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Ecuador Prepares for More Banana Exports to China as FTA Takes Effect

May 06, 2024

According to China’s State Council, the long-awaited free trade agreement between China and Ecuador went into force on May 1, marking a significant step toward greater bilateral trade. Under the terms of the FTA, around 90% of the items traded between China and Ecuador will be free of tariffs, with approximately 60% of them enjoying zero tariffs immediately. Bananas, one of Ecuador’s key agricultural exports to China, are among the goods whose tariffs will be gradually eliminated over 10 years.

In January, Jose Antonio Hidalgo, executive director of the Ecuadorian Banana Exporters Association, stated that the FTA should allow the industry to double its exports to China. In April, during the association’s 25th anniversary celebrations, Hidalgo reiterated the industry’s focus on Asian markets, naming China, Japan and South Korea as primary export destinations. Citing statistics, he noted that Asia currently accounts for 6% of Ecuador’s total banana exports, and the target is to increase this to 15%.

According to the association, among the issues confronting Ecuador’s banana sector nowadays is the “contamination” of export shipments with drug substances. While investing heavily in security, growers are also hoping to see the results of the government’s campaign against drug trafficking. In regard to infrastructure, the association emphasized the lack of road capacity in some areas near the ports, which causes truck congestion and must be addressed as well.

Meanwhile, Ecuador has reportedly started testing its second banana cultivar with better tolerance to Panama disease tropical race 4. Known as GAL, this new variety joins Formosana 218, which has been undergoing testing for over a year and is now partially in commercial production. With the testing phase for GAL set to last 24 months, the two disease-resistant varieties are intended to provide a safety net for producers in the event of a broader outbreak. Cases of Panama disease TR4 have previously been reported in three South American countries, two of which, Colombia and Peru, share borders with Ecuador. Colombia was the first country on the continent where the fungus was detected, which occurred in 2019, followed by Peru in 2021 and Venezuela in 2023.

In 2023, China imported a total of 1.77 million metric tons of bananas, of which the Philippines and Vietnam supplied the majority with export volumes of 686,000 and 506,000 metric tons, respectively. Meanwhile, Ecuador ranked third, shipping 266,000 metric tons and increasing its export volume by 33% compared with 2022.

Image: Pixabay

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