1. Possible effect of Mega FTAs on
outsiders
Ecuador
and
its
approach
to
trade
agreements

2. 1. Ecuador
new
interests
on
trade
agreements:
I. Domino
Theory
of
Regionalism
II. Ecuador
falls
within
theory
predic=ons
as
changes
in
trade
situa=on
III. New
interests
on
trade
agreements
with
several
countries
2. Mega
FTAs
becoming
the
new
standard
I. Main
characteris=cs
II. Bilateral
Trade
Agreements
are
not
enough
III. The
case
of
Chile
3. Possible
effect
of
exclusion
from
this
Mega
FTAs
I. General
Overview
II. The
case
of
Ecuador
4. Conclusion
Estructura

3.
Domino
Theory
on
Regionalism
• Objec5ve:
To
explain
the
rapid
expansion
of
PTAs.
• Mechanism:
The
forma=on
of
a
PTA
pushes
excluded
countries
to
look
to
par=cipate
in
new
or
exis=ng
PTAs
as
a
way
to
secure
their
exports
access
to
their
regular
markets.
• Main
trigger:
The
expecta=on
of
trade
diversion
that
exporters
of
non-­‐member
countries
face
once
a
PTA
is
formed.
• Addi5onal
variable:
The
end
of
GSP
Ecuador new interests on trade agreements
Number
of
PTAs,
1950-­‐2010,
by
scope
of
coverage.
Source:
WTO,
2011

4.
1. Neighbors
signed
trade
agreements
Ecuador new interests on trade agreements
HTS
Sec5ons
Ecuador
Colombia
Peru
Mineral
fuels,
mineral
oils
and
products
of
their
dis5lla5on;
bituminous
substances;
mineral
waxes
9,131
15,676
1,567
Fish
and
crustaceans,
molluscs
and
other
aqua5c
invertebrates
823
219
Edible
fruit
and
nuts;
peel
of
citrus
fruit
or
melons
537
295
313
Natural
or
cultured
pearls,
precious
or
semiprecious
stones,
precious
metals;
precious
metal
clad
metals…
413
2,480
3,121
Live
trees
and
other
plants;
bulbs,
roots
and
the
like;
cut
flowers
and
ornamental
foliage
219
785
US
imports
by
country
(2013)
Millions
of
dollars
HS
Sec5ons
Ecuador
%
Colombia
%
Peru
%
Vegetable
products
966
37.7
1,318
17.1
1,198
22.5
Foodstuffs,
beverages,
tobacco
881
34.3
196
2.5
498
9.4
Live
animals;
animal
products
491
19.1
Mineral
products
105
4.1
5,624
72.8
2,071
38.9
EU
imports
by
country
(2013)
Millions
of
euros
and
%
of
total
exports
7
8
12
13
13
14
14
16
20
21
27
Source:
Data
compiled
from
the
US
Interna=onal
Trade
Commission
Source:
Data
compiled
from
various
European
Commission
reports
Source:
WTO,
countries
trade
ins=tu=ons
Ecuador
falls
within
theory
predic5ons
as
changes
in
trade
situa5on

5. 2. End
of
GSP
with
US
and
EU
3. As
a
result,
Ecuador
faces
possible
trade
devia=on
New
interests
on
trade
agreements
with
several
countries
Ecuador new interests on trade agreements
Ecuador´s
trade
agenda
for
2016
US
imports
from
Ecuador
under
import
programs
(%
of
total
imports
from
Ecuador)
Ecuador
exports
to
the
EU
in
2009,
by
tax
applied
and
import
program
European
Union
Korea
Turkey
Central
American
countries
Others
Source
4:
Data
complied
from
USTR
report
2007
Source
5:
Data
compiled
from
DRN
evalua=on
report
(2012)
and
FEDEXPORT
report
(2010)

6. • Agreements
such
as
TPP,
TTIP,
RCEP,
include
several
countries
and/or
big
economies
• Greater
scope
of
regular
topics
and
inclusion
of
new
ones,
such
as
in
TPP
Transpacific
Partnership
(TPP):
Important
for
its
size
and
scope:
• 30
chapters
and
covers
a
vast
number
of
trade
and
trade
related
topics.
• New
coverage:
• E-­‐Commerce
• State-­‐Owned
Enterprises
• Regulatory
Coherence
• Financial
services,
etc.
Mega FTAs becoming the new standard
• In
Market
Access
chapters,
the
commitments
go
beyond
past
PTAs:
• 18,000
tariffs
across
all
member
countries
and
sectors.
• Including
products
in
sectors
sensi=ve
for
countries,
such
as
agriculture,
dairy
and
automobiles.

7. • Bilateral
trade
agreements
are
not
enough,
as
member
countries
seek
inclusion
in
Mega
FTAs
to
expand
benefits.
• Similar
rules/regula=ons
among
big
economies
and
several
countries
facilitates
trade
and
invest
within
member
countries.
• These
Mega
FTAs
reduce
the
“Spagheb
Bowl
Effect”
created
by
PTAs.
Mega FTAs becoming the new standard
The
case
of
Chile:
• Why
par=cipate
in
TPP
if
it
has
trade
agreements
with
all
countries?
• Greater
market
access
• Investment
rules
with
all
countries
• Facilitate
its
inclusion
in
global
value
chains

8. • The
cost
of
exclusion
from
Mega
FTA
becomes
greater,
as
trade
in
goods
and
services
and
investment
increasingly
takes
place
among
member
countries.
• Exclusion
from
accumula=on
rules
could
lead
to
exclusion
from
global
value
chains
• Will
CAN
become
irrelevant
in
promo=ng
regional
value
chains?
• As
a
result,
Ecuador
could
lose
compe==veness
and
market
access
to
products
from
Peru,
Chile,
and
later
on
Colombia,
in
several
big
markets
within
the
TPP.
Possible effect of exclusion from this Mega FTAs
General
Overview

9. Study
Results
on
Market
Access:
• Difficul=es
with
Japan,
Australia
and
Canada
given
the
possible
export
risk
for
products
such
as:
Fish
meals,
pellets
and
flour,
cocoa,
shrimp,
fish
oil
and
grease,
among
others.
• The
number
of
products
could
increase
once
countries
such
as
Colombia,
Korea
and
Thailand
adhere
to
the
agreement.
Possible effect of exclusion from this Mega FTAs
Cost
of
late
inclusion:
• Sensi=ve
sectors
and
disciplines
for
Ecuador
are
already
defined
in
the
agreement.
• Such
topics
could
go
against
Ecuador´s
norms
and
interests,
in
case
Ecuador
seeks
a
future
adherence.
Sectors
• Automobiles
• Agriculture
• Pharmaceu=cal
Disciplines
• IPR
• Investment
• Arbitra=on
methods

10. • Are
Ecuador´s
nego=a=ons
and
planned
agreements
a
learning
experience,
prior
a
Mega
FTA?
Conclusion
• Considering
greater
cost
of
exclusion,
countries
need
to
think
on
strategies
to
adapt
and
start
to
par=cipate
in
such
agreements.
• However,
excluded
countries
need
to
consider:
• Given
the
greater
scope
of
Mega
FTAs,
the
required
changes
in
internal
norms
and
regula=ons
becomes
greater,
crea=ng
a
challenge
for
the
government.
• The
poli=cal
economy
of
implemen=ng
FTAs:
How
to
please/bypass
interest
groups
with
contras=ng
expecta=ons
• Beker
to
start
with
smaller
agreements,
less
comprehensive,
to
gain
experience
and
to
promote
a
gradual
internal
adjustment.
• Joining
a
Mega
FTA
could
become
a
medium-­‐long
term
policy