Ecuador playing in Latin America?

I believe Ecuador will play a leadership role in the region. The country has been very successful both from a political and economic point of view. We have a stable economy that is expected to continue growing, especially as we develop. We should be able to grow 5%-6%, or maybe even 7% in the next few years. That will help us reduce the gap between developed countries and Ecuador, and will give us more regional influence. On the other hand, we're at the middle point between countries such as Cuba and Venezuela, which have very specific political systems and an important state role in planning the economy, and countries such as Chile and Colombia, which are very free-trade and free-market oriented. This gives us the chance to enable the two systems to coexist in the region, acting as a kind of pivot. Hopefully, Ecuador will have a role in strengthening the new institutional structures that exist in the region, such as UNASUR for South America, and CELAC in the Latin America and Caribbean region. We should be able to influence those institutions for the sake and interests of the Latin American and Caribbean regions.

What are your main priorities during your term, besides the trade agreement with the EU?

Our priority is to change the economic and productive matrix of the country. To influence and help this process is the main objective of the ministry. We want to change the matrix to one that is based on higher value-added goods, where the main factor of production is talent and knowledge. For that, we need economies of scale and large markets. It's not possible for us to build that kind of project as Ecuador alone—we need to find adequate international partners in order to achieve this goal. At the Ministry we have to be the ones to help those new industries to open up to the markets and we keep track of what the tendencies are in the market for the goods and services that consumers demand. Besides, we are aiming to diversify Ecuador's international market for goods and services. Our trade depends mainly on the Andean Community, the EU, and the US. We want to expand into new markets, and this lessens our exposure to risk, which is otherwise significant if we are dependent on just one or two markets. There's still instability in the international arena, and we've yet to completely overcome the latest financial crisis of 2009-2010. We also want to introduce new actors to the international marketplace. We want more democracy in our international trade sector. Right now, international trade is concentrated in a few hands in Ecuador, and we want to introduce more actors—especially SMEs and even micro enterprises.

What is your mid-term outlook for the Ecuadorean economy?

We have the economic resources to continue to grow. Our GDP will continue to increase, and there will be greater welfare in Ecuadorean society. We'll have a stable economy with a better introduction to international markets and more investment coming into the country, with Ecuador coming back to the international capital markets and being able to attain better financial access. The country is planning for fantastic infrastructure and a more skilled labor force with high levels of education and training. There will be political and economical stability, with sustained economic growth. We'll continue to focus and develop South-South relations, considering the most growth in the 21st century will not be seen in the developed world but the developing world, particularly in the Asia-Pacific, Middle East, and Latin America. Overall, the country will change for the benefit of the majority of our country, and Ecuador will be well placed between two future economic powerhouses: Latin America and the Asia-Pacific region.