Ecuador announced last week that as of March 11 it will impose tariffs of 5% to 45% on 2,800 products, covering nearly one-third of all Ecuadorian imports.
Ecuador’s Minister of Foreign Trade Diego Aulestia said in a news conference that the measure is in compliance with World Trade Organization rules and that the move was discussed with the local private sector. “Ecuador is facing a difficult external situation and this is the government’s reaction in the face of it,” he said.
The tariffs are to remain in place for 15 months and then be gradually withdrawn.
The move is in response to falling oil prices and a strengthening U.S. dollar. Ecuador’s economy relies on exporting oil, and the recent oil price drop has hurt its balance-of-payments situation. Furthermore, as the U.S. dollar strengthens, foreign goods become cheaper compared to Ecuadorian goods, which are priced in U.S. dollars. The tariffs will allow Ecuadorian-produced goods to compete better in the local market. Ecuador adopted the U.S. dollar as its official currency in 2000.
FreshFruitPortal reports that Peru has launched a formal complaint with the Andean Community, referring to the action as “against the spirit of current dialogue between the two countries.”
The Chilean Fruit Exporters Association (ASOEX) estimates that the tariffs will have an impact of about US$35 million to US$40 million on the Chile’s fruit industry, which sends an average of 4.5 million to 4.9 million cartons of fruit each year to the Ecuadorian market.
In January, Ecuador imposed a 21% Colombian-import tariff and a 7% Peruvian-import tariff, but both were removed in late February after negotiations with both countries.