Conclusion of free trade agreement negotiations between Ecuador and Canada

By Robalino

Once ratified in both countries, the Ecuador-Canada Free Trade Agreement is an important step in advancing Ecuador's trade diversification strategy, opening new markets for Ecuadorian businesses and enhancing their ability to compete on the global stage. By making it easier to trade goods and services, this agreement will benefit importers and exporters, businesses, investors, and consumers in both countries, creating a more transparent and predictable environment for trade and investment.

In 2022, Ecuador was the sixth-largest economy in South America with a population of 18 million and a GDP of USD 118.84 billion (2023). From 2018 to 2023, Canadian foreign direct investment in Ecuador tripled to USD 4.4 billon, making Canada one of the largest foreign investors in Ecuador.
Canada and Ecuador began negotiations for a Free Trade Agreement (FTA) in April 2024, following successful exploratory talks that identified strong trade policy alignment, a public consultation process, and the submission of a Notice of Intent and Canada's objectives to Parliament. 

The annex on Intellectual Property (IP) Cooperation and Technical Assistance is the first such annex in an FTA for Canada. The Parties will develop a work plan of cooperation and technical assistance activities to enhance and strengthen bilateral exchanges and cooperation on IP, specifically in the areas of geographical indications and trademarks. Under the annex, the Parties recognize their mutual interest in developing their understanding of each other’s IP rights systems, and the importance that IP rights play in promoting innovation, social, economic, and cultural development, as well as economic competitiveness in a knowledge-based economy.

The Rules of Origin chapter includes general and product-specific rules of origin that establish criteria for determining the origin of goods that are clear, as simple as possible, and that leave little room for administrative discretion. The rules of origin outcome allows for accumulation of materials and production, as well a forward-looking provision on cross-cumulation. The rules of origin take into account production and sourcing patterns, as well as regional integration and sectoral interests.

The Origin Procedures chapter is used to administer the rules of origin of goods in order to enable the trading community to take advantage of the preferential tariff treatment afforded under the Canada-Ecuador FTA. It contains obligations in areas such as certification of origin, record keeping, origin verifications, advance rulings, penalties and cooperation. Accordingly, the Chapter prescribes the processes necessary for traders to take full advantage of the FTA, while at the same time providing the customs administrations with an efficient and effective methodology to ensure that only qualifying goods receive the benefits of the Agreement.

The Sanitary and Phytosanitary Measures (SPS) chapter incorporates certain obligations of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures, includes robust obligations on science and risk analysis, comprehensive transparency provisions, and establishes mechanisms to resolve trade irritants and enhance regulatory cooperation. The entire SPS chapter is subject to the Canada-Ecuador FTA dispute settlement mechanism. The Agreement preserves the rights of the Parties to take measures necessary for the protection of human, animal or plant life or health.