REPRESENTING 85% OF NON-OIL EXPORTS

Ecuador 2020 | ECONOMY | VIP INTERVIEW

TBY talks to Daniel Legarda, Executive President of the Ecuadorian Federation of Exporters (Fedexpor), on a diversified export basket, the EU Free Trade Agreement, and the future of the Pacific Alliance.

What steps has Fedexpor taken to become the main voice representing exporters in Ecuador?

Our federation of exporters is an organization considered as a 'third level' entity, which means we can group chambers of commerce as well as companies as partners under our umbrella. Fedexpor represents 85% of the non-oil exports of the country. Our partners include a wide range of exporters from traditional sectors such as banana, flowers, mango, and cocoa as well as growing ones such as chemicals or cosmetics, for example. Furthermore, we represent everyone from small to medium and large companies, which means we are a transversal entity representation of all sorts of exporting companies in Ecuador. Fedexpor's action focuses on two areas: the representation of the interests of the sector within Ecuador and services to help companies reach international markets. For example, we work to include several proposals to change the legislation to make the country more competitive in terms of logistics or employment. We also offer training courses for companies and employees, as well as organize events. Over the last 10 years, Fedexpor has gained a great deal of strength due to the country's need to boost its foreign sales. Ecuador is an economy with 17 million people and has experienced significant development; however, it is still a small market, so exports are vital for the healthy development of its economy and people.

What is the weight of non-oil exports in the economy of the country?

Non-oil exports represent around 11% of Ecuador's GDP; USD11 of every USD100 in the Ecuadorian economy is related to exports. That is only the direct contribution. If we consider the spillover effect, we could be talking about an indirect impact of up to 20%. In 2018, Ecuador generated USD12.8 billion in non-oil exports, and 2019 is expected to surpass the USD13-billion mark.

How have Ecuadorian exports to the EU developed after the signing of an FTA in 2017?

FTAs are extremely helpful in boosting exports if they are well implemented. Trade between Ecuador and the EU has increased over the last two years. Exports to the EU have increased by 7% since then, and the number of regular exporters has also increased. Ecuador currently counts on 1,400 companies that export the EU, out of a total of 3,600 exporting companies. Most importantly, the EU is one of the large markets for the small companies in Ecuador. Thanks to this agreement, more than 20,000 new jobs have been created in the country. Ecuador will not be able to develop if it does not open its doors and realize it is key to be part of global value chains. That should be the main strategy not just for the exporting sector, but for the development of the country as a whole. The country is going in the right direction with measures such as the reduction of the size of the state and the ease of bureaucracy, while signing agreements not only with the EU, but also engaging in negotiations for agreements with other countries and regions.

What opportunities could be unleashed for Ecuadorian exporters after the country's integration into the Pacific Alliance?

Further integration with this bloc is key in our current strategy, and the relevant stakeholders in the country understand this. The Pacific Alliance has demonstrated that it can keep up with a rapid growth rate if we compare it with other regional blocs. In addition, joining the bloc can also be key to boosting FDI into Ecuador, as it will mean a market-friendly economy is being consolidated. The main opportunities would come from access to the vast market of Mexico, as it has many opportunities in terms of exports, specifically in products such as cocoa, shrimps, processed foods, wood, or construction materials. Access to the markets of our neighboring countries Peru and Colombia would also improve. Chile is also part of the alliance, and we are currently negating an agreement that would be bigger in scope than the alliance itself. Additionally, we see opportunities in Eastern Europe, specifically Russia. Negotiations are taking place with Japan and South Korea, as well as with Costa Rica and Guatemala. Furthermore, after years of being on hold, talks on a trade agreement with the US have resumed.