The free trade agreement (FTA) signed on 11 May by Chinese Minister of Commerce Wang Wentao and Ecuadorian Minister of Production, Foreign Trade, Investment, and Fisheries Julio José Prado has received a positive response from Chinese seafood distributors, but there are worries among other involved parties that the deal may skew largely in China’s favor.
Bilateral trade between Ecuador and China grew to a record USD 13 billion (EUR 12.1 billion) last year, up 20 percent year-over-year. The value of Ecuadorian shrimp exports to China, in particular, has also been growing consistently. Shrimp exports to China rose from USD 105 million (EUR 97.6 million) in 2017 to USD 615 million (EUR 571.9 million) in 2018. That figure soared to USD 4 billion (EUR 3.7 billion) in 2022, accounting for 60 percent of China’s shrimp imports.
Yet China experienced a trade surplus of USD 609 million (EUR 566.3 million) with Ecuador in 2022, in part due to a surge in exports of automobiles; China is now Ecuador’s top supplier of cars.
With that large of a disparity, China appears to be the biggest beneficiary of the deal, especially given that tariffs on key Chinese exports like cars and machines currently undergo taxation of around 35 percent to 45 percent at Ecuador’s ports. By contrast, Ecuadorian seafood faces tariffs of between 5 percent and 7 percent in China.
Ecuadorian President Guillermo Lasso has suggested the deal will lower costs for business and lead to job creation, but experts including Carolina Viola, the head of the Socio-Environmental Observatory of Chinese Investment in Ecuador, are worried that Ecuador’s workers won’t be able to compete with their Chinese counterparts and that the country will lose important tax revenue.
Viola said there is a danger for Ecuadorian labor standards and pay due to the “asymmetry” of the new trade deal.
With G7 leaders calling out the use of economic coercion by China for geopolitical goals, analysts also debate whether Ecuador’s asymmetric economic reliance on China will hurt its wild-catch fisheries sector, or at least make the country’s government more reluctant to criticize Chinese incidents of illegal fishing on Ecuador’s coast.
Ecuadorian officials in China have been hard at work trying to take advantage of the new FTA by selling the virtues of Ecuador’s shrimp. Speaking at the Shenzhen International Fisheries Fair, Paul Pennaherra, the economic attaché at the Ecuadorian consulate in Guangzhou, said that Ecuadorian shrimp was of “premium quality.”
Landy Chow, manager of seafood trading firm Siam Canadian’s office in Guangzhou, said he believes Ecuadorian shrimp have an edge over local products.
“The meat color of Ecuadorian shrimp is more grayish blue. Due to such good color, Ecuadorian shrimp are selling quite well in the China market,” Chow told SeafoodSource.
Among those also welcoming the signing is Zheng Jiayuan, CEO of Guangdong Guotong Ultra-low Temperature Cold Chain Co., a supply chain service platform for the food industry, who told the Xinhua news agency he paid taxes of CNY 15,000 to CNY 20,000 (USD 2,100 to USD 2,800, EUR 1,950 to EUR 2,600) on each container of Ecuadorian shrimp he imported in the first four months of 2023. Thanks to the FTA, Zheng said his company will now double its imports of Ecuadorian shrimp to 300 containers per year. He praised Ecuadorian shrimp for its “thin skin, plump meat, and fresh and sweet taste.”
According to Djames Lim, head of the Lim Shrimp Co., which produces sea cucumber and shrimp in China, Ecuadorian shrimp is cheaper, even in China, because it’s less expensive to produce.
“Producing shrimp in Ecuador is definitely much cheaper than in China because [Ecuador] uses extensive methods of production,” he told SeafoodSource.
Lim, whose firm is developing several aquaculture projects outside China to supply Chinese buyers, said he expects Ecuador to continue to consolidate its position as a quality alternative to shrimp farmed in China.
“Because the market is so huge in China, there is enough to go around,” Lim said. “Chinese and Ecuadorian shrimp are priced differently, [so] the customer can choose.”
One of the factors that make imports cheaper is China’s belated effort to rehabilitate environmental degradation, which has forced the closure of waterways and river basins to fish and aquaculture. For the first time, three major river basins – the Haihe, Songhua, and Liaohe – are closed for fishing for more than two months as of 16 May, according to China's Ministry of Agriculture and Rural Affairs. The ministry said this will be the first year all of China’s maritime waters – including the East China Sea and the South China Sea, as well as its seven major river basins – will be closed to fishing activities for at least part of the year.
Photo courtesy of Ecuadorian Minister of Production, Foreign Trade, Investment, and Fisheries
