Foreign trade is essential for the economic growth of nations. Therefore, promoting policies that strengthen trade relations from an economic perspective should be one of the key priorities of government policy.
Opening up the economy to the purchase and sale of products to and from other countries allows Ecuadorian companies to grow and become stronger. Currently, the country has 11 trade agreements with countries and regions such as Colombia, Mexico, the European Union, Mercosur member countries, among others.
Exports were severely affected by the COVID-19 pandemic in Ecuador and around the world. However, the country recorded a historic record in non-oil exports, reaching nearly $15 billion. This was announced in March by former Minister of Foreign Trade Iván Ontaneda.
Shrimp, bananas, flowers, tuna, cocoa, and Ecuadorian fish are sold around the world thanks to foreign trade. COVID-19 vaccines are helping economic activity recover globally. As a result, worldwide demand for products made in Ecuador is beginning to increase in some sectors.
In terms of non-traditional exports, according to the Foreign Trade Statistical Report published by the Ecuadorian Federation of Exporters (Fedexpor), canned fish exports have grown by 11%. A similar situation can be seen with flowers, whose exports have increased by 4%.
The United States is the main export destination for Ecuadorian non-oil products, followed by the European Union and China.
According to data from Fedexpor, non-oil exports to the United States grew by 10%. However, exports to the European Union and China recorded declines of 7% and 35%, respectively.
Ecuadorian coffee and processed coffee products, as well as cocoa, recorded export increases of 17% and 3%, respectively. Other traditional export products, such as bananas, shrimp, tuna, and fish, recorded declines.
These figures show that the country still needs to reactivate its economy in order to contribute to the recovery of foreign trade. The European Union has announced that it will provide €4.5 million in funding for projects aimed at strengthening Ecuador's export capacity to the EU, while also facilitating the integration of vulnerable groups such as women, Indigenous peoples, young people, people with disabilities, and others.
What You Should Know
Many people believe that foreign trade is an elitist sector reserved for only a few, but this idea is far from reality. Small and medium-sized businesses also have the opportunity to become part of this sector and contribute to the country's economic growth.
The truth is that there are many important things you should know about foreign trade so that, if you choose to do so, you can become part of this sector in the near future.
Opportunities for Everyone
Large companies are not the only ones that can export. Small and medium-sized businesses have the same opportunities to succeed in international markets. This is a sector with significant potential for new SMEs looking to enter the international market.
According to the Ministry of Production, 1,759 SMEs exported products such as bananas, plantains, wood, and flowers between January and October 2020. Their main buyers were China, Colombia, the United States, and the Netherlands.
Due to the pandemic, total imports had declined by 25% as of August 2020 compared with figures recorded in August 2019. According to the Ministry of Production, the largest shares corresponded to raw materials (36%), capital goods (24%), consumer goods (23%), fuels and lubricants (16%), and miscellaneous products (0.5%).
The five main non-oil products imported into Ecuador are medicines (2%), telephones and mobile phones (3%), metal manufactures (-30%), industrial machinery and parts (-28%), and soybean oil residues (5%).
Education as an Advantage
Understanding the advantages Ecuador has through its 11 trade agreements is important for both exporters and importers. Even if you have no intention of reaching international customers, having knowledge of logistics processes, cost schedules, and cold-chain requirements for preserving certain products can give you an advantage when making decisions.
Bilateral Alliances
Foreign trade is not just about selling products in other countries or importing less expensive goods. It also creates opportunities for meetings and partnerships between local business owners and potential international buyers. These connections can help your brand or company grow.
Advantages and Disadvantages
Discussing the advantages of foreign trade could be quite extensive, but we have listed the most important ones:- Access to more affordable goods and services, as well as a greater variety of products.
- The opportunity to complement domestic production when it is insufficient to meet national demand.
- It promotes the comparative advantages of each country, including resources, technology, and geographic location.
- It encourages employment.
- It improves domestic competitiveness, increases product value, and attracts new investors.
At the same time, there are also important disadvantages that should be taken into consideration to prevent foreign trade from becoming detrimental:
- The main concern is that competition from international companies can negatively affect local businesses and contribute to the closure of companies that are unable to adapt to customer demand. However, this issue exists within the delicate balance between potential negative effects and free-market principles. Therefore, each country must carefully determine the appropriate model based on its own economic conditions.
- High costs resulting from licenses, logistics chains, and local regulations.
- Language barriers, although they may seem simple to overcome, can represent a significant disadvantage. Not speaking the local language can lead to substantial losses. For this reason, it is recommended to hire the appropriate professional services to ensure smooth and effective communication without complications.
English 
Spanish