US is continuously losing ground in Latin America. This has even intensified after Biden took charge of White House. This time the country of focus is Ecuador. The United States has long been the main partner in the Ecuadorian economy, providing aid and investment, but this is now changing as China has become increasingly influential in the country.
And, Biden is unsettled by this.
In January, the China and Ecuador concluded technical negotiations on a free trade agreement (FTA) between the two nations.
The free trade agreements can be a major driver of Ecuadorian economy. In 2021, the entire trade accounted for 51% of Ecuador’s GDP.
99 percent of Ecuador’s present exports to China, which are primarily agricultural and agro-industrial goods including shrimp, bananas, roses and other flowers, cocoa, and coffee, will be given privileged access once this trade agreement enters into force. Additionally, it will make it possible for Ecuador to export non-traditional goods including pitahaya, pineapple, mango, blueberries, processed foods, fresh and canned fruit, as well as a wide range of other agricultural and agro-industrial goods.
Last year, China overtook the United States as Ecuador’s top trading partner for non-petroleum products. An immediate benefit of the free trade agreement will be an increase of $1 billion in exports to China. Customers in Ecuador will have improved access to high-tech goods at lower costs, including supplies, equipment, tools, cars, and machinery.
In addition, Guillermo Lasso, the president of Ecuador, announced that his nation has secured an agreement with China. Ecuador would restructure $4.4 billion in outstanding debt, saving the nation $1 billion between 2022 and 2025.
Since 2010, China has loaned $18 billion to Ecuador. This money has been used to finance infrastructure projects, including roads, ports, and airports in the Latin American country.
The Chinese have also invested in the oil and gas industry, and this has resulted in the loss of contracts for the US.
The United States’ loss of influence in Ecuador is also due to its failure to respond effectively to the country’s economic crisis. Ecuador’s economy has been in a state of decline for many years, but the U.S. government has failed to provide adequate support to the country. From a growth of 8% in 2011, it fell to -1.2% in2016. And, subsequently to -8% in 2020 because of Covid-19.
This has allowed China to step in and provide the necessary aid, further cementing its position as the major partner in the Ecuadorian economy. Overall, the United States is losing ground in Ecuador to China. And, this is a consequence of neglecting Ecuador by subsequent governments of US.
Biden even invited Ecuadorian President Guillermo Lasso to Washington in last December. He promised to strengthen the relationships between the both countries. Ecuador wants to sign a free-trade deal with US, however Biden hasn’t acted despite the request.
Basically, Biden’s promises are as hollow as they can be.
China is swept US off their feet in what Washington considers as its ‘backyard.’ This is not good news for the country which seeks to maintain its hegemony across the world.
