Ecuador And Free Trade Agreement With The United States, A Serious Bewilderment?

“Ecuador and Free Trade Agreement with the United States, a serious bewilderment?”
By Maria Mercedes Chedraui Doumet

“It has been said that arguing against globalization is like arguing against the laws of gravity.” A nation cannot fight against integration with others; economies are interdependent and for that reason it is necessary to fix the rules for free exchange and that is what a FreeTrade Agreement (FTA)* intends to do. Commercial opening is an essential element for success. It is proved that for having a sustained growth, economy should be open to commerce and investments with the rest of the world.
The resulting integration of the world economy has raised living standards around the world. Most developing countries have shared in this prosperity; taking Chile, forinstance, the FTA with the United States, has represented an important pillar in its economical development and its competitive strategy (Exhibit 1 and 2). “As a bloc, developing countries have become much more important in world trade, they now count for one-third of world trade, up from about a quarter in the early 1970s.”
A Free Trade Agreement with a country like the United States could giveEcuador global recognition and trust from national and foreign investors. At the same time, it would represent a challenge for national economic agents who will search for new ways of improvement in order to be more competitive. The negotiation of this agreement will help Ecuador to identify the opportunities and threats that occur in a globalized world and the constant processes of regionalintegration.
By writing this paper, I intend to show what I qualify as an error made by the Ecuadorian Government by not signing the FTA with the United States when it was suitable, and the main consequences, in my opinion, of this lack of decision: a further step into poverty, the loss of job opportunities and the decrease of transactions with Ecuador’s major partner, the United States. (Exhibit 3)First, Ecuador suffered a loss of money due to the disagreement with the FTA. I think the country, nowadays needs an open economy to external trading, with a clear objective: change its view in order to increase its exportations. It can be seen that this situation has turned into a common problem that has affected many fields, causing a millionaire loss to the country’s economy. It is historicallyproved that the interchange has enriched many countries; it is clear that closing the doors to this opportunity will generate more poverty to the nation. “History and numbers have proved that free trading promotes economical growth, efficiency, increases prosperity and reduces poverty.”
For me, the losses of all the job opportunities that would have been created with the signing of this FTA form acatastrophic thinking, with this I state my second point. Many regions around Ecuador are affected by unemployment, basically in the production and employment fields, as well as in enterprises. According to statistics it is said that “there is a loss of 300.000 to 500.000 job opportunities in different areas, such as urban and rural areas, reducing personal due to the high custom duties.” Thesecountrymen are forced to migrate or leave the country in search of opportunities to survive. Besides, “it caused a decrease of 100.000 job opportunities that were planned to be given when signing the FTA.”
Finally, The United States is, undoubtedly, the country that generates the highest economical income to Ecuador. Besides, the United States’ economy is complementary to Ecuador’s, notsupplementary. This is due to the fact that Ecuador exports agricultural products, mainly, and the United States imports belong to industrial products. (Exhibit 4) Perhaps, many people think that Ecuador could have other partners instead of the United States to “complement” its economy. But that idea seems a little foolish to me, having this world power nation that has the potential to provide the country...