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Canada to explore a free-trade agreement with Ecuador, in fresh run at lessening reliance on U.S., China


Canada has been negotiating a trade agreement with the Pacific Alliance, which includes Chile, Colombia, Mexico, Peru and soon Ecuador, since 2017

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Trade Minister Mary Ng said she and her Ecuadorian counterpart agreed to explore the possibility of a free-trade agreement between the new countries, the latest example of the Canadian government’s attempts to lessen its reliance on trade with the United States and China.

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Ng made the announcement from Mexico City on Nov. 24. She and Ecuador’s trade minister, Julio José Prado, are attending a summit of the Pacific Alliance, a trading bloc made up of four Latin American countries with a history of openness to freer markets: Chile, Colombia, Mexico, and Peru.

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Ecuador, a Pacific nation of about 18 million people that borders Colombia and Peru, is expected to join the group by the end of the year. Meanwhile, Canada has been negotiating a trade agreement with the Pacific Alliance since 2017, describing the talks as as an attempt to “modernize and streamline our existing agreements” and “expand elements of these existing bilateral agreements.”

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The talks with Ecuador come amid something of a reset of Prime Minister Justin Trudeau’s trade policy after years of bruising confrontations with the world’s biggest economies. Trudeau’s attempt to sign a free-trade agreement with China after he was first elected in 2015 ultimately fell flat, and then he spent the better part of two years negotiating a new North American free-trade agreement after former president Donald Trump threatened to end Canada’s privileged access to the world’s largest economy.

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Ecuador is small and relatively poor, with gross domestic product per capita of US$6,000, according to the World Bank.

But commercial relations with Canada have been ramping up. Canadian direct investment in Ecuador has tripled in the last five years, topping $3.7 billion in 2021, while bilateral merchandise trade topped $953 million. Ecuador mainly provides Canada with agricultural products, including wheat, tropical fruits, and flowers, while Canada provides oats, lentils, wheat, peas, and barley.

Ecuador plans to open a new trade office in Ottawa on Dec. 1, the press release said.

In the weeks to come, Canada will consult with Canadians to see what they think about a Canada-Ecuador free trade agreement.

“Canada and Ecuador are important commercial partners in the hemisphere and share commitments to democracy, human rights and the international rules-based system,” the press release said.

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