Trade Relations Between Mexico and Ecuador: Exports and Challenges in 2024
The relationship between nations, especially in the diplomatic sphere, focuses on promoting cooperation and integration, where the commercial and economic dimensions play a crucial role. However, following the break between Mexico and Ecuador, announced by Andrés Manuel López Obrador's government in 2024, the situation changed drastically. This Monday, Ecuador announced it will impose a 27% tariff on products coming from Mexico due to the absence of a Free Trade Agreement. In November 2024, Mexico’s exports to Ecuador reached $37.6 million, while imports were $48.1 million, resulting in a trade deficit of $10.5 million.
What are the exports taking place between Ecuador and Mexico? The Data Mexico portal indicates that in November 2024, the main product Mexico exported to Ecuador was pharmaceuticals, valued at $5.06 million. Most of these exports came from Mexico City ($12.7 million), the State of Mexico ($8.26 million), and Jalisco ($3.95 million). In contrast, the most imported product by Mexico from Ecuador during that same period was candy without cocoa and white chocolate, totaling $1.34 million. The main states receiving these imports were Chihuahua ($2.73 million), Jalisco ($2.55 million), and Mexico City ($890,000). In addition to this, Mexico also acquires fish preparations and caviar from Ecuador, totaling $14.7 million.
Despite efforts to strengthen commercial ties, negotiations to establish a free trade agreement that began under Guillermo Lasso's administration have stalled, primarily because López Obrador’s administration refused to include products such as shrimp and bananas. With the change of government in Ecuador, now led by Daniel Noboa since 2023, reaching a trade agreement has become even more complicated. Between January and September 2024, Ecuador invested a total of $5.63 million in Mexico, split between intercompany accounts ($4.89 million) and new investments ($742,000). From 1999 to September 2024, Ecuador’s foreign direct investment (FDI) in Mexico totaled $137 million, with new investments representing $107 million, intercompany accounts $19 million, and reinvested earnings $11.1 million, according to data from the Ministry of Economy. In the third quarter of 2024, Mexico received $13.6 million in remittances from Ecuador, while Ecuador received $4.65 million in remittances from Mexico.
It is clear that the commercial relationship between Mexico and Ecuador faces significant challenges, especially due to the lack of a treaty to facilitate trade exchanges. While the diversification of exports could be a positive factor, the implementation of tariffs may negatively impact both economies. To improve this situation, it is crucial for both nations to resume negotiations and seek agreements that benefit their productive sectors, promoting a more fluid and sustainable trade.
