The United States and Ecuador have signed a reciprocal trade agreement, finalizing tariff and non-tariff measures first outlined in a framework deal last year, even as the U.S. works to reconstruct its tariff regime.
Under the agreement, the U.S. agreed to apply the most-favored-nation rate of duty to a lew of goods from Ecuador, including flowers, coffee, fruits, spices, gas and certain chemical compounds. The U.S. also said it would provide preferential treatment to the South American country for future tariff actions, a provision that could prove to be important in the near future.
Last week, the U.S. initiated a pair of Section 301 investigations, one of which is reviewing foreign forced labor regulations of 60 trading partners, including Ecuador. The U.S. has previously used these probes as the foundation for fresh tariffs.
For its part, Ecuador agreed to remove, reduce or cap tariffs on a wide range of U.S.-origin goods and said it would not apply any price band system to U.S. agricultural products, such as the Andean Price Band System. The U.S. and Ecuador also plan to enter into a duty evasion agreement, though no further details were provided.
Ecuador further assented to the creation of duty-free quotas for certain agricultural goods, including corn, sorghum, ethanol, poultry, pork, dairy products and soybean oil. The country also stated it would provide preferential market access for U.S. agricultural goods and eliminate non-tariff barriers more generally. For instance, Ecuardo said it would remove restrictions and licensing requirements for remanufactured U.S. goods and accepting U.S. regulations for medical devices and pharmaceuticals, motor vehicles and parts, food and agricultural goods.
In addition, Ecuador agreed to strengthen intellectual, property and environmental protections, while implementing measures to prohibit the importation of goods made with forced labor. The deal also calls for the country to eliminate value added and digital services taxes.
The reciprocal trade agreement will go into effect 30 days after both countries have completed proper legal procedures to implement provisions of the pact.
The U.S. has finalized the terms of several other framework trade agreements, including ones with the United Kingdom, El Salvador, Argentina and Guatemala. However, some of these pacts, as well as framework deals that have yet to be finalized, are on uncertain ground following a Supreme Court ruling last month that removed the tariffs at the heart of negotiations.
After the high court eliminated levies U.S. President Donald Trump installed via the International Emergency Economic Powers Act, the White House implemented a fresh 10% global surcharge under a different statute. The shifting policy caused the EU to halt efforts to implement an agreement it reached with the U.S. last year.
The environment has become even more uncertain due to the Section 301 investigations the U.S. launched last week.
“Who can guarantee that the final outcome will not mean even higher tariffs for the EU? It is not enough to simply assume - on Both Sides- that we will end up with the Turnberry framework,” Bernd Lange, chair of the European Parliament’s International Trade Committee, said in a LinkedIn post, referring to the framework agreement between the U.S. and EU. “[U.S. Trade Representative Jamieson] Greer said it is too early to say how any new penalties from the latest probes will overlap with the sectoral duties and he maintained regarding the deals that Trump has reached with partners like the EU: ‘I think that we are able to take into account these agreements.’ This is too weak.. We need clarity.”
Meanwhile, Malaysia, which is targeted in both investigations, signaled it may be reconsidering its framework agreement with the U.S., according to the South China Morning Post.
