BASELINE PAINT MARKET STUDY IN ECUADOR SAICM GEF Project Lead in Paint Component
Prepared for Prepared by
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INDEX 1 INTRODUCTION ...... 1 2 NATIONAL CONTEXT ...... 2 2.1 Physical and demographic context ...... 2 2.1.1 Geographical aspects ...... 2 2.1.2 Demographic aspects ...... 2 2.1.3 Social aspects ...... 3 2.1.3.1 Health ...... 3 2.1.3.2. Education ...... 3 2.1.4 Economic aspects...... 4 2.1.4.1. Labor and employment...... 4 2.2 Political structure ...... 6 2.2.1 Administrative divisions ...... 6 2.2.2 State Structure ...... 7 2.3 Economic and productive activity in Ecuador...... 8 3 LEGAL MECHANISM AND NON-REGULATORY INSTRUMENTS IN THE MANAGEMENT OF PAINTINGS ...... 10 3.1 Introduction...... 10 3.2 Constitution of the Republic of Ecuador...... 13 3.3 International treaties and agreements ...... 14 3.4 Laws ...... 15 3.4.1 Foreign Trade Law...... 15 3.4.2 Law of the Ecuadorian Quality System...... 15 3.4.3 Organic Health Law...... 16 3.5 Organic laws ...... 16 3.5.1 The Organic law of Production, Commerce and Investments, COPCI...... 16 3.5.2 Organic Integral Criminal Law...... 17 3.5.3 Organic Environmental Law...... 17 3.6 Regulations ...... 18 3.6.1 Safety and health regulation for workers. Executive Decree 2393...... 18 3.6.2 General regulation to the Law of the Ecuadorian Quality System...... 18 3.6.3 Regulation of the Organic Environmental law ...... 19 3.6.4 Ecuadorian Technical Regulations RTE INEN 061 Paintings (in the approval process) ...... 19 | ii
3.7 Ministerial Agreements ...... 20 3.8 INEN standards ...... 21 3.9 Scope of the Model Law on Lead in Paint in Ecuadorian Legislation...... 27 4 INSTITUTIONAL FRAMEWORK AND OTHER ACTORS RELATED TO PAINT MANAGEMENT . 31 4.1 Introduction ...... 31 4.2 Functions of government institutions...... 31 4.2.1 Ministry of Production, Foreign Trade, Investments, and Fisheries - MPCEIP. .. 31 4.2.2 Ministry of Public Health- MSP...... 31 4.2.3 Ministry of Environment - MAE ...... 31 4.2.4 Ecuadorian Standardization Service- INEN ...... 32 4.2.5 Ecuadorian Accreditation Service- SAE...... 32 4.3 Responsibilities of Ecuadorian government institutions in lead paint management . 32 4.3.1 Ministry of Production, Foreign Trade, Investments, and Fisheries...... 32 4.3.2 Ministry of Environment- MAE...... 32 4.3.3 Ecuadorian Standardization Service- INEN...... 33 4.3.4 Ecuadorian Accreditation Service - SAE...... 33 4.4 Functions related to national non-governmental organizations or associations...... 33 4.4.1 Association of Chemical Producers of Ecuador- APROQUE ...... 33 4.4.2 Ecuadorian Chamber of Industries and Production- CIP...... 33 4.5 Projects, agreements or other mechanisms related to lead paint management...... 34 5 THE PAINT AND COATINGS MARKET ...... 35 5.1 Introduction ...... 35 5.1.1 Types of paints in Ecuador ...... 36 5.1.2 Demand and marketing channels for paints in the country ...... 37 5.2 Paints and coatings imports ...... 38 5.2.1 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a non-aqueous medium (tariff heading 3208) ...... 39 5.2.1.1 Country of origin of the import of non-aqueous based paints ...... 43 5.2.1.2 Main importers of non-aqueous based paints ...... 45 5.2.2 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in an aqueous medium (tariff heading 3209) ...... 48 5.2.2.1 Country of origin of imports of water-based paints...... 50 5.2.2.2 Main importers of water-based paints...... 52 5.2.3 Prepared driers (Tariff heading 3211) ...... 54 | iii
5.2.3.1 Countries of origin of prepared driers imports ...... 55 5.2.3.2 Main importers of prepared drier agents ...... 56 5.2.4 Results of the analysis of imports of paints ...... 57 5.3 Exports of paints and coatings ...... 59 5.3.1 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a non-aqueous medium (Chapter 3208) ...... 60 5.3.1.1 Country of destination for exports of heading 3208 ...... 60 5.3.2 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in an aqueous medium (tariff heading 3209) ...... 63 5.3.2.1 Country of destination for exports of heading 3209 ...... 64 5.3.3 Prepared driers. (Tariff heading 3211) ...... 65 5.3.4 Analysis of exports of paints and coatings ...... 65 5.4 National paint production ...... 68 5.4.1 Commercial activities related to the paint market according to CIIU...... 68 5.4.2 National paint production ...... 72 5.4.2.1 Export Market ...... 73 5.4.2.2 Reference prices of coatings until October 2019 ...... 74 5.4.2.3 The volume of paint production in the country...... 74 6 THE MARKET FOR LEAD COMPOUNDS AND PIGMENTS ...... 77 6.1 Import analysis of lead compounds...... 77 6.2 Import of pigments ...... 84 6.2.1 Analysis of the import of pigments under tariff heading 3206200000 ...... 85 6.2.1.1 Country of origin of imports of pigments of tariff heading 3206200000...... 87 6.2.1.2 Main pigment importers of tariff heading 3206200000 ...... 88 6.2.2 Analysis of the import of pigments under heading 3212 ...... 90 7 HEALTH IMPACTS OF THE USE OF LEAD PAINTS ...... 91 8 BIBLIOGRAPHY ...... 94
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TABLE INDEX Table 1. Distribution of the population attending the educational levels by type of institution . 4 Table 2. Composition of the national population in labor indicators...... 4 Table 3. Composition of employees by activities at the national level (September 2019) ...... 5 Table 4. Provinces of Ecuador ...... 6 Table 5. Competent institutions on the management of chemical substances...... 11 Table 6. International treaties and agreements ratified by Ecuador ...... 15 Table 7. Limits of lead content in paints defined in the Technical Regulation 061 ...... 19 Table 8. Ministerial agreements for chemical management ...... 21 Table 9. Technical standards associated with chemical substances ...... 22 Table 10. Technical standards associated with paints...... 22 Table 11. Comparison between the Model Law and the Technical Regulation RTE INEN 061 ... 27 Table 12 Global paint consumption, 2012 ...... 35 Table 13. Tariff heading for paint and varnishes1 ...... 38 Table 14. Applications of imported paints and coatings within code 3208 ...... 39 Table 15. Weight of paints and coatings imported within tariff heading 3208 (2018- November 2019) ...... 40 Table 16. The weight percentage of paints imported according to tariff heading (Code 3208) 41 Table 17. Economic activities of importing companies of tariff heading 3208100000 ...... 46 Table 18. Economic activities of importing companies of tariff heading 3208200000 ...... 46 Table 19. Economic activities of importing companies of tariff heading 3208900000 ...... 47 Table 20. Applications of imported paints and coatings within tariff heading 3209 ...... 48 Table 21. Weight of paints and coatings imported within tariff heading 3209 (2018- Nov 2019) ...... 49 Table 22 Percentages of imported paints according to tariff subheading (3209) ...... 50 Table 23. Economic activities of importing companies of tariff heading 3209100000 ...... 52 Table 24. Economic activities of importing companies of tariff heading 3209900000 ...... 53 Table 25. Economic activities of importing companies of heading 3211000000 ...... 56 Table 26. Percentage of annual imports (2018- Nov 2019) ...... 58 Table 27. List of tariffs heading for exported paints and coatings ...... 59 Table 28. Annual exports according to tariff heading 3208 (2018- Nov 2019) ...... 60 Table 29. Annual exports of heading 3209...... 63 Table 30. Annual exports according to tariff heading 3209 (2018 - Nov 2019) ...... 65 Table 31. List of exporting companies (2018-Nov 2019) ...... 67 | v
Table 32. Classification of activities related to the manufacture and marketing of paints and pigments ...... 68 Table 33. Paint manufacturing companies in Ecuador ...... 69 Table 34. Supplier companies for paint industries in Ecuador ...... 70 Table 35. Importers and distributors of paints and coatings in Ecuador ...... 71 Table 36. Total sales by companies in the country (2018) ...... 72 Table 37. Reference prices by type of paint and coating (December 2019) ...... 74 Table 38. Reference prices of paints and coatings by companies (December 2019) ...... 75 Table 39. Net weight for internal sales of paints in the country (2018) ...... 75 Table 40. National production of paints for the domestic market (2018) ...... 76 Table 41. National production of paints for the internal market (2018) ...... 76 Table 42. Tariff heading for lead compounds imported into the country1 ...... 77 Table 43. Imports of tariff heading 2824. Years 2018-Nov 2019 ...... 78 Table 44. The economic activity of importers of tariff heading 2824 (2018-Nov 2019) ...... 79 Table 45. Other imports under chapters 28 and 29 (2018-Nov 2019) ...... 81 Table 46 Commercial activity of importers of other lead compounds (2018-Nov 2019) ...... 81 Table 47. Main lead pigments used in the industry ...... 84 Table 48. Tariff headings for pigments ...... 85 Table 49. Classification of pigments (heading 3206200000), according to the tariff report l .. 85 Table 50. Imports of pigments (tariff heading 3206200000) 2018 to Nov-2019 ...... 86 Table 51. Activities according to the SRI of importers of heading 3206200000 ...... 88 Table 52. Chromium-based pigments imported within heading 32129 ...... 90 Table 53. Effects of lead in humans ...... 91 Table 54. Forms of lead used in the paint industry ...... 92
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INDEX OF GRAPHS Graph 1 Imports of paints and coatings on a non-aqueous basis (tariff heading 3208) ...... 41 Graph 2. Countries of origin of imports of non-aqueous paints based on polyesters ...... 43 Graph 3. Countries of origin of imports of non-aqueous paints based on acrylic or vinyl polymers ...... 44 Graph 4. Countries of origin of imports of non-aqueous paints called “other”...... 45 Graph 5. Imports of water-based paints and coatings (Tariff heading 3209) ...... 49 Graph 6. Countries of origin of imports of aqueous paints based on acrylic or vinyl polymers 51 Graph 7. Countries of origin of imports of aqueous paints “Other” ...... 52 Graph 8. Annual imports of prepared driers (2018- Nov 2019) ...... 55 Graph 9. Annual imports of prepared driers by type (2018- Nov 2019) ...... 55 Graph 10. Countries of origin of prepared driers imports (2018- Nov 2019) ...... 56 Graph 11. Comparison of annual imports according to the type of paint (2018- Nov 2019) ..... 58 Graph 12. Imports of paints (2019)...... 59 Graph 13. Exports of heading 3208 (2018- Nov 2019) ...... 60 Graph 14. Country of destination for exports of heading 3208 ...... 61 Graph 15. Country of destination for exports of heading 3208200000 ...... 62 Graph 16. Country of destination for exports of heading 3208900000 ...... 63 Graph 17. Exports of tariff heading 3209 (2018- Nov 2019)...... 64 Graph 18. Country of destination for exports of heading 3209100000 ...... 64 Graph 19. Country of destination for exports of heading 3209900000 ...... 65 Graph 20. Non-aqueous and aqueous base paint exports (2018 - Nov 2019)...... 66 Graph 21. The geographical location of paint manufacturing industries in Ecuador ...... 70 Graph 22. Participation by companies according to total sales (2018) ...... 73 Graph 23. Distribution of exports by companies (2018) ...... 73 Graph 24. Countries of origin of imports of the tariff heading 2824100000 (2018 -Nov 2019) . 80 Graph 25. Countries of origin of imports of the tariff heading 28241900090...... 80 Graph 26. Countries of origin of imports of the tariff heading 2834299000 (2018 -Nov 2019) 83 Graph 27. Countries of origin of imports of the tariff heading 2833293000 (2018 -Nov 2019) . 83 Graph 28. Countries of origin of imports of the tariff heading 2915291000 (2018 -Nov 2019) 84 Graph 29. Imports of pigments (tariff heading 3206200000), 2018 to Nov-2019...... 86 Graph 30. Countries of origin of imports of pigments tariff heading 3206200000 (2018-Nov 2019) ...... 87 Graph 31. Imports of pigments according to the economic activity of the importer (2018-Nov 2019) ...... 89 | vii
INDEX OF FIGURES Figure 1. Physical map of Ecuador...... 2 Figure 2. Ethnic groups in Ecuador ...... 3 Figure 3. Administrative map of Ecuador ...... 7 Figure 4. Main products, goods or services exported in the second quarter of 2019 ...... 8 Figure 5. Main products, goods or services imported in the second quarter of 2019 ...... 9 Figure 6. Variation rates (t / t-4) of GVA by industry ...... 9 Figure 7. Hierarchy of Ecuadorian regulations ...... 10 Figure 8. Distribution channels for the paint market ...... 38
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ACRONYMS AND ABBREVIATIONS AAN National Environmental Authority
APROQUE Association of Chemical Producers of Ecuador
BCE Central Bank of Ecuador
CEER Resource Efficiency and Cleaner Production Center of Ecuador
CIIU International Standard Industrial Classification
CIP Ecuadorian Chamber of Industries and Production
COA Organic Environmental Law
COMEXI Foreign Trade and Investment Council
COPCI Organic law of Production, Commerce, and Investments
ENEMDU National Survey of Employment, Unemployment, and Under-Employment
GPD Gross Domestic Product
GVA Gross Value Added
IESS Ecuadorian Social Security Institute
IGM Military Geographic Institute
INEC National Institute of Statistics and Censuses
INEN Ecuadorian Standardization Service
INOCAR Oceanographic Institute of the Navy
ISO International Organization for Standardization
ISO/IEC International Organization for Standardization/ International Electrotechnical
Commission
ISSFA Institute of Social Security of the Armed Forces of Ecuador
ISSPOL Institute of Social security of the Police
MAE Ministry of Environment
MPCEIP Ministry of Production, Foreign Trade, Investments, and Fisheries
MSP Ministry of Public Health
NTE Ecuadorian Technical Standard
OEC Conformity Assessment Agencies | ix
PEC Conformity Assessment Procedure
RTE Ecuadoran Technical regulation
SAE Ecuadorian Accreditation Service
SAICM Implementation of the Strategic Approach to International Chemicals
Management
SENAE National Customs Service of Ecuador
SRI Internal Revenue Service
SUIA Unique Environmental Management System
SUPERCIA Superintendence of Companies, Securities and Insurance
UNEP Nations Environment Program
UNIDO United Nations Industrial Development Organization
WHO World Health Organization
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1 INTRODUCTION The World Health Organization (WHO) with the United Nations Environment Program (UNEP) has launched the initiative called "Global Alliance to Eliminate Lead Paint" whose goal is to phase-out the manufacture and sale of paintings that contain lead thereby reducing the exposition to this metal and eliminating its risks and effects on the population.
To comply with the proposal of the Alliance, in the Latin America Region; Colombia, Peru, and Ecuador are developing the Regional project “Lead-free paints”, this project is carried out with the technical support of the Cleaner Production Centre of Serbia, experts from the United States Environmental Protection Agency, United Nations Environment Program, public and private institutions of each country. In the case of Ecuador are involved the Ministry of Production, Foreign Trade, Investments, and Fisheries, Ministry of Environment, Ecuadorian Standardization Service, Association of Chemical Producers of Ecuador, private companies and the Resource Efficiency and Cleaner Production Center of Ecuador (CEER), the latter being the executing agency of the regional project in Ecuador.
In this sense, CEER is a non-profit institution focused on sustainable industrial development, promotion of the use of clean technologies, energy efficiency and efficient use of resources. CEER was created as part of the World Program to establish National Cleaner Production Centers of the United Nations Industrial Development Organization (UNIDO) and with the support of the Ministry of Production, Foreign Trade, Investments, and Fisheries.
CEER as the technical executor of the project, will focus its efforts on the successful development of each activity of this project, which in the first place requires a baseline that reflects the reality of the country regarding the paints and coatings market, just as the use of pigments and lead compounds in the Ecuadorian industry. To achieve this purpose, it will consider the existing base information at the national level, related to records, databases, and statistics available in private and state agencies. Through this component, the efforts made in the country will be also known, in terms of the development of regulations around the market for paints and coatings, which will allow for a clear and precise starting point to achieve the objectives of the project regarding the regularization of the use of lead in paints, whose final goal is to reach 90 ppm of content by dry weight for these products. With the inputs developed through the pilot paint reformulation tests in industries, it will practically show that it is possible to achieve the goal of the project in terms of lead content, while it will provide an alternative for companies to be prepared for the modern environmental challenges that are occurring worldwide and that will happen in the country, with a mandatory regulation on the content of lead in paints.
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2 NATIONAL CONTEXT 2.1 Physical and demographic context 2.1.1 Geographical aspects Ecuador is located on the northwestern coast of South America, it´s territory is constituted by the continental and insular part, occupying a total area of 270,670 km2, where four natural regions are also recognized: Coastal region, Andean region or Sierra, Amazon region or Oriente, and Insular region or Galapagos. The continental zone which is the area with the largest extension is between the parallels 01 ° 30 ’N and 03 ° 23.5’ S and the meridians 75 ° 12 ’W and 81 ° 00’ W (INOCAR, 2012)
Figure 1. Physical map of Ecuador.
Source: Instituto Military Geographic Institute- IGM Prepared by: IGM The country is limited to Colombia in the north, with Peru in the south and east, and with the Pacific Ocean in the west. 2.1.2 Demographic aspects According to the last population and housing census conducted in 2010, Ecuador registered 15,012,228 inhabitants; of which 7,443,875 were men and 7,568,353 women, presenting a half- life of 78,4 years. (INEC, 2015) The population in the country identifies itself with the following ethnic groups: P a g e | 3
Figure 2. Ethnic groups in Ecuador
Source: Population and housing census 2010- INEC/ National Institute of Statistics and Censuses. Prepared by: CEER.
For another hand, based on the projections developed by the National Institute of Statistics and Censuses (INEC), it is estimated the population will increase in 2020 to 17,510,643 inhabitants, of which 8,665,937 corresponds to the male gender and 8,844,706 to the female, being the urban areas with the greatest number of inhabitants (11,201,131 people) and 6,309,512 in rural areas. (INEC, 2015) 2.1.3 Social aspects 2.1.3.1 Health Taking into account the provisional numbers of the statistical registry of live births and deaths of 2018 carried out by INEC; 293,139 births were registered in that year, with a birth rate of 17.2 births per one thousand inhabitants, evidencing a reduction in the general rate of 13.4 during the period 1990- 2018 (INEC, 2019). In the same way, 71,007 general deaths were registered in 2018, showing: 4.6 deaths for men per one thousand inhabitants and 3.7 for women, however, compared to 2017, there is an increase in the mortality rate of 1.2%, being the following ten most common diseases: ischemic heart disease, diabetes mellitus, cerebrovascular diseases, influenza-pneumonia, hypertensive diseases, land transport accidents, cirrhosis, diseases of the liver, urinary system, chronic diseases of the lower respiratory tract and also certain conditions originating in the prenatal period (INEC, 2019). 2.1.3.2. Education Regarding the education rates, the last census (2010) shows that illiteracy index in Ecuador has been reduced by 2.2% compared to the previous census carried out in 2001, registering a total index of 6.8% in the people at 15 years or older in 2010, of which women represent 7.7% and men 5.8%. Besides, the ethnic groups with the highest illiteracy rate are the indigenous and montubios with 20.4% and 12.9% respectively (INEC, 2010). P a g e | 4
In the same year, it is located the lowest illiteracy rate in people between 15 and 19 years old, on the other hand, the group with the highest illiteracy rate belongs to those people with 95 years or older (INEC, 2010). Table 1 shows the details about the percentages of the population that attended the different levels of education and type of institution.
Table 1. Distribution of the population attending the educational levels by type of institution
Type of educational institution Level Total (%) Public (%) Private (%)
Preschool 2,3 2,2 2,3
Primary education 69,9 55,0 66,1
High school 15,6 18,9 16,4
Higher education 12,1 23,9 15,2
Source: Population and housing census 2010- INEC. Prepared by: CEER.
It is evident that the people between 15 and 19 years old show the lowest illiteracy rate, and the group with the greatest illiteracy is from the people with 95 years or older (INEC, 2010).
Moreover, the tabulated education data show that the net attendance rate in 2017 was 97.45% for primary education, 84.31% for secondary school and 70.80% for high school (INEC, 2017). 2.1.4 Economic aspects. 2.1.4.1. Labor and employment. Ecuador showed until September 2019, a working-age population of 71.1%, of which 67.8% were economically active and 32.2% economically inactive, however, the 4.9% of the working-age population was unemployed (INEC, 2019). The following table shows the number of people about the before mentioned indicators.
Table 2. Composition of the national population in labor indicators.
Indicator Number of people
Working-age Population 12.359.400
Economically active population 8.379.355
Population with Employment 7.972.485
Full Employment 3.228.032
Underemployment 1.649.346 P a g e | 5
Indicator Number of people
Unpaid employment 870.833
Other non-full employment 2.171.045
Unclassified employment 53.228
Unemployment 406.871
Economically Inactive Population 3.980.045
Source: Labor Indicators report September 2019, INEC- ENEMDU. Prepared by: CEER. About the national rates, the gross and global participation rates in the country were 48.2% and 67.8% respectively, while the overall employment rate according to gender was 96.0 % for men and 94.0% for women, the underemployment rate was at 21.0% for men and 18.0% for women and the unemployment rate was 6.0% for women and 4.0% for men (INEC, 2019). The private sector has a greater contribution to jobs, representing 92.2% compared to the public sector, which contributed 7.8%. In this context, the main economic activities in Ecuador are presented below:
Table 3. Composition of employees by activities at the national level (September 2019)
Branch of activity Percentage
Agriculture, livestock, hunting, forestry, and fishing 29,7
Trade activities 18,5
Manufacturing (including oil refining) 10,0
Teaching, social and health services 6,6
Accommodation and food services 6,6
Transport 5,4
Building 5,8
Professional, technical and administrative activities 5,0
Other services* 3,8
Public administration, defense, mandatory social security plans 3,5
Domestic service 2,6
Postal service and Communications 0,9 P a g e | 6
Branch of activity Percentage
Financial services activities 0,7
Electricity and water supply 0,5
Oil and mines 0,5
* Includes: Real estate activities - Arts, entertainment and recreation - Activities of extraterritorial organizations - Other service activities - Not specified Source: Labor Indicators report September 2019, INEC- ENEMDU. Prepared by: CEER.
Although the population is in working conditions, only 29.5% of employees are affiliated or covered by IESS-General Insurance, 58.9% have no affiliation, while the remaining 11.5% are covered by other insurances such as voluntary insurance, peasant insurance, ISSFA or ISSPOL insurance, private insurance, municipal and provincial council insurance, and MSP insurance (INEC, 2019). 2.2 Political structure 2.2.1 Administrative divisions Ecuador is divided into 24 provinces distributed in its four natural regions, the provinces are subdivided into cantons and these in urban and rural parishes. Quito is the capital of Ecuador which is located in Pichincha.
Table 4. Provinces of Ecuador
Coastal Region Andean Region Amazon Region Insular Region
Esmeraldas Carchi Sucumbíos Galápagos Santo Domingo de los Imbabura Orellana Tsáchilas Pichincha Napo Manabí Cotopaxi Pastaza Guayas Tungurahua Morona Santiago Santa Elena Bolívar Zamora Chinchipe Los Ríos Chimborazo El Oro Cañar Azuay Loja
Source: INOCAR, 2012. Prepared by: CEER.
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Figure 3. Administrative map of Ecuador
Fuente: Military Geographic Institute Prepared by: IGM 2.2.2 State Structure The Constitution of Ecuador in the First Chapter regarding "Fundamental Principles" recognizes in its article 1: “Ecuador is a constitutional State of rights and justice, a social, democratic, sovereign, independent, unitary, intercultural, multinational and secular State. It is organized as a republic and is governed using a decentralized approach.” Considering the territory is organized in: provinces, cantons and, parishes, the Ecuadorian people will elect their representatives, who will be elected by popular vote and may be governed by governors, mayors, chiefs and/or political lieutenants depending on the jurisdiction. In this sense, the State is directed by the following functions: Legislative branch: it is exercised by the National Assembly, which is formed by the assembly members who are elected for a four-year term. Executive branch: its maximum representative is the president who is the head of State and Government, responsible for public administration, the president can serve for four-year terms, this function is also composed of 123 entities such as national secretariats, ministries, research institutes, regulation and control agencies, public companies, technical secretariats, public banking, national councils for equality, among others. Judicial branch and indigenous justice branch: the judicial branch is formed by the jurisdictional, administrative, auxiliary and autonomous entities. On the other hand, indigenous justice is led P a g e | 8 by the authorities of different communities, towns and indigenous nationalities, they have the power within their territory. Transparency and social control branch: composed of the Council for Citizen Participation and Social Control, the Ombudsman's Office, the Comptroller General's Office, and the superintendence. Electoral branch: its representatives are composed of the National Electoral Council and the Electoral Tribunal. Public Administration: Includes various agencies of the Executive, Legislative, Judicial, Electoral and Transparency and Social Control functions, as well as autonomous decentralized entities, legal entities created under this administration, and other institutions created by the Constitution. 2.3 Economic and productive activity in Ecuador. Based on the preliminary results of the macroeconomic variables of the second quarter of 2019 presented by the Central Bank of Ecuador, the gross domestic product (GDP) grew by 0.3%, concerning to the second quarter of 2018 and showed a positive variation of 0.4%, due to exports and the final consumption of households. However, for the same period, the imports of goods and services represent 2.2%. Next figure shows the main products, goods or services related to these variables:
Figure 4. Main products, goods or services exported in the second quarter of 2019
Source: Central Bank of Ecuador. Prepared by: CEER.
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Figure 5. Main products, goods or services imported in the second quarter of 2019
Source: Central Bank of Ecuador. Prepared by: CEER.
The gross value added (GVA) by year-on-year economic activity shows that these have a positive and negative variation rate, thus affecting the change in GDP in the country.
Figure 6. Variation rates (t / t-4) of GVA by industry
* Includes: Real estate activities and Entertainment, recreation and other service activities Source: Central Bank of Ecuador. Prepared by: Central Bank of Ecuador.
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3 LEGAL MECHANISM AND NON-REGULATORY INSTRUMENTS IN THE MANAGEMENT OF PAINTINGS 3.1 Introduction. The Republic of Ecuador is governed by several regulatory instruments that organize, control, protect the rights and obligations of citizens in the territory, that is why it recognizes those legal mechanisms founded in the country and those international instruments that have been signed and ratified by the State. The following figure presents the structure of the legal base of Ecuador.
Figure 7. Hierarchy of Ecuadorian regulations
Constitution of the Republic of Ecuador
International treaties and agreements
Organic laws
Ordinary laws
Regional standards and district ordinates
Decrees and regulations
Ministerial Agreements
Technical standards regulations
Other acts and decisions of public authorities
Source: CEER Prepared by: CEER
In the context of this document, it is mentioned that for paints manufacture its necessary the use of chemical substances such as additives, pigments, solvents, binders, dryers, etc., those mostly come from international markets, therefore, there is a regulatory framework which is applied by the competent state agencies in Ecuador.
In this sense, the Ecuadorian legal basis includes different mechanisms for the management and control of chemical substances reflected in several regulatory legislations, whose application is the responsibility of different institutions presented in the following table:
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Table 5. Competent institutions on the management of chemical substances
Competent Phases of Legal instrument Date institutions management
Ecuadorian State All phases of Constitution of Ecuador Official register 449 management of 2008-10-20
Ecuadorian State All phases of Penal Code Official register management Supplement 180 of 2014-02-10
Ministry of Public All phases of The Organic Health Law Official register Health management Supplement 423 of 2006-12-22
Ministry of Commercialization Foreign Trade Law. Official register 82 of Productivity, 1997-06-09 Law 12. Foreign Trade, and Fisheries
Ministry of Commercialization, Law of the Ecuadorian Official Register Productivity, manufacturing Quality System. Law 76. Supplement 26 of Foreign Trade, February 22, 2007. and Fisheries Last modification: June 09, 2014.
Ecuadorian Manufacturing NTE INEN 2280. Official register No. Institute for 380 of 2001-07-31 Paints. Nitrocellulose Standardization lacquers for vehicles repainting. Specifications.
NTE INEN 2281. Official register No. 380 of 2001-07-31 Paints. Acrylic lacquers for vehicles repainting. Specifications.
NTE INEN 2282. Official register No. No. 381 of 2001-08- Paints. Nitrocellulose 01 sealcoat for wood. Specifications.
NTE INEN 2283. Official register No. 380 of 2001-07-31 Paints. Nitrocellulose lacquers for finishes on wood. Specifications.
NTE INEN 2285. Official register No. 380 of 2001-07-31 P a g e | 12
Competent Phases of Legal instrument Date institutions management Paints. Alkydic varnishes of air drying. Specifications.
NTE INEN 2286. Official register No. 381 of 2001-08-01 Paints. Nitrocellulose bases for repainting in the automotive industry. Specifications
NTE INEN 1043. Official register No. No. 381 of 2001-08- Paints. Anticorrosive 01 prime with alkydic vehicle. Specifications.
NTE INEN 1046. Official register No. No. 381 of 2001-08- Paints. Anticorrosive 01 primer with epoxy vehicle. Specifications.
NTE INEN 1044. Official register No. 382 of 2001-08-02 Paints. Anticorrosive coatings for high temperatures. Specifications.
NTE INEN 2287. Official register No. 382 of 2001-08-02 Paints. Nitrocellulose and polyester mastic. Specifications.
NTE INEN 1042. Official register No. 65 of 2009-11-12 Traffic signs paints. Requirements.
NTE INEN 2095. Official register No. 122 of 2017-11-17 Paints. Modified alkydal enamels for vehicles. Requirements.
NTE INEN 1544. Registro Oficial No. Architectural paints. 389 de 2018-12-17 Emulsion water-based
paint (latex). Requirements. P a g e | 13
Competent Phases of Legal instrument Date institutions management
NTE INEN 2284. Official register No. 182 of 2018-02-16 Paints. Lacquers catalyzed by acid for finishing on wood. Requirements
NTE INEN 2094. Official register No. 6 of 2019-07-29 Paints. Synthetic alkyd enamels of air drying. Requirements.
Ecuadorian Handling and NTE INEN 2266 Official register No. Institute for storage Transport storage and 881 of 2013-01-29 Standardization handling of hazardous materials. Requirements.
Ministry of Handling and The Organic Official register Environment imports Environmental Code. Supplement 983 of Law 0, and its 2017-04-12 regulations
Final disposal Ministerial Agreement Official register No. (waste) No. 026. Procedures for 334 of 2008-05-12 registration of
hazardous waste generators, management of hazardous waste before environmental licensing, and for the transport of hazardous materials.
Source: Ecuadorian Regulations Prepared by: CEER
In this chapter, these legal regulations and the scope of their competence are synthesized.
3.2 Constitution of the Republic of Ecuador. Official Record 449 of October 20, 2008. The Constitution is the highest regulation in the Ecuadorian State, which is above any other legal system (art.424). The Constitution establishes in its different titles the fundamental rules and principles to guarantee: the rights (of the people, of the environment, access to education, water, food, P a g e | 14 communication, etc.), participation and organization of power, territorial organization of the state, development regime, good living regime, international relations, thus recognizing citizen participation for social, economic and political development of Ecuador. Article 14 recognizes the right of the population to live in a healthy and ecologically balanced environment, which guarantees sustainability and a good way of living, “sumak kawsay”. It is also declared of public interest the preservation of the environment, the conservation of ecosystems, the biodiversity, the integrity of the genetic heritage of the country, the prevention of environmental damage and the recovery of degraded natural areas. Moreover, article 15 indicates that the State will promote, in the public and private sector, the use of environmentally clean technologies, non-polluting, and low impact alternative energy. Energy sovereignty will not be achieved to the detriment of food sovereignty, nor shall it affect the right to water. Prohibiting the development, production, possession, marketing, importation, transportation, storage and use of chemical, biological and nuclear weapons, persistent organic compounds, agrochemicals internationally prohibited, and harmful experimental biological technologies and genetically modified organisms harmful to human health or that threaten food sovereignty, the ecosystems, as well as the introduction of nuclear and toxic waste into the national territory. It is the right of people to have goods and services of ideal quality and to choose them freely, besides accurate and non-misleading information about their content and characteristics so they will have the necessary control mechanisms and corresponding penalties for lack to them (art 52). The third paragraph of article 397 establishes the regularization of the production, importation, distribution, use and final disposal of toxic and dangerous materials for people and the environment.
3.3 International treaties and agreements Ecuador is part of several international instruments related to the protection of the environment, ozone layer, and climate change, for example: • Minamata Convention on mercury. • Stockholm Convention on persistent organic pollutants. • Vienna Convention for the protection of the ozone layer. • United Nations Framework Convention on climate change. • Kyoto Protocol (of the United Nations framework convention on climate change). • Paris Agreement on climate change. • The Montreal Protocol on substances that deplete the ozone layer.
In the same way, the country has ratified its partition in international conventions related to the management of chemical substances which are indicated below: P a g e | 15
Table 6. International treaties and agreements ratified by Ecuador
International treaties and Ratification Date Description agreements
Regulate the movements (import, export, and Basel Convention on transit) of hazardous wastes under a perspective the control of of reduction and appropriate promotion of transboundary February 23, 1993 environmental management, thus participating movements of in the fulfillment of the Millennium Development hazardous wastes Goals, safeguarding the health of people and the and their disposal environment.
Rotterdam Convention on the To share trade efforts and responsibilities for prior informed certain chemicals classified as hazardous, it is consent procedure created the Rotterdam Convention. Ecuador is a May 04, 2004 for certain hazardous participant contributing to the information chemicals and exchange for decisions of import and export of pesticides in such substances. international trade
Source: Ministry of Environment Prepared by: CEER. 3.4 Laws 3.4.1 Foreign Trade Law. Official Register 82 of June 9, 1997. The Foreign Trade Law focuses on promoting the country's trade worldwide, guaranteeing the internal and external satisfaction of consumers. In this sense, under this law the Foreign Trade and Investment Council (COMEXI) is created, which establishes the policies, rules, negotiation strategies, import and export procedures, among others, to have greater production competitiveness. 3.4.2 Law of the Ecuadorian Quality System. Official Register Supplement 26 of February 22, 2007. Last modification: June 09, 2014 This law governs all national and foreign goods and services that are produced, imported and marketed in Ecuador, which need technical regulations. Among one of its objectives is the protection and preservation of human, animal, plant, and environmental health, as well as consumer protection through different mechanisms of evaluation or conformity assessment to ensure the quality of these products before commercialization and/or import. The Ecuadorian quality system is structured by several institutions with powers to issue standards, technical regulations, and conformity assessment procedures. The Ministry of Production, Foreign Trade, Investments, and Fisheries is the governing institution for compliance with this system, in addition to the creation of the Interministerial Committee and its Advisory Council, involving representatives of the productive sector, academia, and consumers. P a g e | 16
Based on article 40 of this law, these institutions are authorized to carry out the monitoring and control of the goods: packaged, stored, offered or exposed for sale, sold or in the delivery process, at any time for compliance of the quality standards, in case of non-compliance will be reported to the governing institution for the corresponding sanctioning processes. Law of the Ecuadorian Quality System stipulates penalties for unfulfillment the provisions of its regulatory framework, including economic sanctions (art 52), the confiscation of goods following the rules of the Organic Integral Criminal Law; the payment of damages to the affected, suspension of the activity (art 55), the recidivism (in the same year) of the infractions will result in the payment of double the fine and the temporary or definitive closing of the establishment (art 56). 3.4.3 Organic Health Law. Official Register Supplement 423 of December 22, 2006. Last amendment: April 12, 2017 The Organic Law of Health has the objective to regulate the actions that make effective the universal right for all the inhabitants of the country, for which the Ministry of Public Health is the sanitary authority. The law includes several provisions in different areas, such as: • Food and nutritional security by promoting good practices and proper use of products. • Sexual and reproductive health through easily accessible programs for men, women, and adolescents. • Avoid the consumption of tobacco, alcoholic beverages, psychotropic drugs, narcotics and other substances that generate dependence for human, individual and collective health. • Declare as priorities the quality water, air, noise pollution, health and safety at work, among other topics which may represent a hazard to health. • Regulate the operations of public or private services. On the other hand, it is mandatory to comply with the control standards for public and private institutions that carry out production, import, export, storage, transport, distribution, marketing, and sale of products for human use and consumption.
3.5 Organic laws 3.5.1 The Organic law of Production, Commerce and Investments, COPCI. Official Register Supplement 351 of December 29, 2010. Last modification: August 21, 2018. The COPCI normalizes the productive process of the country at all stages, either the production, distribution, exchange, trade, consumption and productive investments of all those natural or legal people. It also promotes the use of environmentally clean technologies and alternative energies; thus, it is established on art. 234 that "the enterprises in the course of the technologies replacement should adopt measures to achieve cleaner production processes, for example, the use of non- P a g e | 17 toxic raw materials, non-hazardous and low environmental impact". To motivate this change in the productive matrix the government offers benefits and tax incentives. 3.5.2 Organic Integral Criminal Law. Official Register Supplement 180 of February 10, 2014. Last reform: June 3, 2019. The purpose of this law is to regulate the punitive power of the State, establishing the criminal offenses, the procedure for judging people, and promote the social rehabilitation of people sentenced and integral reparation of the victims. In this sense, penalties are stipulated with loss of liberty for different periods, depending on the type of crime, for instance: • The person who uses biological, chemical or radioactive elements that cause irreparable, irreversible or permanent damages to the health of one person or more will be punished with seven to ten years (Article 215) • Crimes for the illicit production of controlled substances for three to ten years (Article 219) • Crimes for the illicit traffic in controlled substances of two up to thirteen years (Article 220) • Prohibited management or not authorized products, waste or dangerous substances with one or three years, but if this crime involves the death shall be punished with 16 to 19 years of loss of liberty (Article 254). • Illicit traffic of firearms, chemical, the nuclear or biological weapon from five to seven years (Article 362) • Second-class offenses are classified as offenses that violate the authority's regulations and provisions about the custody of flammable, corrosive or chemical products that cause impacts penalizing them with five to ten days in prison. 3.5.3 Organic Environmental Law. Official Register Supplement 983 of April 12, 2017. The Organic Environmental Law (COA), is the regulatory instrument that entered into force in Ecuador in April 2018, which purpose is to guarantee and protect the rights of people to live in a healthy and ecologically balanced environment, it also regulates several environmental scopes at the national level. In the Title IV of the third book regarding environmental quality is established the principles for the national integrated management of chemical substances, in which article 211 stipulates that the environmental authority has the power to issue the policies and guidelines to regulate possession and movement of chemical substances, especially for those considered as severely restricted, taken into account their management, using the cross-sectoral approach and the criteria established in the Single System of Environmental Management, and international instruments ratified by the State. Other important issues stipulated within this section are: • The phases involved in the management of chemical substances being these: supply, storage, transport, use, export, and others established by the national environmental authority (AAN), together with the support of national institutions, they establish the list of chemical substances according to their danger and restriction. Therefore, it is P a g e | 18
forbidden the importation and illegal traffic of persistent organic pollutants or chemical substances of agricultural and industrial use that have been classified as prohibited. • Any natural or legal person that takes part in these phases must have the respective permission of the AAN, by which the united responsibility establishes in case of events that produce environmental pollution as well as the extended responsibility from the producer throughout the product life cycle.
3.6 Regulations 3.6.1 Safety and health regulation for workers. Executive Decree 2393. Official Register 565 of November 17, 1986. Last modified: February 21, 2003. The objective of this regulation is the prevention, reduction or elimination of occupational hazards, establishing an inter-institutional committee on occupational safety and health who will coordinate, evaluate, execute and ensure compliance with the provisions related to occupational risk prevention. This committee is composed of delegates from the Ministry of Labor, National Directorate of Environmental Control, Ecuadorian Institute of Social Security, and representatives of the employer and labor sector. Besides, in this regulation the powers of the public entities are detailed. In Chapter V: Environment and occupational hazards due to physical, chemical and biological factors, and Chapter VII: Handling, storage, and transport of dangerous goods indicate one of the central axes to be taken into account to ensure safe conditions in the workplace. In the first case, the articles include risk factors such as heat, noise, radiation, corrosive substances, toxins, biological risks, etc, establishing in this way the general and appropriate norms for protection, control measures and exposure times, that is why it should be noted that among the standards for the control of chemical substances (Art 65) indicates that “In those industrial processes that are using substances with a recognized danger or toxicity, it will be necessary to make an effort to replace them with others substances with lower risk, whenever the industrial process allows it ”. In the second case (Chapter VII), the conditions and procedures that must be carried in industries for handling, storage and transport of flammable, non-flammable and corrosive materials are indicated. Other aspects covered by this regulation include the conditions for workplaces, signage, personal protective equipment that must be given to workers, as well as penalties to companies for non-compliance. 3.6.2 General regulation to the Law of the Ecuadorian Quality System. Executive Decree 756. Official Register Supplement 450 of May 17, 2011. Last modification: June 09, 2014. This regulation provides a better understanding and application of the stated in the Law of the Ecuadorian Quality System, to promote and protect the quality of goods and services, in which the functions, obligations, requirements of the members of the Interministerial Committee and Council are detailed. It presents the procedure for the designation and renewal of conformity assessment for the Evaluation Agencies under the framework of the National Quality Policy and the commitments P a g e | 19 that this appointment involves; it also exposes the administrative process for infractions or omissions by complaints, contemplating a fragment on the investigation phase until the application of the corresponding penalty. 3.6.3 Regulation of the Organic Environmental law Official Register Supplement No. 507 of June 12, 2019. The Regulation establishes in its Book III, Title VI "Integral Management of Chemical Substances" the details about the responsibilities of the National Environmental Authority (art 521), and the phases of chemical substance management in sections 1, 2, 3, 4, and 5 of the third chapter. 3.6.4 Ecuadorian Technical Regulations RTE INEN 061 Paintings (in the approval process) This regulation is under the observation process until December 23, 2019. It aims to protect the safety and human health by regulating the paintings before their commercialization, that is why all manufacturers, importers, distributors, and marketers need to meet the requirements established in this regulation thought to obtain the certificate of conformity of their product, which is issued by an accredited institution. The Ministry of Production, Foreign Trade, Investments and Fisheries (MPCEIP) and other institutions designated by the State have the authority of inspection, monitoring, and control. The regulation arranges the products based on the type of paint and the tariff heading. It also indicates the technical reference standards for the requirements (general product, packaging, and labeling), laboratory tests and the product quality parameters, in this sense the following table shows the limit of lead content proposed in the RT INEN 061:
Table 7. Limits of lead content in paints defined in the Technical Regulation 061
Total lead content in dry base Description Reference standard % (m/m)
Architectural paints. Emulsion NTE INEN 1544. 0.01 water-based paint (latex) Types of paints: 1-2-3-4
Paints. Synthetic alkyd enamels of NTE INEN 2094. 0.06 air drying Type of paints: 1-2 (Gloss)-3 (Matte)
Paints. Modified alkydal enamels 0.06 NTE INEN 2095. for vehicles
Paints. Nitrocellulose bases for repainting in the automotive 0.06 NTE INEN 2286 industry
NTE INEN 1043 Paints. Anticorrosive prime with 0.06 Alkyd anticorrosive (anticorrosive primer alkydic vehicle with alkyd vehicle/anticorrosive paint/ Enamel alkyd gloss). P a g e | 20
Total lead content in dry base Description Reference standard % (m/m)
Paints. Anticorrosive primer with 0.06 NTE INEN 1046 epoxy vehicle
Paints. Acrylic lacquers for 0.06 NTE INEN 2281 vehicles repainting
Paints. Lacquers catalyzed by acid 0.01 NTE INEN 2284 for finishing on wood
Paints. Nitrocellulose lacquers for 0.01 NTE INEN 2283 finishes on wood
Paints. Nitrocellulose lacquers for 0.06 NTE INEN 2280 vehicles repainting
Paints. Nitrocellulose and no defined NTE INEN 2287 polyester mastic
Paints. Anticorrosive coatings for 0.06 NTE INEN 1044 high temperatures
Paints. Nitrocellulose sealcoat for 0.01 NTE INEN 2282 wood
NTE INEN 1042. Traffic signs paints 0.06 For type 1(water-based)-2(solvent- based)
Paints for children and school 0,01 - supplies.
Paints. Alkydic varnishes of air NTE INEN 2285. 0.06 drying Type of paints: 1 (Gloss)-2 (Matte)
Source: Technical Regulations RTE INEN 061. Prepared by: CEER. Any violation of the requirements specified in this regulation shall subject to punishment according to the Law of the Ecuadorian System of Quality. As mentioned above, the technical regulation 061 is under the process of approval, therefore it will enter into force after six (6) months from the day following its publication in the Official Gazette.
3.7 Ministerial Agreements The Ministry of Environment has issued the following ministerial agreements regarding the chemical substances. P a g e | 21
Table 8. Ministerial agreements for chemical management
Ministerial agreement Description
Ministerial agreement No. 026. This agreement establishes that any person (natural, legal, national or foreign) who generates, Procedures for registration of handles hazardous waste or transport hazardous hazardous waste generators, materials in Ecuador must obtain the respective hazardous waste management authorization from the Ministry of Environment before environmental licensing, and based on the procedures presented in Annexes A, B for the transport of hazardous and C respectively. materials. Official Register No. 334 of May 12, 2008.
Ministerial Agreement No. 142, presents in its Annex A: the list of chemical substances considered Ministerial agreement No. 142. as prohibited dangerous, hazards with intense and National list of hazardous chemicals, chronic toxicity. Annex B shows the details of hazardous and special waste. Official hazardous waste by specific and non-specific Register No. 856 of December 21, sources and Annex C indicates the national list of 2012. special waste. Thus, contemplating the paint waste in Annex B.
This agreement provides procedures to regulate public and private activities about environmental quality matters. Furthermore, it describes the Ministerial agreement No. 061. characteristics of the environment and natural Reform of Book VI of the unified text sources such as air, water, soil, and biodiversity, of secondary legislation. Official considering their relation to the absence or Register No. 316 of May 4, 2015. presence of harmful agents that may affect the balance and regeneration of life cycles, their structure, functions and evolutionary processes of nature.
Sources: Ministry of Environment. Prepared by: CEER. 3.8 INEN standards The Ecuadorian Standardization Service - INEN, has issued the following technical standards on hazardous chemicals and paints:
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Table 9. Technical standards associated with chemical substances
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER
This standard focuses on the preparation of caution labels for HAZARDOUS INDUSTRIAL hazardous chemicals based on their risks. It also contains NTE INEN 2288 CHEMICALS. PRECAUTIONARY 2000 information about the measures and instructions in case of contact LABELLING. SPECIFICATIONS. or exposure based on the identified risk.
TRANSPORT STORAGE AND The standard stipulates the requirements for the transport, storage, NTE INEN 2266 HANDLING OF HAZARDOUS 2013 and handling of hazardous materials. MATERIALS. REQUIREMENTS
Source: INEN, 2019 Prepared by: CEER. Table 10. Technical standards associated with paints.
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER
The classification considers the type of binder, thus identifying 34 varieties of paints under this criterion. It also recognizes according NTE INEN 1021 PAINTS. CLASSIFICATION 1984 to the environment, the brightness, the drying conditions, the form of application.
PAINTS AND VARNISHES. The standard regulation describes the sampling procedure for NTE INEN 1022 INSPECTION AND PREPARATION OF 1984 different processes and products, either varnishes, emulsions, SAMPLES FOR TESTS solvents, paints; viscous products (cement, putties), and powder. P a g e | 23
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER Establish the mixture and the sample reduction series, all based on the guidelines that must be met for the labeling for the sampling vessels and information contained in the initial inspection report.
This standard sets out the spectrometric methods for atomic absorption in flames using calcination and wet oxidation PAINTS AND RELATED PRODUCTS. techniques, to determine the total lead content in a range of 0.01 DETERMINATION OF TOTAL LEAD. to 2% and greater than 2%. NTE INEN 2093 FLAME ATOMIC ABSORPTION 1998 It is specified the equipment, reagents, calibration processes, SPECTROMETRIC METHOD sample preparation, calculations and other procedures required to perform such analyses.
PAINTS AND RELATED PRODUCTS. Like the NTE INEN 2093 standard regulation, here it is shown the DETERMINATION OF TOTAL LEAD BY necessary specifications (reagents, equipment, calculations, etc.) NTE INEN 2123 MEANS OF CONCENTRATED NITRIC 1998 to determine the lead content in those products that contain at ACID. FLAME ATOMIC ABSORPTION least 0.001% of this metal, using the spectrometric method of SPECTROPHOTOMETRIC METHOD. atomic absorption in flames but using acid nitric.
PAINTS. NITROCELLULOSE LACQUERS These regulations apply to nitrocellulose lacquers (NTE INEN 2280) NTE INEN 2280 FOR VEHICLES REPAINTING. 2001 and acrylic lacquers (NTE INEN 2281), used for all vehicles, these SPECIFICATIONS. should not contain benzene (benzol), methanol (methyl alcohol) or chlorinated compounds; allowing small amounts of certain impurities from raw materials. PAINTS. ACRYLIC LACQUERS FOR NTE INEN 2281 VEHICLES REPAINTING. 2001 On the other hand, it also indicated the conditions that the product SPECIFICATIONS. must-have, the inspection processes (sampling, acceptance, and rejection of products), packaging, and labeling. P a g e | 24
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER
This is a specific norm for nitrocellulose sealcoat for wood, containing the general requirements, the form of application and PAINTS. NITROCELLULOSE SEALCOAT NTE INEN 2282 2001 conditions to preserve and handle the products until their final FOR WOOD. SPECIFICATIONS. destination. This product is used to improve the properties of this material.
PAINTS. NITROCELLULOSE LACQUERS It details the general and specific specifications (application NTE INEN 2283 FOR FINISHES ON WOOD. 2001 conditions - mixing, labeling, etc.) for nitrocellulose lacquers SPECIFICATIONS. including their classification (type 1: gloss and type 2: matte)
This regulation refers to the standards that must have the alkyd PAINTS. ALKYDIC VARNISHES OF AIR NTE INEN 2285 2001 varnishes (gloss and matte) of air drying for decorative or DRYING. SPECIFICATIONS. protective purposes.
PAINTS. NITROCELLULOSE BASES FOR It establishes the compliance parameters for nitrocellulose bottom NTE INEN 2286 REPAINTING IN THE AUTOMOTIVE 2001 paints used in brass work and related fields, as well as for the INDUSTRY. SPECIFICATIONS retouching and repainting of motor vehicles in general.
These standards encompass those anticorrosive primers with alkyd PAINTS. ANTICORROSIVE PRIME vehicle containing minium (NTE INEN 1043) and anticorrosive with NTE INEN 1043 WITH ALKYDIC VEHICLE. 2001 epoxy vehicle, catalyzed with polyamides, polyamines, isocyanate, SPECIFICATIONS. and corrosion inhibiting pigments (NTE INEN 1046). In both cases, the specific requirements, composition, and four types of environments are recognized in which they are used (1: severe, 2: PAINTS. ANTICORROSIVE PRIMER strong-moderate, 3: severe intermediate and 4: common). It NTE INEN 1046 WITH EPOXY VEHICLE. 2001 should be noted that the NTE INEN 1043 takes into account vehicles SPECIFICATIONS. formed by alkyd resin used in environments (3, 4) and the NTE INEN 1046 considers the 4 types of environments P a g e | 25
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER
NTE INEN 1044 identifies two types of anticorrosive coatings for high temperatures: a) vehicle-based on alkyd resins, aluminum PAINTS. ANTICORROSIVE COATINGS paste and colloidal silica and b) vehicle-based on 100% silicone NTE INEN 1044 FOR HIGH TEMPERATURES. 2001 and/or modified silicone resins, as well as unmodified pigments SPECIFICATIONS. and pigments of paste aluminum, defining the corresponding temperature for each type mentioned above.
PAINTS. NITROCELLULOSE AND Describes the requirements, classification, sampling, for NTE INEN 2287 POLYESTER MASTIC. 2001 nitrocellulose and polyester putties to apply on metal surfaces. SPECIFICATIONS.
This standard regulation describes the test methods by direct extraction of the pigment with solvents and applying white paint PAINTS AND RELATED PRODUCTS. on a film containing the pigment understudy. These can determine NTE INEN 2271 DETERMINATION OF BLEEDING 2001 the characteristics of the degree of bleeding. The first test method DEGREE IN PIGMENTS. (by direct extraction) suggests a maximum of 1.5g is for pigments such as lead chromate.
It is specified in this regulation the requirements, classification, packaging, and labeling of paints used to demarcate pavements, TRAFFIC SIGNS PAINTS. NTE INEN 1042 2009 roads, bridges, tunnels, parking lots, and other asphalt surfaces. REQUIREMENTS. Therefore, pigments and thermoplastics must be free of lead, lead chromate, and arsenic chromate.
PAINTS AND VARNISHES — TERMS This standard presents the most used terminology in the paint NTE INEN-ISO 4618 AND DEFINITIONS (ISO 4618:2014, 2016 industry, covering the concepts of the chemical substances for IDT) instance: types of oils, conditioners, varnishes, colors, pigments, P a g e | 26
DOCUMENT DOCUMENT TITLE YEAR DESCRIPTION TYPE NUMBER paints, resins, sealants, etc. It also covers the processes involved during the paint manufacture and use of the products.
The NTE INEN 2095 standard contains the requirements of PAINTS. MODIFIED ALKYDAL modified alkyd enamels for vehicles in which the maximum limit NTE INEN 2095 ENAMELS FOR VEHICLES. 2017 content is 0.06% corresponding to the dry base, using the method REQUIREMENTS established in NTE INEN 2093 standard.
The rule includes the definitions, types of latex paints and the ARCHITECTURAL PAINTS. EMULSION physical-chemical conditions that these paints must obey for NTE INEN 1544 WATER-BASED PAINT (LATEX). 2018 protection and decoration purposes for exterior and interior REQUIREMENTS. surfaces. The total lead content is a maximum of 0,01%.
The maximum limit for lead content in this standard corresponds PAINTS. LACQUERS CATALYZED BY to 0.01%, besides, it defines the basic terminology, classification, NTE INEN 2284 ACID FOR FINISHING ON WOOD. 2018 sampling, packaging, and labeling associated with the REQUIREMENTS requirements that acid-catalyzed, transparent and colored lacquers need to have for wood finishes.
This standard establishes a maximum lead content of 0.06%, for PAINTS. SYNTHETIC ALKYD ENAMELS alkyd resin-based paints also called synthetic air-drying alkyd NTE INEN 2094 2019 OF AIR DRYING. REQUIREMENTS. enamels used to coat interior and exterior metal surfaces, wood and masonry.
Source: INEN, 2019 Prepared by: CEER.
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3.9 Scope of the Model Law on Lead in Paint in Ecuadorian Legislation. The Model Law and Guidance for Regulating Lead Paint is a tool proposed by the United Nations Environment Program, designed to help countries in enacting new laws or modifying existing laws, to establish a single regulatory limit regarding the total lead content in paints. This guideline presents the following key elements to establish effective and applicable requirements: A. Defining key terms and ensuring that the scope of the law is clear B. Establishing a clear legal limit on total lead content in paint C. Setting the effective dates of the new requirements D. Providing methods for ensuring compliance and enforcement E. Specifying the consequences of non-compliance. F. Providing any necessary general provisions In Ecuador, as presented in section 3.6, work is currently carried out on the reform of the Ecuadorian Technical Regulation RTE INEN 061 “PAINTS”, which has included regulatory limits for lead content according to the type of paint as presented in Section 3.6.4, Table 7. Limits of lead content in paints defined in Technical Regulation 061, and sections that relate to the model law. Therefore, this section presents an analysis of the scope of the model law concerning the Technical Regulation RTE INEN 061. In this sense, the following table shows a comparison of the items indicated in the model law and its relation with the Ecuadorian Technical Regulations RTE INEN 061 “PINTURAS”, a document that is in the process of approval.
Table 11. Comparison between the Model Law and the Technical Regulation RTE INEN 061
Model Law and Guidance for Technical Regulation RTE INEN 061 “Paints” Regulating Lead Paint Numeral 3. DEFINITIONS. It is accepted the definitions of the following technical standards: ISO 4618, NTE INEN 1544, 1042, 2285, 2094, A. Definitions. 2095, 2286, 1043, 1046, 2281, 2284, 2283, 2280, 2287, 1044, 2282, as those that include in the RTE INEN 061 for instance: certificate of conformity, paints, architectural paints, latex paint, solvent-based paint, paints for children and school use, producers or manufacturers, among others.
Numeral 4. REQUIREMENTS B. The legal limit on total lead content in paint. In Ecuador, there are two regulatory limits for lead content: 100 ppm and 600 ppm, depending on the type A regulatory limit of 90 ppm of total of paint, as shown in Table 7. Limits of lead content in lead content is proposed, as it is paints defined in Technical Regulation 061. However, technically feasible by eliminating in the new proposal of this Regulation, a value of 90 the intentional addition of lead ppm as a limit for lead content is not yet stipulated, as compounds in paints and taking established by the model law. into account the residual content in the raw materials. In this sense, the Resource Efficiency and Cleaner Production Center of Ecuador, has referred to the P a g e | 28
Model Law and Guidance for Technical Regulation RTE INEN 061 “Paints” Regulating Lead Paint Ministry of Production, Foreign Trade, Investments and Fisheries the document “Observations to the Technical Regulations 061", requesting that temporary provisions be included in Section 12. REVISION AND UPDATE OF THE TECHNICAL REGULATIONS, to adjust the limit of lead content from 100 ppm to 90 ppm, for all those paints that are directly exposed and represent a risk to public health.
In the proposal for RTE INEN 061 it establishes that it will enter into force after six (6) months from the day following its publication in the Official Gazette, that is, it will regulate the paint with a lead content of 100 ppm or 600 ppm, depending on the type of paint. C. Effective dates To align with the proposal of Global Alliance, the Resource Efficiency and Cleaner Production Center of Provide a reasonably delayed Ecuador has referred to the Ministry of Production, effective date for the 90ppm total Foreign Trade, Investments and Fisheries the lead limit or phased effective dates, document “Observations to the Technical Regulations depending on the type of paint 061", requesting that temporary provisions be included in Section 12. REVISION AND UPDATE OF THE TECHNICAL REGULATIONS, to adjust the limit of lead content from 100 ppm to 90 ppm, for all those paints that are directly exposed and represent a risk to public health.
Numeral 8. "CONFORMITY ASSESSMENT PROCEDURE (PEC)" provides mechanisms for conformity assessment, these mechanisms comply with the requirements of the Model Law, a summary of those are presented below: D. Providing methods for 8.1. Domestic and imported products must ensuring compliance and demonstrate compliance through a certificate of enforcement conformity, issued by an accredited, designated or - Third-Party Testing/ declarations recognized institution by the country of conformity 8.1.1. Inspection and sampling processes carried out by Manufacturers and importers ISO 2859-1; or, according to the procedures require to submit sufficient samples established by the accredited, designated or to a third-party laboratory recognized institution accredited to obtain the 8.1.2 Presentation of the Certificate of Conformity declarations of conformity issued by an accredited, designated or recognized institution 8.2 National manufacturers and importers must present the certificate of conformity issued by an accredited, designated or recognized institution P a g e | 29
Model Law and Guidance for Technical Regulation RTE INEN 061 “Paints” Regulating Lead Paint 8.2.1 Certificate of Conformity of product according to Certification Scheme 1b (lot), established in ISO/IEC 17067 8.2.2 Certificate of Conformity of product according to Certification Scheme 5 (INEN quality seal), established in ISO/IEC 17067 8.2.3 Supplier declaration of conformity (First Part Certificate of Conformity) according to ISO/IEC 17050- 1.
In the proposed regulation, there are several mechanisms aligned with what is suggested by the Model Law. Numeral 9. AUDIT AND/OR SUPERVISION AUTHORITY Control and surveillance activities are the responsibility of the Ministry of Production, Foreign Trade, Investments and Fisheries, and those State institutions that have on their constitutive laws, the rights of supervision (numeral 9.1). The authority reserves the D. Providing methods for right to verify compliance at any time following the ensuring compliance and provisions of numeral 8 (numeral 9.2). enforcement Numeral 10. AUDIT AND/OR SUPERVISION. - Government Inspections The institutions will evaluate what is established in the conformity assessment procedures by developing programs within the scope of their competence, either individually or in coordination with each other; for which they may use certification, inspection and testing laboratories accredited or designated by the competent institutions (numeral 10.1 and 10.2) The functions of the supervisory authorities must be impartial and objective (numeral 10.3)
In the proposed regulation, there are several mechanisms aligned with what is suggested by the Model Law, as described below: Numeral 11. SANCTIONS REGIMES E. Specifying the consequences of non- Numeral 11.1 establishes that the sanctions will be compliance those provided under the provisions of the Law of the Ecuadorian Quality System. Likewise, the certification,
inspection, laboratories or other institutions that have issued certificates of conformity, reports of erroneous tests or calibration or that have deliberately adulterated the data of the tests or calibrations issued by the laboratory or, of the certificates, will have P a g e | 30
Model Law and Guidance for Technical Regulation RTE INEN 061 “Paints” Regulating Lead Paint administrative, civil, criminal and/or fiscal responsibility following the provisions of the Law of the Ecuadorian Quality System and other laws in force (numeral 11.2)
Sources: Model Law and the Technical Regulation RTE INEN 061 Prepared by: CEER
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4 INSTITUTIONAL FRAMEWORK AND OTHER ACTORS RELATED TO PAINT MANAGEMENT 4.1 Introduction Depending on the regulations described in the previous chapter, different institutions of the state are designated as responsible for carrying out compliance, monitoring, surveillance of the exposed in those regulations, being able to make the corresponding modifications and updates.
4.2 Functions of government institutions. 4.2.1 Ministry of Production, Foreign Trade, Investments, and Fisheries - MPCEIP. The Ministry of Production, Foreign Trade, Investments and Fisheries is the entity in charge of the Ecuadorian Quality System, fulfilling the following attributions: • Establish foreign trade policies for goods, services, and technology. • Constitute the Interministerial Committee of Quality, for which it must guide and execute the provisions of this committee, such as establishing national and international institutional agreements for technical and/or economic cooperation • Temporarily designate laboratories, conformity assessment institutions or other bodies necessary for specific issues, as long as they do not exist in the country • Determine sanctions. 4.2.2 Ministry of Public Health- MSP. This ministry has the function to determine the policies, procedures, programs, and actions necessary to promote the application, monitoring, and compliance with the Organic Health Law, guaranteeing the right to health with equality, equity, and effectiveness. Together with the National Environmental Authority and other competent bodies, they will regulate, control or prohibit the production, importation, commercialization, publicity, and use of toxic or dangerous substances that constitute a risk to human health. They will also provide adequate and truthful information regarding the environmental impact and its consequences for individual and collective health. Among its other responsibilities include: • Regulate the application of technical standards for the detection, prevention, comprehensive care, rehabilitation of communicable/ noncommunicable/chronic degenerative diseases, disabilities and public health problems declared priority. • Take measures to protect human health from the risks and damages that environmental and working conditions may cause. 4.2.3 Ministry of Environment - MAE The Ministry of Environment is the national environmental authority which is responsible to establish the environmental policies in the Ecuadorian territory, through mechanisms of control, monitoring, and restoration for the preservation of ecosystems, biodiversity, and natural heritage, giving it the power to grant and/or suspend the corresponding environmental permits. P a g e | 32
Moreover, the ministry can determine the protected areas, forest inventory, list of species with some category of threat, hazardous substance, waste management and resolve complaints within the scope of its competence. 4.2.4 Ecuadorian Standardization Service- INEN The Ecuadorian Standardization Service is an institution attached to the MPCEIP, and is the entity responsible for metrology in Ecuador, establishing and ensuring that procedures, standards, calibration of instruments, system of units, etc.; be aligned and comply with international standards, as well as a technical and competent entity in regulation and standardization. Among its other functions are: • Form programs, proposal of standards, technical regulations and conformity assessment procedures for products, goods, and services, focused on improving their quality • Provide technical services in the areas of its competence • Act as the competent conformity assessment body after obtaining the corresponding authorization. 4.2.5 Ecuadorian Accreditation Service- SAE. The Ecuadorian Accreditation Service, like INEN, is an institution attached to the MPCEIP, its main function is to grant the corresponding accreditations to those organizations that intend to issue certificates of conformity at the national level (e.g. laboratories). In the same way, it also recognizes those international institutions in this area, for which it evaluates the technical competences and their procedures.
4.3 Responsibilities of Ecuadorian government institutions in lead paint management 4.3.1 Ministry of Production, Foreign Trade, Investments, and Fisheries. The Ministry of Production, Foreign Trade, Investments and Fisheries has the power to carry out surveillance and control activities at any time to national manufacturers and importers of the products established in technical regulation 061, with the support of the institutions that make up the Ecuadorian Quality System for conformity assessment programs. The MPCEIP based on the reports submitted by the INEN or by the SAE may execute the sanction processes as established in the Law of the Ecuadorian Quality System and its respective regulations. 4.3.2 Ministry of Environment- MAE. The Ministry of Environment is responsible for issuing regulations regarding the environmental management of chemical substances in all its phases, including the list of these substances that have been imported, manufactured or marketed in the national territory, identifying and evaluating the environmental risks. It has the attribution of granting the corresponding records such as the application of controls, monitoring, and sanctions together with the competent authorities in the matter, to regulate the management of chemical substances, for which it can create programs, campaigns, develop training and encourage the research in this area. P a g e | 33
The responsibilities mentioned above also apply to the management of hazardous waste generated in the country. 4.3.3 Ecuadorian Standardization Service- INEN. Within the attribution in the normative framework of paints, INEN has the function of “reviewing within a term not exceeding five (5) years from the date of its entry into force, to incorporate technological advances or additional requirements of security for the protection of environment an human health, following the provisions of the Law of the Ecuadorian Quality System ”(number 12.1 of section 12. Review and update of technical regulation 061) 4.3.4 Ecuadorian Accreditation Service - SAE. The SAE as an accredited institution has the responsibility of certifying and monitoring to those institutions that have obtained the corresponding authorization to comply with the quality parameters of the products based on conformity assessments. In this sense, in Ecuador there are 306 Conformity Assessment Agencies (OEC) of which: 29 has the power to grant certifications, 85 can perform inspections and 192 are laboratories to develop analyzes of different parameters of several industrial sectors. These laboratories are accredited for the analysis of lead in soil, sediments, sludge, solid waste, being the testing laboratory of the Ecuadorian Standardization Service - INEN the institution with Certificate of Accreditation No.: SAE LEN 16-002 that includes the analysis of dry-based lead content for water-based emulsion architectural paints, synthetic alkyl enamels for domestic use, modified alkyd enamels for vehicles, traffic paints, and acid-catalyzed lacquers (shiny, semi- glossy and matte), using atomic absorption spectrophotometry methods, called acetylene air, described in NTE INEN 2093: 1998.
4.4 Functions related to national non-governmental organizations or associations. 4.4.1 Association of Chemical Producers of Ecuador- APROQUE APROQUE has the mission of promoting the sustainable development of the chemical industries and related in the country, under the global initiative Responsible Care, among its objectives are: Offer technical support • Develop continuing education allowing the improvement of its associates. • Encourage the adoption of continuous improvement processes among its members • Promote connections with national and international entities for cooperation and development of the country. Moreover, APROQUE is part of the technical subcommittee on paints, which provides advice related to this subject. 4.4.2 Ecuadorian Chamber of Industries and Production- CIP. The Ecuadorian Chamber of Industries and Production was established in 1936, this organization represents several productive sectors of the country, promoting the high-quality production of Ecuadorian goods and services. P a g e | 34
The other activities developed by the CIP include: • Provide advice and carry out events on economic, legal, environmental and industrial safety issues. • Promote knowledge to improve job performance. • Create specialized committees to strengthen communication channels among its members.
4.5 Projects, agreements or other mechanisms related to lead paint management. Ecuador does not have evidence about paint projects or other specific mechanisms, however as mentioned in the chapter regarding the legal framework, there are chemical management projects led by the Ministry of Environment. In this sense, this institution has actively participated in the implementation of the Strategic Approach to International Chemicals Management (SAICM), thus developing in its first phase the update of the national profile of chemical substances management in Ecuador in 2011. Subsequently, the environmental impacts of 74 industrial activities were evaluated, chapter 22 contains the assessment of manufacture of paints, varnishes and coatings products, similar, printing inks and putty, where positive and negative impacts of different magnitude were determined for this activity. Likewise, the capacities for the implementation of the Strategic Approach to International Chemicals Management were evaluated, to guarantee the efficacy of these activities and the correct implementation by the parties involved, contributing to the reduction of risks to health and the environment related to chemical products considering their entire life cycle.
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5 THE PAINT AND COATINGS MARKET 5.1 Introduction There is a global increase of the paints and coatings market, mainly generated by the highest demand of the construction industry, due to the growing and fast urbanization; vehicles; as well as the high demand for non-residential and industrial applications, these reflect in the consumption of these products and materials. Thus, based on the article of the digital magazine INPRA LATINA, in 2017, it was established that the global consumption of coatings was $ 172.280 million and it is expected until 2023 an annual growth rate of 4,46% (Chaverra, 2018). Concerning the per capita consumption of paints and coatings at global level, the Latin American Federation of Associations of Technicians and Paint and Ink Manufacturers (LATINPIN) in its digital publication indicates that according to the International Monetary Fund, the coatings market in America Latina is $ 9.2 billion, with a population of 604 million people; being Brazil the main consumer country of paints in Latin America, with a consumption of eight liters per inhabitant, followed by Mexico, whose consumption is between 5.5 and 7.5 liters on average, while in States United the consumption is 20 liters for inhabitant (Latinpin, 2019)
To know the trends of consumption in Latin America, a publication on consumption per capita is presented below for 2012 (Latin Press, 2012):
Table 12 Global paint consumption, 2012
Statistics by countries in South America
Population Per Capita Total South Millions of Millions of America Millions Liters/inhabitants. liters gallons Argentina 41,8 5,59 234 62 Bolivia 10,1 1,18 12 3 Brazil 203,4 6,69 1360 359 Chile 16,9 4,50 76 20 Colombia 44,7 2,22 99 26 Ecuador 15 3,0 45 12 Paraguay 6,5 2,0 13 3 Perú 29,2 1,82 53 14 Uruguay 3,3 4,55 15 4 Venezuela 27,6 4,13 114 30 Others* 1,2 5,0 6 2 Total in South 399,7 5,07 2027 536 America P a g e | 36
Statistics by countries in South America
Population Per Capita Total South Millions of Millions of America Millions Liters/inhabitants. liters gallons Global 6926 5,019 34765 9185 *Falkland Islands, Guyana, Surinam. Source: Inpra Latina, 2012 Prepared by: CEER.
It was not possible to determine information more updated for the whole Latin American region. However, in 2018, the digital magazine “Peru Construye” reports for Ecuador a per capita consumption of 5,7 liters per inhabitant, while Peru showed 4,92 liters being the lowest value in the region; for another hand, Mexico reported 6,81 liters, Brazil 9,5 liters, and Chile 9,84 liters1.
The highest increase per capita consumption for 2012 to 2018, calculated from the data found is in Peru with 172%, while the lowest is in Brazil with 42%, in our country the increase was 90%. It is important to mention that other factors can generate favorable conditions for the growth of the paint market, such as the low cost of raw materials and the improvement of industrial activity. However, at the same time, environmental challenges such as the content of lead or volatile organic compounds in paints and coatings should also be handled (Gestión, s.f.). The present study intends to analyze the use of lead in paints in national production, from secondary sources of information. In Ecuador, the growing production and the market of paintings are a reflection of what happens worldwide; it was evident in this study, as will be seen later, most consumed paints correspond to those of non-aqueous, solvent-based type, both used in the automotive industry, and the manufacturing sector specifically paintings for industrial, marine use and wood. 5.1.1 Types of paints in Ecuador In the country, there are several types of paints marketed depending on their use or final consumer. In the Ecuadorian Technical Standard INEN 1021 1983-4, the classification is according to several criteria, for instance, considering the type of resin, they are classified as vinyl, acrylic, alkyd, catalyzed epoxy, polyurethane, polyester. Another important classification is according to the technology: water-based, solvent-based or powder-based paints. In the domestic market of paints in Ecuador, the commercialization is also according to the different uses or applications, that means for architectural, industrial, automotive and special uses such as anticorrosive wood paint, etc. a) Architectural paints are those used indoors and outdoors; interior paints are mostly decorative, while exterior paint seeks to protect the surface from environmental conditions that can damage it. Architectural paints can be:
1 Magazine “Peru Construye” https://peruconstruye.net/2018/11/16/consumo-de-pintura-llega-a-1-3- galones-per-capita-uno-de-los-mas-bajos-en-la-region/ P a g e | 37
- Water-based products include water or latex paints (water-soluble); - Solvent-Based paints are alkyd paints or oil-based enamels (soluble in solvents). These paints are durable and more resistant to abrasion. This is the most developed market in the country, with the greatest variety of products. In 2003 represented approximately 70 % of the total paint market (Madera Valencia, 2013); due to its sale is free, and does not require technical knowledge for its application. These paints are selling to the final consumer through specialized points of sale in paint or hardware stores, where a broad portfolio of products is maintained to meet the needs of the consumers. • There is a specific market for industrial products because they must meet the requirements and specialized regulations; their demand is directed toward factories and industries of food, steel, iron, petroleum, etc., the products require attributes and conditions of major resistance for the different working environments. Industrial paints consist mainly of enamels and synthetic varnishes, generally used in all types of metals exposed to the weather or difficult maintenance, therefore they must protect against corrosion, or they must be materials, which require special sanitary conditions for industrial installations of foods. In all cases, they must provide a high degree of adhesion, hardness and relatively quick drying. The commercialization of this type of product is through technical representatives, and it is not available in mass outlets; the market is growing as the demands from the manufacturing industry and international markets increases. • In the case of automotive paint, the demand depends on the national assemblers of vehicles, as well as specialized workshops for auto parts repair. This type of paints requires ensuring resistance to oxidation and external conditions, durability and optimum adhesion. • Marine paints are used for the maritime transport industry: ships, vessels, boats, etc.; these types of paints must have anti-fouling characteristics (avoid the growth of algae, mollusks, and other marine organisms), anticorrosive (due to the exposure of metals to saline environments), abrasion-resistant, antioxidants, and quick drying. Marketing is generally direct between the manufacturer and the maritime company. • Special paints are mainly used in the manufacture of furniture and wooden articles, either domestically or in the construction sector. In general, commercialization is at points of sale or hardware stores. 5.1.2 Demand and marketing channels for paints in the country The demand is currently covered by national production and imports for the national paint market. Although there are exports, these are fewer concerning imports and those are covered by a few local companies. The commercialization is through different channels from the manufacturer to the final consumer, generally, it is done through specialized centers, hardware stores or shopping centers. The following figure shows the structures used to reach the consumer (Kother & Armstrong, 2018):
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Figure 8. Distribution channels for the paint market
Manufacturer Manufacturer Manufacturer
Wholesaler
Distributor Distributor
Consumer Consumer Consumer
Channel 1 Channel 2 Channel 3
Prepared by: CEER The following sections present an analysis of imports, exports, and an estimate of national production.
5.2 Paints and coatings imports To analyze the situation of imports and exports of paints in our country, it was collecting information available from the website of the Central Bank of Ecuador (BCE)2, as well as information obtained from companies specialized in customs statistics. It was considered the tariff heading3, in which it is defined the nomenclature4, this facilitates the identification and classification of internationally imported and exported goods. The coatings are categorized into two large groups: the dispersed or dissolved in an aqueous medium and the dispersed or dissolved in a non-aqueous medium, according to the following table:
Table 13. Tariff heading for paint and varnishes1
Tariff Heading Description
3208 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a non- aqueous medium; solutions as defined in note|4|to this chapter
2 Foreign Trade Statistics of the Central Bank of Ecuador, https://contenido.bce.fin.ec/documentos/PublicacionesNotas/bi_fw.html 3 Resolution No. 59 of the Foreign Trade Committee (COMEX), effective as of October 1, 2012 4 Based on the Annex to the International Convention on the Harmonized System for the Designation and Codification of Goods (Harmonized System) of the Customs Cooperation Council, a document that includes the nomenclature of tariffs and statistics for foreign trade. P a g e | 39
Tariff Heading Description
3208.10.00 Based on polyesters
3208.20.00 Based on acrylic or vinyl polymers
3208.90.00 Others
3209 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in an aqueous medium
3209.10.00 Based on acrylic or vinyl polymers
3209.90.00 Other
3211.0000 Prepared driers
1Decision 812, Approval of the Common Nomenclature-NANDINA Source: Central Bank of Ecuador Based on the tariff heading it is presented below the result of the compilation of statistical information about imports. 5.2.1 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a non-aqueous medium (tariff heading 3208) Imports registered for this code include those coatings soluble or dispersed in a non-aqueous medium, usually in organic solvents such as thinner. For the analysis of statistical information, data have been collected from the import records obtained from a manifest company for the years 2018 to November 2019. The following table presents a summary of what is described in the “Description of the trade product” from the tariff database, which allows understanding the types of paint or coating being imported.
Table 14. Applications of imported paints and coatings within code 3208
Tariff Heading Description Use and applications
3208.10.0000 Based on polyesters It includes paints for general use, aeronautical, anticorrosive, automotive, base, traffic, epoxy, school paints, resins, inks used in serigraphy.
3208.20.0000 Based on acrylic or It includes paints for general use, vinyl polymers aeronautical, anticorrosive, automotive, base, traffic, school paints, powder paint, additives, varnishes, lacquers, paint dyes, catalyzed paint, sealants, lacquers, various coatings, and phlebography inks.
3208.90.0000 Other This group includes additives, varnishes, lacquers, base coatings, sanitary varnishes, P a g e | 40
Tariff Heading Description Use and applications thinner, resins, waxes, sealants, paints for several uses such as aeronautic, anticorrosive, automotive, traffic, wood, mirrors, among others.
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Inside this tariff heading, it has been included some imports of dyes and materials for use in the analysis laboratory. Below is presented the metric tons imported in the analysis period:
Table 15. Weight of paints and coatings imported within tariff heading 3208 (2018- November 2019)
Net weight (Ton) Tariff Heading Description 2018 2019 3208100000 Based on polyesters 1248,9 952,4 Based on acrylic or vinyl 3208200000 polymers 1014,8 885,9 3208900000 Other 3799,9 3176,8
Total 6063,7 5015,1 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. The total imports for this item are 11079 tons, of which 6064 tons are reported for 2018 and 5015 tons from January to November of 2019. The following graph shows the performance of these imports.
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Graph 1 Imports of paints and coatings on a non-aqueous basis (tariff heading 3208)
Imports of paints and coatings on a non-aqueous basis (tariff heading 3208) 4000 63% 70% 63% 3500 60%
3000 50% 2500 40% 2000 30% 1500 19% 18% 20% 1000 17%
NET WEIGHT (METRIC TON) (METRIC WEIGHTNET 21%
500 10%
1248,9 ton 1248,9 ton 952,4 ton 1014,8 ton 885,9 ton 3799,9 ton 3176,8 0 0% A BASE DE POLIESTERES A BASE DE POLIMEROS LOS DEMAS ACRILICOS O VINILICOS
3208100000 3208200000 3208900000 SUBCODE TO ACCORDING IMPORTATION ANNUAL OF %
PESO NETO (Ton ) - 2018 PESO NETO (Ton ) - 2019 % PESO - 2018 % PESO - 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. It is observed from the imports of paints and coatings on a non-aqueous basis a great amount is included under tariff heading 320890000, which corresponds to the "other" (63%); followed by paints of the polyester-based type (19-21%) and to a lesser percentage, paints based on acrylic polymers (18-17%). In the import tariff, the products are registered by the trade name and sometimes by the type of product. In the present investigation, an approximate classification was carried out considering the type of application that is given to the painting, based on the information reported in the “characteristics” category, according to this, the following grouping is presented and the percentage by weight of the volume imported from each category:
Table 16. The weight percentage of paints imported according to tariff heading (Code 3208)
Tariff Heading Application 2018 2019 Spray paints or aerosols 62,1% 65,0% Multi-use paints 26,5% 24,8% Background paints 5,0% 3,9% 3208100000 Primer 2,0% 1,4% BASED ON Automotive paints 1,0% 2,4% POLYESTER S Finishing paint 2,1% 0,9% Varnish 1,1% 1,0% Traffic paints 0,4% P a g e | 42
Tariff Heading Application 2018 2019 Other coatings 0,3% 0,2% Varnish 49,2% 41,9% Multi-use paints 30,0% 37,1% Primer 7,6% 7,9% Paint coating 7,2% 5,0% 3208200000 Spray paints 3,3% 4,4% BASED ON Automotive paints 1,5% 2,5% ACRYLIC OR VINYL Background paints 0,4% 0,3% POLYMERS Flexographic inks 0,2% 0,3% Lacquers 0,2% 0,3% Sealant 0,0% 0,2% Other coatings 0,4% 0,2% Varnish 23,3% 32,4% Multi-use paints 19,0% 22,3% Sanitary varnish 21,4% 19,2% Lacquers 13,8% 8,7% Various coatings 7,3% 6,0% 3208900000 Sealant 4,7% 4,2% OTHER Spray paints 1,9% 2,3% Anticorrosive paints 1,9% 0,8% Wood paints 1,2% 1,0% Varnish for flexography 1,9% 0,0% Other coatings 3,6% 3,1% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
In the group of paints based on polyesters, the import of spray paints or aerosols, of different types and uses, stands out.
It is observed the most imported subheading within the "other" is the varnishes including sanitary varnishes, lacquers, and multi-use paints. P a g e | 43
5.2.1.1 Country of origin of the import of non-aqueous based paints a) Tariff heading 3208100000 The countries from which the import of this budget heading was reported during the years 2018 and 2019 were:
China United States Portugal Argentina Colombia Germany Peru Sweden Brazil Italy Chile South Korea México Uruguay Indonesia France Spain Netherlands Belgium United Kingdom Romania
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
Graph 2. Countries of origin of imports of non-aqueous paints based on polyesters (Tariff heading 3208100000)
Imports tariff heading 320810000 by country of origin
LOS DEMÁS 1% NETHERLANDS
URUGUAY 1%
ITALY 0,5% GERMANY 2%
UNITED STATES 2% 3% SPAIN 2019 2018
Country of origin 6% MEXICO 8% 9% BRAZIL 9% 10% COLOMBIA 15% 65% CHINA 62% 0% 10% 20% 30% 40% 50% 60% 70% % net weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. It is observed most of the imports of this subheading come from China (62% -65%), followed by Colombia, Brazil, and Mexico.
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b) Tariff heading 3208200000 The products included in this heading correspond to non-aqueous paints or coatings based on acrylic or vinyl polymers, and these are imported from the following countries:
Colombia Spain South Korea Canada Brazil France Poland Hungary China United States Italy Switzerland Portugal Hong Kong Lebanon Egypt México Belgium Argentina Costa Rica Germany Australia Netherlands Slovenia Peru United Kingdom Chile
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
Graph 3. Countries of origin of imports of non-aqueous paints based on acrylic or vinyl polymers (Tariff heading 32082000) Imports tariff heading 320820000 by country of origin
4% LOS DEMÁS 1% UNITED KINGDOM 1% AUSTRALIA 2% BELGIUM 2% 4% HONG KONG 0% UNITED STATES 4% FRANCE 6% SPAIN 6% 2019 2018 PERU 5%
Country of origin GERMANY 7% MEXICO 4% 9% PORTUGAL 6% 12% CHINA 11% 19% BRAZIL 20% 19% COLOMBIA 26% 0% 5% 10% 15% 20% 25% 30% % net weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Most of the imports of this tariff come from Colombia, followed by Brazil and China.
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c) Tariff heading 3208900000 This tariff heading includes coatings called “other”, which are imported from the following countries:
Colombia China Switzerland Montenegro Spain México Indonesia Guinea United States France Lebanon Norway Peru United Kingdom Poland Sweden Germany Chile Hong Kong Egypt Portugal Netherlands South Korea Japan Belgium Argentina Taiwan Canada Brazil Greece Panamá Venezuela Italy
Graph 4. Countries of origin of imports of non-aqueous paints called “other” (Tariff heading 320890000)
Imports tariff heading 3208900000 by country of origin
LOS DEMÁS 1% 2% CHILE 0% UNITED KINGDOM 1% FRANCE 3% MEXICO 2% 4% CHINA 4% ITALY 2% BRAZIL 4% 2019 2018 BELGIUM 4% PORTUGAL 3% County of of County origin GERMANY 7% PERU 8% 5% UNITED STATES 17% 15% SPAIN 18% 18% COLOMBIA 28% 26% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0% 30,0% % net weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Most of the imports come from Colombia, Spain, the United States, and Peru; followed by Germany and Portugal. 5.2.1.2 Main importers of non-aqueous based paints The following table shows the economic activities of the importing companies, reported in the tariff and the percentage of the volume of imports. P a g e | 46
Table 17. Economic activities of importing companies of tariff heading 3208100000
TARIFF HEADING 3208100000 BASED ON POLYESTER % import CIIU Activity volume G469000 Wholesale of several products without specialization. 40% Manufacture of paints, varnishes, enamels or lacquers, C202201 21% pigments and dyes, opacifiers and prepared colors Repair and maintenance services of engines other than G453000 13% those of motor vehicles in exchange for a fee or contract Sale of all types of parts, components, supplies, tools, and 8% accessories for motor vehicles G466312 Wholesale of paints, varnishes, and lacquers 8% Wholesale of building materials: stone, sand, gravel, G466313 2% cement, etc. Other companies. 7% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. It is observed from the companies that import non-aqueous paints based on polyesters, 50% corresponds to those companies that sell wholesale products (CIIU G6046900, G466312, G466313), followed by companies that manufacture paints (21%), and those of automotive repair services (13%).
Table 18. Economic activities of importing companies of tariff heading 3208200000
TARIFF HEADING 3208200000 BASED ON ACRYLIC OR VINYL POLYMERS % import CIIU Activity volume Sale of all types of parts, components, supplies, tools and accessories for motor vehicles, including repair and G453000 37% maintenance services of engines other than those of motor vehicles in exchange for a fee or contract. G466312 Wholesale of paints, varnishes, and lacquers. 19% Manufacture of paints, varnishes, enamels or lacquers, C202201 15% pigments and dyes, opacifiers and prepared colors G469000 Wholesale of several products without specialization. 10% G466913 Wholesale of adhesive substances 2% Wholesale of building materials: stone, sand, gravel, G466313 1% cement, etc. J619009 Other telecommunications activities. 1% Wholesale of printing equipment, including parts, G465998 1% pieces, and related materials. P a g e | 47
TARIFF HEADING 3208200000 BASED ON ACRYLIC OR VINYL POLYMERS % import CIIU Activity volume Intermediation in the purchase, sale, and rental of real L682002 1% estate in exchange for compensation or contract G475201 Retail sale of hardware items 1% Sales activities of clothing, furniture, gadgets, hardware, G471900 1% cosmetics, jewelry, toys, sporting goods, etc. Wholesale of stationery shops, books, magazines, G464993 1% newspapers Wholesale of electrical appliances and devices of G464911 1% domestic use Retail sale of paints, varnishes, and lacquers in G475202 1% specialized establishments Other companies 8% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Most of the products from the companies that import non-aqueous paints based on acrylic are destined for wholesale, but part of the imports is made by the manufacturing companies (15%) and those that use automotive paint.
Table 19. Economic activities of importing companies of tariff heading 3208900000
TARIFF HEADING 3208900000 OTHER % import CIIU Activity volume G466312 Wholesale of paints, varnishes, and lacquers. 44% G469000 Wholesale of several products without specialization. 12% Forging, pressing, stamping and rolling of metal activities; powder metallurgy, production of metal objects directly C259100 8% from metal powders that undergo heat treatment or compression. Sale of all types of parts, components, supplies, tools, and G453000 3% accessories for motor vehicles Repair and maintenance services of engines other than 3% those of motor vehicles in exchange for a fee or contract Manufacture of paints, varnishes, enamels or lacquers, C202201 5% pigments and dyes, opacifiers and prepared colors C202205 Printing ink manufacturing 4% G466913 Wholesale of adhesive substances 3% G451001 Car sale (new and used cars) 3% P a g e | 48
TARIFF HEADING 3208900000 OTHER % import CIIU Activity volume Manufacture of metal containers for compressed or C251202 2% liquefied gases. Passenger air transport with established itineraries and H511001 1% schedules. Support services for the manufacture of aircraft and C303005 special ships and related machinery in exchange for a fee 1% or contract. Wholesale of building materials: stone, sand, gravel, G466313 1% cement, etc. Other companies 10% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. About the other types of non-aqueous paints in this category, there is a decrease in the companies that manufacture paints that import these products; it is noted again the high level for wholesale; another important part is presented with the automotive sector. 5.2.2 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in an aqueous medium (tariff heading 3209) Considering the analysis of the data provided by the manifest company during the period January 2018 to November 2019 is presented a summary of the characteristics for the different types of paints or coatings of this tariff heading:
Table 20. Applications of imported paints and coatings within tariff heading 3209
Tariff Heading Description Use and applications
3209.10.0000 Based on acrylic This includes coatings like varnishes, lacquers, sealants, or vinyl polymers undercoats, traffic paint, school paint, wood paint, paints for several uses and other products such as resins, dyes, binders, waxes, waterproofing, among others.
3209.90.0000 Other This includes varnishes, lacquers, paints for several uses such as automotive, aeronautics, anticorrosive, traffic, it is also reported other materials such as resins, sealants, dyes, waxes, tanning products, pastes, and other coatings.
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Below are presented the imported metric tons:
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Table 21. Weight of paints and coatings imported within tariff heading 3209 (2018- Nov 2019)
Net weight (ton) Tariff Heading Description 2018 2019 3209.10.0000 Based on acrylic or vinyl 4642 3240 polymers
3209.90.0000 Other 449 418
Total 5091 3658 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Imports for this tariff heading represented a total of 8748 tons, of which 5091 tons for 2018 and 3658 tons from January to November 2019. The following graph shows the performance of these imports.
Graph 5. Imports of water-based paints and coatings (Tariff heading 3209)
Imports of water-based paints and coatings (Tariff heading 3209) 5000 100% 91% 4500 90% 4000 80% 89% 3500 70% 3000 60% 2500 50%
2000 4.642,0 40% Net weight (tons) weight Net
1500 30% 3.239,6 1000 9% 11% 20%
500 10%
448,5 418,2 0 0% A BASE DE POLIMEROS ACRILICOS O VINILICOS LOS DEMAS 3209100000 3209900000
PESO NETO (Ton ) - 2018 PESO NETO (Ton ) - 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. It is observed under the tariff heading 32091000 the greatest amount of the imports corresponds to water-based paints and coatings, which belong to those paints or coatings based on acrylic or vinyl polymers with a total import between 89 and 91%. The following table shows a summary of the percentage of paint imports according to the approximate categorization carried out in this investigation:
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Table 22 Percentages of imported paints according to tariff subheading (3209)
Description Application 2018 2019
Paints for several uses 81,2% 66,0% Spray paints 8,4% 19,9% 3209100000 Varnish 10,2% 12,8% BASED ON ACRYLIC OR VINYL Wax 0,1% 0,3% POLYMERS Traffic paint 0,0% 0,4% Other coatings 0,1% 0,5% Paints for several uses 34% 38% Spray paints 33% 31% Resin 19% 11% 3209900000 Varnish 6% 12% OTHER Pigmented paste 7% 4% Traffic paint 0% 4% Anticorrosive paint 1% Other coatings 1% 1% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. . In the group of paints based on acrylic or vinyl polymers, the import of paints for several uses stands out, however, it usually includes architectural paints. It is observed most imported products within the tariff heading "other" are paints for general- purposes and spray paints. 5.2.2.1 Country of origin of imports of water-based paints. a) Tariff heading 3209100000 According to the data of the imports reported for the years 2018 and 2019, the aqueous paints based on acrylic or vinyl polymers come from the following countries.:
Peru Germany Argentina Denmark Spain Brazil Lebanon South Korea China Italy France Portugal United States Chile Belgium Dominica Mexico Netherlands Taiwan Colombia United Kingdom Hungary
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Graph 6. Countries of origin of imports of aqueous paints based on acrylic or vinyl polymers (subheading 320910000) Imports subheading 32091000 by country of origin
LOS DEMÁS 0% CHILE ITALY 1%
BRAZIL 0% GERMANY 1%
COLOMBIA 1% MEXICO 7%
Contries Contries origin of 15% UNITED STATES 9% CHINA 20% 8% 25% SPAIN 32% 28% PERU 46% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% % net weight
2019 2018
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. It is observed most of the imports of this subheading come from Peru, followed by Spain, China, and the United States. b) Tariff heading 3209900000 This heading includes coatings called “other”, which are imported from the following countries:
China Mexico Panamá Italy Brazil Netherlands Switzerland Portugal Spain Colombia India Norway Germany Hong Kong Sweden France United States Peru United Kingdom Venezuela
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Graph 7. Countries of origin of imports of aqueous paints “Other” (subheading 3209900000)
Imports subheading 320990000 by country of origin
1% LOS DEMAS 2% PERU 1%
HONG KONG 3%
COLOMBIA 1% NETHERLANDS 3%
MEXICO 5% UNITED STATES 7%
Country of origin 11% GERMANY 4% 22% SPAIN 15% 14% BRAZIL 26% 34% CHINA 37% 0% 5% 10% 15% 20% 25% 30% 35% 40% % net weight
2019 2018
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Most of the imports of this subheading come from China, Brazil, and Spain 5.2.2.2 Main importers of water-based paints. The following table shows a summary of different economic activities of the importing companies and the percentage of the volume of imports.
Table 23. Economic activities of importing companies of tariff heading 3209100000
TARIFF HEADING 3209100000 BASED ON ACRYLIC OR VINYL POLYMERS % import CIIU Activity volume G466312 Wholesale of paint, varnishes, and lacquers. 34% G469000 Wholesale of several products without specialization. 22% Manufacture of gelatin and its derivatives, glue and adhesive C202916 7% preparations, including glue and rubber-based adhesive. Retail sale of office supplies and stationery such as pencils, G476103 4% pens, paper, etc., in specialized stores. Repair and maintenance services of engines other than those G453000 4% of motor vehicles in exchange for a fee or contract P a g e | 53
TARIFF HEADING 3209100000 BASED ON ACRYLIC OR VINYL POLYMERS % import CIIU Activity volume Wholesale of electrical appliances and devices of domestic G464911 4% use G466913 Wholesale of adhesive substances. 4% Activities of shoe shiner, luggage carriers, people in charge of S960907 3% parking vehicles, etc. Wholesale of building materials: stone, sand, gravel, cement, G466313 3% etc. Sales activities of clothing, furniture, gadgets, hardware, G471900 2% cosmetics, jewelry, toys, sporting goods, etc. Manufacture of paints, varnishes, enamels or lacquers, C202201 2% pigments and dyes, opacifiers and prepared colors C202205 Printing ink manufacturing. 1%
Other companies 8% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
Most of the imports of this type of coating are commercialized.
Table 24. Economic activities of importing companies of tariff heading 3209900000
TARIFF HEADING 3209900000 OTHER
CIIU Activity % import volume
G466321 Wholesale of hardware and locks items 30% Retail sale of perfumes, cosmetic and personal items in G477205 12% specialized stores Car sale (new and used cars) includes the sale of all types G451001 of parts, components, supplies, tools, and accessories for 15% motor vehicles F410010 Construction of all types of residential buildings 5%
G469000 Wholesale of several products without specialization. 4% Wholesale of building materials: stone, sand, gravel, G466313 4% cement, etc. Passenger air transport with established itineraries and H511001 3% schedules. G466931 Wholesale of other intermediate products n.c.p. 3% Manufacture of paints, varnishes, enamels or lacquers, C202201 2% pigments and dyes, opacifiers and prepared colors P a g e | 54
TARIFF HEADING 3209900000 OTHER
CIIU Activity % import volume
Other companies 21% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. 5.2.3 Prepared driers (Tariff heading 3211) “Prepared driers agents are mixtures used to accelerate, they generally consist of mixtures of different drying products (lead borate, naphthenate or zinc oleate, manganese dioxide, cobalt resin, etc.).”5 In the case of this tariff heading, the prepared driers products were imported into the country, from January 2018 to November 2019, were the following: • Zirconium Octoate • Calcium octoate • Cobalt Octoate • Zinc Octoate • Magnesium octoate In this tariff heading, there are also imports reported under the general term of prepared driers agents or drying additives.
The tariff heading, “prepared driers " has imported around 312 metric tons for the year 2018 and 204 tons for 2019.
5 http://www.aduanas-mexico.com.mx/cgi-bin/ctarnet/notas_ex/not_3211.html P a g e | 55
Graph 8. Annual imports of prepared driers (2018- Nov 2019)
Imports Water-based paints and coatings 350 (tariff heading 3211) 300
250
200
150 312,5 ton
203,7 ton
NET WEIGHT (TONS) WEIGHTNET 100
50
0 SECATIVOS PREPARADOS 3211000000 2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. The following graph shows the imports of prepared drier products according to the type of product:
Graph 9. Annual imports of prepared driers by type (2018- Nov 2019)
Imports of the tariff heading 3211000000 45% 39% 40% 38% 35% 30% 28% 25% 25% 22% 22% 20% 17% 15% 10% 5% 3% 5% 0% 1% 0,4% 0,1% 0% SECATIVOS DE SECATIVOS DE SECATIVOS DE SECATIVOS SECATIVOS DE ADITIVOS SECATIVOS DE OCTOATO DE OCTOATO DE OCTOATO DE PREPARADOS OCTOATO DE OCTOATO DE ZIRCONIO CALCIO COBALTO ZINC MAGNESIO
2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. The most important driers are zirconium octoate, followed by cobalt and calcium. 5.2.3.1 Countries of origin of prepared driers imports The prepared drier products are mainly imported from Colombia, Thailand, and India.
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Graph 10. Countries of origin of prepared driers imports (2018- Nov 2019)
Imports subheading tariff 32110000 by country of origin
LOS DEMÁS 0,01% UNITED KINGDOM
BRAZIL 0,31%
SPAIN 1% ARGENTINA 1%
SOUTH KOREA 0,01% UNITED STATES 0,03%
Country of origin 3% UNITED ARAB EMIRATES 3% INDIA 9% 8% 1% THAILAND 14% 83% COLOMBIA 73%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% % en peso neto
2019 2018
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
5.2.3.2 Main importers of prepared drier agents The following table presents a summary of the economic activities that import the prepared driers:
Table 25. Economic activities of importing companies of heading 3211000000
Tariff heading 3209900000 “OTHER” % import CIIU Activity volume G469000 Wholesale of several products without specialization. 33% Manufacture of paints, varnishes, enamels or lacquers, pigments and C202201 16% dyes, opacifiers and prepared colors. Manufacture of gelatin and its derivatives, glue and adhesive C202916 10% preparations, including glue and rubber-based adhesive. G466913 Wholesale of adhesive substances. 8% C202993 Manufacture of inks for writing and drawing. 4% Binding activities of printed sheets to make books, brochures, C181201 4% magazines, catalogs, etc. G466931 Wholesale of other intermediate products n.c.p. 4% G465101 Wholesale of computers and peripheral equipment. 4% P a g e | 57
Tariff heading 3209900000 “OTHER” % import CIIU Activity volume Wholesale of industrial chemicals: aniline, printing ink, essential oils, industrial gases (oxygen), chemical glue, dyes, synthetic resin, G466911 3% methanol, paraffin, flavoring and flavor enhancers, caustic soda, industrial salt, acids and sulfides, starch derivatives, etc. C282998 Support services for the manufacture of printing machinery. 3% Repair and maintenance services of engines other than those of G453000 2% motor vehicles in exchange for a fee or contract Manufacture of printing and binding equipment and auxiliary C282991 2% machines for printing on various materials. Activities of shoe shiner, luggage carriers, people in charge of parking S960907 1% vehicles, etc. Other companies 6% Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Most of the imports of the drying products are done by commercialization companies and followed by paint manufacturing companies.
5.2.4 Results of the analysis of imports of paints a) Regarding the country of origin • The main countries from which paint is imported non-aqueous media, based on polyesters, are China, Colombia, Brazil, Mexico, and Spain; based on acrylic or vinyl polymers are Colombia, Brazil, China, Portugal and Mexico, and the "other" are Colombia, Spain, Peru, United States, Belgium, Germany • Concerning paints in aqueous media, paints based on acrylic or vinyl polymers the countries are Peru, Spain, the United States, and China; about the "others" come from China, Brazil, Spain. • Prepared driers were mainly imported from Colombia, Thailand, and India. b) About imports of tariffs headings 3208, 3209 and 3211
• A comparative analysis of the imports between the three tariffs headings related to paints in non-aqueous media (3208), in aqueous media (3209) and prepared driers (3211), it was observed that the main imports of non-aqueous paints represented between 48% to 56%, while the aqueous ones were between 40% to 48%; the prepared drier products were 4%.
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Table 26. Percentage of annual imports (2018- Nov 2019)
Tariff Year 2018 NOV-2019 Heading Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a 53% 56% non-aqueous medium; solutions as 3208 defined in note|4|to this chapter Paints and varnishes based on synthetic polymers or chemically modified natural 44% 41% polymers, dispersed or dissolved in an 3209 aqueous medium
3211 Prepared driers 3% 2% Total Weight (Metric Tons) 11466,6 8876,6 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
Graph 11. Comparison of annual imports according to the type of paint (2018- Nov 2019)
Comparison of imports of paints and coatings 60% 56% 53% 50% 44% 41% 40%
30%
20%
10% 3% 2% 0% Pintura base no acuosa Pintura base acuosa Secativos preparados 3208 3209 3211
2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
• The trend for both years (2018 and 2019) shows a high volume of imports of solvent- based paints and a small number of prepared driers.
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Graph 12. Imports of paints (2019).
Imports of headings 3208, 3209 and 3211 for 2019
3500,0 36% 36% 40% 3000,0 35% 2500,0 30% 25% 2000,0 20% 1500,0 3.177 3.240 15% 11% 10% en peso % 1000,0 10% 5%
Net weight Net weight (tonmetric) 500,0 952 886 2% 5% 418 204 0,0 0% A BASE DE A BASE DE LOS DEMAS A BASE DE LOS DEMAS SECATIVOS POLIESTERES POLIMEROS POLIMEROS PREPARADOS ACRILICOS O ACRILICOS O VINILICOS VINILICOS 3208100000 3208200000 3208900000 3209100000 3209900000 3211000000 No acuoso Acuoso Secativos preparados Types of paints
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
• In 2019, the paints with the highest import demand corresponded to the non-aqueous paints located in the “other” category, and the acrylic or vinyl type aqueous paints.
5.3 Exports of paints and coatings Exports of paints and coatings that are made from the country include the following tariff heading:
Table 27. List of tariffs heading for exported paints and coatings
Tariff Heading Subheading Description
3208900000 Other 3208 3208100000 Based on polyesters Non-aqueous based paints 3208200000 Based on acrylic or vinyl polymers
3209 3209100000 Based on acrylic or vinyl polymers Water-based paints 3209900000 Other Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
An analysis of exports for each tariff heading is presented below. P a g e | 60
5.3.1 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in a non-aqueous medium (Chapter 3208) It is determined that in this category, the most exported products are in the "Other" category.
Table 28. Annual exports according to tariff heading 3208 (2018- Nov 2019)
Net Weight (Ton) Total Tariff Heading Description 2018 2019 (Ton)
3208100000 Based on polyesters 206,4 236,6 443,0
3208200000 Based on acrylic or vinyl polymers 9,8 16,5 26,3
3208900000 Other 400,3 463,9 864,2
Total 3208 616,5 717,0 1333,5 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. Approximately 65% of exports of solvent-based paints were within the category of others, including paints or coatings such as varnishes, epoxy paint, liquid inks, quick-drying paints, polyurethane paints, among others.
Graph 13. Exports of heading 3208 (2018- Nov 2019)
Expors of heading 3208 (2018 until November 2019) 500 65% 70% 450 60% 400 350 50% 300 33% 40% 250 30% 200 peso % 150 20% 100 2% 10%
Net (MetricWeight Tons) 50
464 206 237 10 16 400 0 0% A BASE DE POLIESTERES A BASE DE POLIMEROS LOS DEMAS ACRILICOS O VINILICOS 3208100000 3208200000 3208900000 Type of paint
2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. 5.3.1.1 Country of destination for exports of heading 3208 About the countries where these types of paints are exported, the following graphs show that non-aqueous paints based on polyesters (3208100000) are destined to Peru, Colombia, and Chile; in less quantity to Spain, Mexico and Venezuela.
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Graph 14. Country of destination for exports of heading 3208
% Exports of heading 3208100000 by destination country
GUATEMALA 0,001%
BOLIVIA 0,01%
INTERNATIONAL WATERS 0,03%
1,7% VENEZUELA 0,5% 2019 2018 MEXICO 3,2% 3,4% ESPAÑA 0,4% 11,6%
CHILE 12,5% Countries Countries destination of 13,1% COLOMBIA 29,1% 70,2% PERU 54,3%
0% 10% 20% 30% 40% 50% 60% 70% 80% % weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
As for non-aqueous based paints, based on acrylic or vinyl polymers (3208200000), these are mainly exported to Colombia, Peru, and Chile; In 2018, exports were mostly to Peru (63.7%), however, in 2019, exports were to Colombia (81.9%).
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Graph 15. Country of destination for exports of heading 3208200000
% Exports of heading 3208200000 by destination country
AGUAS INTERNACIONALES 0,01%
BOLIVIA 0,2%
INTERNATIONAL WATERS 0,2% 0,3% MEXICO 0,4% 2019 2018 UNITED STATES 1,7%
EL SALVADOR 1,2%
13,8%
CHILE 21,4% Countries Countries destination of 2,6% PERU 63,7% 81,9% COLOMBIA 12,6%
0% 20% 40% 60% 80% 100% % weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
Finally, the paints with the highest volume of exports classified as "other" were destined to the following countries:
Peru Venezuela Bolivia Colombia Chile United States Honduras Mexico Costa Rica Dominican Republic Spain Germany Portugal
Of these indicated destinations, the exports are mainly directed to Peru and Colombia; in smaller quantities to Honduras, the Dominican Republic, among others. In 2019, sales to Peru increased.
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Graph 16. Country of destination for exports of heading 3208900000
% Exports of heading 3208900000 by destination country
0,7% LOS DEMAS 01%
2,1% CHILE 02%
VENEZUELA 05% 2019 2018
DOMINICAN REPUBLIC 06%
6,0% HONDURAS 03%
Countries Countries destination of 10,9% COLOMBIA 17%
80,3% PERU 67%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
% weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
5.3.2 Paints and varnishes based on synthetic polymers or chemically modified natural polymers, dispersed or dissolved in an aqueous medium (tariff heading 3209) In water-based paints, the highest export volumes more than 85%, are reported in acrylic or vinyl.
Table 29. Annual exports of heading 3209.
Net Weight (Ton) Total Tariff heading Description 2018 2019 (Ton)
3209100000 Based on acrylic or vinyl polymers 65,7 49,8 115,6
3209900000 Other 3,6 11,2 14,9
Total 3209 69,4 61,1 130,5 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
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Graph 17. Exports of tariff heading 3209 (2018- Nov 2019). Exports of tariff heading 3209. (2018- Nov 2019)
70 94,8% 100% 90% 60 81,6% 80% 50 70%
40 60% 50% 30 40%
20 18,4% 30% 5,2% 20% Net weight Net weight (Metric Tons) 10 10% 65,7 49,8 3,6 11,2 0 00% A BASE DE POLIMEROS ACRILICOS O LOS DEMAS VINILICOS 3209100000 3209900000 Type of paint 2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. 5.3.2.1 Country of destination for exports of heading 3209 Colombia and Peru were the countries where aqueous paints based on acrylic or vinyl polymers were exported.
Graph 18. Country of destination for exports of heading 3209100000
% Exports of heading 3209100000 by country of destination
GUATEMALA 0,002%
UNITED STATES 0,02%
BRUNEI DARUSSALAM 0,04%
3209100000 7,3%
PERU 8,2% A BASE DE POLIMEROS BASE A DE ACRILICOSVINILICOS O COLOMBIA 92,7% Countries Countries destination of 91,8%
0% 20% 40% 60% 80% 100% % weight
2019 2018
Source. Foreign Trade Statistics (SE|NAE) Prepared by: CEER.
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As for water-based paint categorized as “other” (3209900000), it is mainly exported to Colombia and El Salvador.
Graph 19. Country of destination for exports of heading 3209900000
% Exports of heading 3209900000 by destination country
GERMANY 0,004%
DESPACHO INTERNACIONAL 0,009%
INTERNATIONAL WATERS 0,1%
AGUAS INTERNACIONALES 0,1% LOSDEMAS 3209900000 0,001% UNITED STATES 0,7%
Countries Countries destination of EL SALVADOR 7,4%
92,5% COLOMBIA 99,2%
0% 20% 40% 60% 80% 100% 120% % weight
2019 2018
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. 5.3.3 Prepared driers. (Tariff heading 3211) For the analysis period, (2018 until November 2019), exports are not reported, the last one was in 2017 with a volume of 0,5 metric tons to Peru. 5.3.4 Analysis of exports of paints and coatings a) The global analysis of tariff heading 3208 and 3209 reported a total of 1464 tons for the period between January 2018 to November 2019. In this period the most exported tariff heading corresponds to non-aqueous paints with 59%, categorized as "other", followed by non-aqueous polyester-based paints with 30%; in a smaller quantity, there are aqueous paints based on acrylic or vinyl polymers, with 6.4% to 9.6% of total exports. Table 30. Annual exports according to tariff heading 3209 (2018 - Nov 2019)
Tariff Heading Subheading Description 2018 2019
3208900000 Other 58,4% 59,6% 3208 3208100000 Based on polyesters 30,1% 30,4% Non-aqueous paints Based on acrylic or vinyl 3208200000 1,4% 2,1% polymers Based on acrylic or vinyl 3209100000 9,6% 6,4% 3209 polymers P a g e | 66
Tariff Heading Subheading Description 2018 2019
Aqueous paints 3209900000 Other 0,5% 1,4%
Total 685,9 ton 778,1 ton
Total exports 1464,0 ton Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. The following graph shows the performance of exports made from the country:
Graph 20. Non-aqueous and aqueous base paint exports (2018 - Nov 2019).
500 464 450 400 400 350
300 2018 2019 237 250 206 200 150 100 66 Net Weight (metric Net Weight (metric ton) 50 50 10 16 04 11 00 LOS DEMAS A BASE DE A BASE DE A BASE DE LOS DEMAS POLIESTERES POLIMEROS POLIMEROS ACRILICOS O ACRILICOS O VINILICOS VINILICOS 3208900000 3208100000 3208200000 3209100000 3209900000 PARTIDA 3208 PARTIDA 3209 Type of paint
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER. b) An increase in exports can be observed (heading 3208) for 2019 for non-aqueous paints and coatings products. c) Regarding the exporting companies operating in the country, the following list was determined:
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Table 31. List of exporting companies (2018-Nov 2019)
TARIFF HEADING EXPORTER AEROLANE LINEAS AEREAS NACIONALES DEL ECUADOR S.A. AVIANCA - ECUADOR S.A. AXALTA COATING SYSTEMS ECUADOR S.A. CAUCHOS VIKINGO EFECUATRO CIA LTDA CHIQUITA BANANA ECUADOR CBBRANDS S.A. COLPISAMOTRIZ ECUADOR S.A. DIRECCION DE INDUSTRIA AERONAUTICA FAE ECUABARNICES S.A. ECUATRAN SA EMPRESA PUBLICA TAME LINEA AEREA DEL ECUADOR TAME EP ENVASES DEL LITORAL S.A. 3208 NON-AQUEOUS ETERNIT ECUATORIANA SA PAINT FABRICA DE ENVASES S.A. FADESA FLINT INK ECUADOR S.A. GUAYATUNA S.A. HEMPEL ECUADOR S.A. INDUSTRIAL INSTRUMENTATION INC. INSTITUTO ANTARTICO ECUATORIANO INAE MANABIMARINE PRODUCTS S.A. PINTURAS CONDOR SA PINTURAS ECUATORIANAS S.A. PINTUCO PINTURAS UNIDAS S.A. PROVEEDORA DE MATERIALES ARROVIECH S.A. SIGMAPLAST S.A. SINCLAIR SUN CHEMICAL ECUADOR S.A. AEROLINEAS GALAPAGOS S.A. AEROGAL ARTES GRAFICAS SENEFELDER C.A. AVIANCA - ECUADOR S.A. CELLERI PESANTEZ ALFONSO PATRICIO CHIQUITA BANANA ECUADOR CBBRANDS S.A. COLPISAMOTRIZ ECUADOR S.A. DIRECCION DE INDUSTRIA AERONAUTICA FAE 3209 AQUEOUS PAINT ETERNIT ECUATORIANA SA GALAPAGOS CORPORACION TURISTICA GALATOURS SA GUAYATUNA S.A. HALLIBURTON LATIN AMERICA S.R.L. PINTURAS CONDOR SA PINTURAS ECUATORIANAS S.A. PINTUCO Source. Foreign Trade Statistics (SENAE) Prepared by: CEER.
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5.4 National paint production The paint industry is relatively small compared to other manufacturing industries but it is an important industry that is part of the value chain of important sectors such as construction. This industry is growing and developing within the country. To estimate national production was used secondary sources of information, from the Internal Revenue Service, and the Superintendence of Companies, Securities and Insurance, where companies report their financial statements. In the country, there are not institutions that regularly request or require production reports from the paint manufacturing companies. The following activities were considered for the development of this research: - Identify companies whose commercial activities are related to the manufacture of paints. - Obtain the financial statements of the year 2018 from the identified companies, where internal net sales and exports are reported - Conduct a market investigation of the types and prices of paints in the local market, to establish average values. - Estimate the production of paints based on the information collected.
5.4.1 Commercial activities related to the paint market according to CIIU. Based on the International Standard Industrial Classification (CIIU), coding CIIU 4.0, the paint sector in Ecuador, related to the manufacture, sale of paints and pigments, are identified with the following codes:
Table 32. Classification of activities related to the manufacture and marketing of paints and pigments
Code CIIU Description of the economic activity
Manufacture of paints, varnishes, enamels, lacquers, pigments, dyes, C2022.01 opacifiers and prepared colors.
G4663.12 Wholesale of paint, varnishes, and lacquers.
Wholesale of industrial chemicals: aniline, printing ink, essential oils, industrial gases (oxygen), chemical glue, dyes, synthetic resin, methanol, paraffin, G4669.11 flavoring and flavor enhancers, caustic soda, industrial salt, acids and sulfides, starch derivatives, etc. Source: Internal Revenue System (SRI) Prepared by: CEER Information was collected from secondary sources considering this classification, in this case, the Internal Revenue Service (SRI) and the Superintendence of Companies (SUPERCIA), to identify active companies related to paints activity. However, it is important to clarify that during the investigation the identified manufacturers, marketers, and suppliers of inputs, are not necessarily inserted in the categories described in the previous table, that is why it was necessary to resort to other external sources of consultation such as labor union interviews, visits or personal references to complement the information. The results are presented below: P a g e | 69
Table 33. Paint manufacturing companies in Ecuador
No. Company CIIU City 1 ADHEPLAST S.A. C2022.01 CUENCA 2 CHI-VIT ECUADOR S.A. C2022.01 CUENCA 3 CONSTRUCTOQUIMICA CIA. LTDA C2022.01 GUAYAQUIL 4 ECUABARNICES S.A. C2022.01 GUAYAQUIL FÁBRICA DE DILUYENTES Y ADHESIVOS 5 C2022.04 GUAYAQUIL DISTHER CIA. LTDA. FABRICA DE PINTURAS PINTAREZ S. 6 C2022.01 QUITO (MUNDO SIDERAL) 7 INDUALCA S.A. C2022.01 QUITO 8 INDUSTRIAL LATINA S.A. LAINDUSA C2022.01 GUAYAQUIL 9 MEGAPINTURAS CIA. LTDA C2022.01 QUITO 10 PINTUEC S.A. C2022.01 GUAYAQUIL 11 PINTURECSA C2022.01 AMBATO 12 PINTUQUIMICA CIA LTDA C2022.01 QUITO 13 PINTURAMA CIA LTDA C2022.01 GUAYAQUIL 14 PINTURAS AMERICA PINTAMER S.A. C2022.01 QUITO 15 PINTURAS CÓNDOR S. A. C2022.01 QUITO 16 PINTURAS ECUATORIANAS S.A. PINTUCO C2022.01 GUAYAQUIL PINTURAS FORTALEZA PAINTINGSFORT 17 S.A. C2022.01 QUITO PINTURAS PRODUTEKN CIA. LTDA. 18 PINTURAS LIDER PINLID CIA. LTDA. G4752.02 QUITO 19 PINTURAS SUPERIOR CIA LTDA C2022.01 GUAYAQUIL 20 PINTURAS UNIDAS S.A. C2022.01 GUAYAQUIL 21 PINTURAS VHP CIA. LTDA. C2022.01 CUENCA 22 SAILORPAINT S.A. G4663.12 GUAYAQUIL 23 SIKA ECUATORIANA S.A. C2395.04 QUITO SOLVENTES Y MASILLAS NACIONALES 24 C2022.01 GUAYAQUIL NEIRA (NEIRASOLVEN) CIA.LTDA. 25 TOPSEAL AMERICANA S.A. C2022.01 GUAYAQUIL 26 PINTURAS WESCO (ZATOTEK S.A.) G4663.12 QUITO Source: Internal Revenue System (SRI) Prepared by: CEER
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Graph 21. The geographical location of paint manufacturing industries in Ecuador
AMBATO; 1; 4% CUENCA; 3; 12%
GUAYAQUIL; 12; 46%
QUITO; 10; 38%
Source: Foreign Trade Statistics (SENAE) Prepared by: CEER About the companies that provide chemical products for the manufacture of paints, 14 companies were identified as suppliers.
Table 34. Supplier companies for paint industries in Ecuador
No. COMPANY CIIU CITY 1 3M ECUADOR C.A. G4690.00 QUITO 2 APRODIN CIA LTDA G4690.00 QUITO 3 BRENNTAG ECUADOR S.A. G4669.11 GUAYAQUIL/QUITO 4 CEGASUPPY S.A. G4690.00 GUAYAQUIL 5 CIPEQ CIA. LTDA. G4669.11 GUAYAQUIL 6 COMERQUIM G4690.00 GUAYAQUIL EMDIQUIN EMPRESA DE 7 DILUYENTES Y QUIMICOS C2022.04 QUITO INDUSTRIALES CIA LTDA 8 MATHIESEN ECUADOR G4663.13 QUITO 9 MINERVA S.A. G4690.00 QUITO NUTEC REPRESENTACIONES 10 G4669.21 GUAYAQUIL S.A. POLIQUIM, POLIMEROS Y 11 C2011.91 GUAYAQUIL QUIMICOS C.A. 12 QUIMASA G4669.12 QUITO 13 QUIMICA ANDERS M6910.02 QUITO 14 SINOSTAR S.A. G4669.11 GUAYAQUIL Source: Internal Revenue System (SRI) Prepared by: CEER During the project development, it is possible that new suppliers may be identified, especially those related to the commercialization of pigments. P a g e | 71
With the companies that distribute paints in the country, there is, on the one hand, the distribution networks of the manufacturers in specialized stores and shopping centers, and on the other, the specialized distributors, who carry out direct importation of the products that they commercialize major or retail. The following list presents a summary of the importers that commercialize in the country, as well as others identified through the Internal Revenue Service.
Table 35. Importers and distributors of paints and coatings in Ecuador
DISTRIBUTING OR IMPORTING COMPANIES CIIU CITY ACSUIN S.A. ACABADOS Y SUMINISTROS INDUSTRIALES G466312 Quito ADHESIVOS Y RECUBRIMIENTOS INDUSTRIALES G4663.12 Quito ECUADHESIVOS CIA. LTDA. ADITEC ECUATORIANA CIA. LTDA. C2029.12 Quito AMERICAN PAINT ECUADOR S.A. AMERIPAINT C2022.01 Guayaquil AXALTA COATING SYSTEMS ECUADOR S.A. G466312 Ambato CACCIO HOLGUIN VINCENZO GIUSEPPE G466312 Quito CHAMPION HIUK IMPORTACIONES CIA. LTDA. G466312 Quito CHASKIROUTE CIA LTDA G466312 Quito CHAPRA NAVEED AYAZ G466312 Quito CHINA HARBOUR ENGINEERING COMPANY LTD G466312 Quito CHINA15TH METALLURGICAL CONSTRUCTION GROUP CO., G466312 Quito LTD. CINTAS ANDINAS DE COLOMBIA S.A. G466312 Quito CLUB 8 DISEÑO DANES GRUPOGAMANINI S.A. G466312 Quito COMERCIAL - CASALINDA S A G466312 Quito COMERCIAL KYWI S.A. G466312 Quito COMERCIALIZADORA SOLDIN S.A. G4669.11 Quito CROMAUTO S.C.C G466312 Quito ECUANOBEL S.A. ECUANOBELSA G466312 Guayaquil HEMPEL ECUADOR S.A. G466312 Guayaquil IMPORTADORA DE QUIMICOS Y PINTURAS EUROPEAS G466312 Duran EUROCOLORPAINT SA MILLER STEPHEN JOSEPH G466312 Loja PINEIGAR S.A. G466312 Milagro PINTCOLOR CIA. LTDA. C2022.01 Quito PINTURAS EVERY ECUADOR S.A. G466312 Quito PINTURAS Y QUIMICOS DEL ECUADOR PYQ S.A. G466312 Guayaquil PLASTICAUCHO INDUSTRIAL S.A. G466312 Quito PROMOCION INTERNACIONAL Y MATERIALES PRIMA S.A. C2022.01 Quito SOLUCIONES INDUSTRIALES PARK SOLUCIONESPARK S.A. G466312 Guayaquil SOLUCIONES INTEGRALES PARA SUPERFICIES NEOPINDEC G466312 Guayaquil C.A. P a g e | 72
DISTRIBUTING OR IMPORTING COMPANIES CIIU CITY VERPAINTCORP CIA. LTDA. G466312 Baños WOODYCOM CIA. LTDA. C2022.01 Quito Source: Internal Revenue System (SRI) Prepared by: CEER It is important to indicate that this list was extracted considering the CIIU code related to the sale and distribution activity. However, it is emphasized that many companies are registered with different CIIU from the commercial activity of the paint market.
5.4.2 National paint production As a result of the investigation using secondary sources and interviews, 26 companies were related to the manufacture of paints in the country, however, there are other informal companies registered with another CIIU code and small sole proprietorships, these could not be identified, but it is known from sources in the sector, that they are working. Through the Internal Revenue Service, it was identified about 39 natural people, who report as economic activity the manufacture of paintings (CIIU 2022.01). In any case, based on the information reported by the Superintendence of Companies related to the financial statements of the main companies, data from local net sales and exports for 2018 was collected, which represents about 249,1 million dollars of entire sales. These results are reported in the following table, and it allows to visualize how the market is distributed for Ecuadorian companies: At the request of the manufacturing companies, the names were omitted and from now on, an assigned key will be used.
Table 36. Total sales by companies in the country (2018)
Company Total internal Total exports Total sales % CIIU Key sales (USD) (USD) (USD) Participation E1a C2022.01 $71.281.727,88 $1.383.090,79 $72.664.818,67 29,2%
E2 C2022.01 $63.849.196,43 $11.165,90 $63.860.362,33 25,6%
E3 C2022.01 $30.539.740,54 $2.432.163,63 $32.971.904,17 13,2%
E4 C2022.01 $19.580.359,91 $95.972,83 $19.676.332,74 7,9%
E5 C2022.04 $11.044.404,29 $0,00 $11.044.404,29 4,4%
E6 G4663.12 $10.614.059,55 $0,00 $10.614.059,55 4,3% Subtotal $206.909.488,60 $3.922.393,15 $210.831.881,75 84,6% Other companies $36.081.608,92 $2.181.746,14 $38.263.355,06 15,4% TOTAL SALES IN THE $242.991.097,52 $6.104.139,29 $249.095.236,81 100,0% COUNTRY a A key code has been assigned to the company at the request of the paint industry Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER P a g e | 73
Around 85% of incomes for 2018 are concentrated in the first 6 companies, while 15% is distributed among 17 companies. No information is available from 3 companies, but their contribution is not significant in the overall sales volume. However, it is important to clarify that within these companies, some of them are dedicated to covering specific markets, while others prefer to maintain a broader portfolio, in order not to depend on the fluctuations in a single market. The following graph shows the distribution of total sales of paint companies in the country.
Graph 22. Participation by companies according to total sales (2018)
Otras; 15,4%
E1; 29,2% E1 E6; 4,3% E2
E5; 4,4% E3 E4 E4; 7,9% E5 E6 Otras E3; 13,2% E2; 25,6%
Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER 5.4.2.1 Export Market It was identified from the analysis of the 23 companies that by 2018, six made exports, with an approximate amount of 6.1 million dollars.
Graph 23. Distribution of exports by companies (2018)
Distribution of exports by companies 45% 39,8% 40% 35% 30,6% 30% 25% 22,7% 20%
% exports % 15%
10% 5,2% 5% 1,6% 0,2% 0% E1 E2 E3 E4 E7 E18 Exporting companies
Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER P a g e | 74
More than 90% of exports are covered by three companies, these being the same that cover the national market. It is also noted that there are exporting companies that are not in the group with the highest national production, however, they appear with export products. 5.4.2.2 Reference prices of coatings until October 2019 The prices of paint industry products are influenced by economic stability and input prices on the international market, considering that most of the raw material is imported; commercialization prices in the country also vary depending on the channel by which it is being distributed. The prices presented in the following tables are referential. This information was obtained from direct consultation of the most important commercialization centers in the city, considering the supplier or manufacturer, as well as the type of paint. Based on this information, an average reference price per gallon was established for manufacturing companies, by type of paint.
Table 37. Reference prices by type of paint and coating (December 2019)
Average Max. Price Min. Price Type of paint Price (USD/gal) (USD/gal) (USD/gal) Alkyd varnish $ 29,2 $ 49,2 $ 15,2 Alkyd car enamel $ 23,8 $ 23,8 $ 23,8 Alkyd enamel for domestic use $ 18,9 $ 24,0 $ 10,5 Automotive primer nitrocellulose $ 23,0 $ 23,0 $ 23,0 Alkyd anticorrosive primer $ 14,8 $ 17,5 $ 10,2 Epoxy anticorrosive primer $ 33,8 $ 42,6 $ 25,0 Acid catalyzed lacquers for wood $ 29,3 $ 43,5 $ 20,6 Nitrocellulose lacquer wood $ 26,3 $ 26,3 $ 26,3 Architectural paints $ 18,3 $ 33,0 $ 4,4 Paint for signs $ 27,0 $ 28,2 $ 26,3 Nitrocellulose sealcoat for wood $ 19,9 $ 19,9 $ 19,9 Average $ 20,7 $ 49,2 $ 4,4 Prepared by: CEER The prices presented a high variability, especially in the case of architectural paints, alkyd enamel for domestic use and, alkyd anti-corrosive; if the scope of this research is extended to the whole country it is possible high variations in these values. However, it has been taken the product prices of companies that cover 85% of national production. 5.4.2.3 The volume of paint production in the country. To estimate the volume of paint production in the country in metric tons, the following considerations will be taken into account: - The highest net sales revenues of the six largest companies in the country will be taken as a reference, representing 85% of the national market. - It was considered the density to convert the volume units to metric tons. P a g e | 75
- The average price of the paint value for each company will be considered to calculate the production volume. Table 38. Reference prices of paints and coatings by companies (December 2019)
Min. Price Company Average Price Max. Price Key (USD/gal) (USD/gal) (USD/gal)
E1 $ 24,1 $ 49,2 $ 6,5 E2 $ 19,9 $ 28,2 $ 8,7 E3 $ 12,8 $ 26,3 $ 4,4 E4 $ 22,1 $ 42,6 $ 7,3 E6 $ 19,4 $ 33,0 $ 8,5 Prepared by: CEER
For the E5 company, reference prices could not be obtained since there was no market availability during the investigation. The following results are reported based on the above considerations:
Table 39. Net weight for internal sales of paints in the country (2018)
Net weight for Net export Company Key internal sales weight (Ton) (Ton) E1 289,8 14936,6 E2 2,8 16202,9 E3 959,6 12048,9 E4 21,9 4474,2 E5 2875,0 E6 2762,9 Subtotal 1274,1 53300,6 (E1+E2+...E6) Other companies 579,9 9590,1 TOTAL 1854,0 62890,7 Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER - The total internal sales reported in the SRI converted into volume, are considered to correspond to the volume of imported paints + volume of paints produced in the country. • 퐼푛푡푒푟푛푎푙 푠푎푙푒푠 푣표푙푢푚푒 = 퐼푚푝표푟푡푒푑 푣표푙푢푚푒 + 푀푎푛푢푓푎푐푡푢푟푒푑 푣표푙푢푚푒 Therefore, the volume produced or manufactured in the country destined for the national market would be: P a g e | 76
• 푉 푚푎푛푢푓푎푐푡푢푟푒푑 = 푉 표푓 퐼푛푡푒푟푛푎푙 푠푎푙푒푠 − 푉 표푓 퐼푚푝표푟푡푎푡푖표푛푠
Table 40. National production of paints for the domestic market (2018)
Market Net Weight (Ton)
(+) Internal sales 62.890,70
(-) Import 11466,63
National production for internal 51424,1 consumption Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER Total national production includes manufacturing for internal consumption and export; therefore, it would be:
Table 41. National production of paints for the internal market (2018)
Market Net Weight (Ton)
(+) Internal consumption production 51.424,07
(+) Exports 1854,03
Total national production 53278,1 Source: Superintendence of Companies, Securities and Insurance (SUPERCIA) Prepared by: CEER
P a g e | 77
6 THE MARKET FOR LEAD COMPOUNDS AND PIGMENTS The present study focuses its analysis on lead pigments used in paints. However, it is also important to have a general knowledge of the importation of the other lead compounds used at the industrial level. In this regard, the analysis of chapters 28 and 29 of the tariff heading was carried out, where the lead compounds imported into the country were identified, as well as chapter 32 about the pigment tariff headings. • Chapter 28: Inorganic chemicals; organic or inorganic compounds of precious metals, of rare-earth metals, of radioactive elements or isotopes. • Chapter 29: Organic chemicals. • Chapter 32: Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments, and other coloring matter; paints and varnishes; putty and other mastics; inks According to this, below are the results of this analysis.
6.1 Import analysis of lead compounds. Similar to what was done in paints and coatings, the collection of information available on the website of the Central Bank of Ecuador was made, as well as information acquired for the years 2018 until November 2019 of a company specialized in customs statistics. The categorization established in the Tariff heading6 was considered, in which nomenclature7 facilitates the identification and classification of internationally imported and exported goods.
Table 42. Tariff heading for lead compounds imported into the country1
Tariff heading 1 Description
Inorganic chemicals; organic or inorganic compounds of precious metals, of rare- 28 earth metals, of radioactive elements or isotopes 28.24 Lead oxides; red lead and orange lead
2824.10.00 • Lead monoxide (litharge, massicot)
• Other 2824.90.00 • Lead Oxides
28.33 Sulphates; alums; peroxosulphates (persulphates). Other sulfates 2833.29.30 • Of lead
28.41 Salts of oxometallic or peroxometallic acids
6 Resolution No. 59 of the Foreign Trade Committee (COMEX), effective as of October 1, 2012 7 Based on the Annex to the International Convention on the Harmonized System for the Designation and Codification of Goods (Harmonized System) of the Customs Cooperation Council, a document that includes the nomenclature of tariffs and statistics for foreign trade P a g e | 78
Tariff heading 1 Description
Other chromates and dichromates; peroxchromates 2841.50.10 • Zinc or lead chromates
2841.70.00 Molybdates
29 Organic chemicals Others: 2915.29.10 a) Calcium acetates, lead, copper, chrome, aluminum or iron
1Decision 812, Approval of the Common Nomenclature-NANDINA Source: (Tariff) Central Bank of Ecuador Prepared by: CEER • Imports within tariff heading 2824 Within this tariff heading was identified the importation of litharge (lead monoxide) and minium (lead oxides). The following table presents the imported quantities.
Table 43. Imports of tariff heading 2824. Years 2018-Nov 2019
Tariff Heading Description Product Net weight (ton) Lead monoxide (litharge, litharge 84,0 2824100000 massicot)
Total 2824100000 84,0 Lead waste 569,2 2824900090 Other Lead oxide 3190,7 - Lead oxides Lead plates 25,7
Metallic lead 8,1
Total 2824900090 3793,7 Total 3877,7 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
Among the applications that give these compounds are mainly in mining and foundry companies, according to the following:
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Table 44. The economic activity of importers of tariff heading 2824 (2018-Nov 2019)
Net weight Tariff Heading Description Economic activity (ton) Wholesale of industrial chemicals 24 Mineral extraction activities 1 Preparation of frits and enamels for ceramics 27 and enameled iron Lead monoxide Exploration and mining of gold and silver 15 (litharge, massicot) Wholesale of machinery and equipment for 2824100000 0,001 mining; It includes parts and pieces Wholesale of chemical and mining products and 17 supplies Retail sale of chemical laboratory equipment 0,002 Total 84 2824100000 Automotive battery manufacturing activities 2110,3 Production of alloys of aluminum; lead, zinc, tin, 1708,3 copper, chromium, manganese, nickel, etc. 2824900090 Other Wholesale of medical equipment, including 0,0 parts and related parts and materials Wholesale of ferrous metals in primary forms 0,0 Total 3818,6 2824900090 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
Depending on the country of origin, the following results are obtained for imports of this tariff: • Most of the imports of litharge come from Peru.
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Graph 24. Countries of origin of imports of the tariff heading 2824100000 (2018 -Nov 2019)
% of imports tariff heading 2824100000 according to the country of origin
0,008% GERMANY
1,3% AUSTRALIA 2019 2018
1,4%
SOUTH AFRICA Country of origin
97,3% PERU 100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of imports
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER • Most of the lead waste came from Colombia and the United States Graph 25. Countries of origin of imports of the tariff heading 28241900090. Years 2018 -Nov 2019
% of imports according to the country of origin
ISRAEL 0,6%
HONDURAS 1,5% 2019 2018 GERMANY 0,00004%
2,1% CHILE 0,001%
Country of origin UNITED 10,7% STATES 14,4% 87,2% COLOMBIA 83,5% 0% 20% 40% 60% 80% 100%
% imports by country of origin
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
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• Import of another tariff heading of Chapters 28 and 29 The imports of other inorganic and organic compounds containing lead content found in Chapters 28 and 29, which were carried out during the years 2018 until November 2019, are summarized below.
Table 45. Other imports under chapters 28 and 29 (2018-Nov 2019)
Tariff Heading Description Product Net weight (ton)
Except for imports of Lead nitrate 33,43 2824100000 ammonium nitrate Reagent 0,00308 Total 2824100000 33,4323 Zinc or lead chromates Lead Chromate II 0,0005 2841501000 Total 2841501000 Others Lead chloride 0,00243 2827399000 Total 2827399000 0,00243 Additives 0,99 Batteries 1,93 Lead 2833293000 Lead compound 0,01031 Lead sulfate 322,5 Total 2833293000 325.45 Calcium, lead, copper, 2915291000 chromium, aluminum or iron Lead acetate 4,8 acetates Source. Foreign Trade Statistics (SENAE) Prepared by: CEER Other chemical compounds contain lead that enters the country, such as those shown in the table above. The largest amount of lead entering the country is in the form of sulfate and lead nitrate; in smaller quantities are used as a laboratory reagent:
Table 46 Commercial activity of importers of other lead compounds (2018-Nov 2019)
Net weight Tariff Heading Description Application (ton)
Gold and silver mining and exploration 20
Except for imports of Sale of laboratory equipment 0,03 2834299000 ammonium nitrate Sale of chemical products 13,41
Total 2834299000 33,43
OTHER 2827399000 Sale of laboratory equipment 0,00046 Lead chloride
2841501000 Zinc or lead chromates Sale of laboratory equipment 0,0005 P a g e | 82
Net weight Tariff Heading Description Application (ton) Automotive battery manufacturing 0,99 activities Manufacture of collector bars and other 1,93 electrical conductors Lead Manufacture and marketing of 0,01031 2833293000 automotive batteries. Production of alloys of aluminum; lead, zinc, tin, copper, chromium, manganese, 322,5 nickel, etc.
Total 2833293000 325,5
Wholesale of chemical and mining products and supplies. 3,1 Wholesale of industrial chemicals products 1,5 Lead acetates 2915291000 Wholesale and retail sale of medical equipment and related materials 0,1 Wholesale and retail of laboratory equipment and quality control. 0,1
Total 2915191000 4,8 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
The table above indicates that lead as sulfate is mainly used in the battery manufacturing industry. According to the country of origin, the following result is obtained for budget items. • The item corresponding to lead nitrates is mainly imported from China and Peru.
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Graph 26. Countries of origin of imports of the tariff heading 2834299000 (2018 -Nov 2019)
INDONESIA 0,001%
SWITZERLAND 0,002%
UNITED STATES 0,005%
INDIA 0,1% Country of origin PERU 30,7%
CHINA 69,2%
0% 10% 20% 30% 40% 50% 60% 70% 80% % by country of origi
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
• Regarding the lead chromate as a chemical reagent, this is mainly imported from Switzerland; while lead chloride is imported from China and India. • Lead sulfates are mainly imported from Costa Rica. Graph 27. Countries of origin of imports of the tariff heading 2833293000 (2018 -Nov 2019)
120% 99,09% 100%
80%
60%
% weight % 40%
20% 0,30% 0,59% 0,01% 0% UNITED STATES CHINA UNITED STATES COSTA RICA ADITIVOS PARA BATERIAS SULFATO DE PLOMO FABRICACIÓN DE BATERÍAS Country of origin
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
• Imports of lead acetates come principally from Peru.
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Graph 28. Countries of origin of imports of the tariff heading 2915291000 (2018 -Nov 2019)
MEXICO 1,1%
INDIA 1,4% Country of origin
PERU 97,5%
0% 20% 40% 60% 80% 100% % weight
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
6.2 Import of pigments Pigments are a fundamental part of the manufacture of coatings, pigments are chemical substances, generally insoluble of natural organic origin such as chlorophyll or organic and inorganic synthetic origin, developed by the chemical industry; most pigments used in paints and dyes owe their color to the chemical properties of transition metals that may have in two or more oxidation states, which explains color characteristics; among the most commonly used transition metals are chromium, lead, zinc, molybdate. Pigments are part of the formulation of the paints, these are the fundamental source of these metals in the composition of the paints; and in the particular case of lead, it is added in the form of different salts either to give a certain color or as an agent to accelerate the drying process of the coating, the following table shows some examples, some of them have already been discontinued:
Table 47. Main lead pigments used in the industry
Name Technical name Formula
Red Pigment 104 Chromate lead sulfate molybdate PbCrO4, PbMoO4, PbSO4
Yellow Pigment 34 Lead chromate PbCrO4
A mixture of lead chromate and iron blue PbCrO4 Green Pigment 15 (Prussian blue) C18Fe7N18 A mixture of lead chromate and Green Pigment 48 phthalocyanine blue
Red Pigment 105 Lead tetroxide Pb3O4 Yellow Pigment 46 Lead monoxide PbO
White Pigment Lead sulfate PbSO4
Naples yellow Lead tin oxide (lead stannate) Pb2SnO4 P a g e | 85
Name Technical name Formula
Orange/red Pigment Lead molybdate PbMoO4 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER To collect information on imports of pigments, the headings of the following tariff were analyzed:
Table 48. Tariff headings for pigments
Tariff headings Tariff description
3206200000 Pigments and preparations based on chromium compounds Pigments (including metal powders and flakes) scattered in non- 3212901000 aqueous media, liquids or paste, types used for the manufacture of paints Dyes and other coloring matter presented in forms or retail 3212902000 packaging Source. Foreign Trade Statistics (SENAE) Prepared by: CEER For the analysis as a primary source was used the digital information available at the Central Bank of Ecuador and as a supplement was considered the import statistics acquired from a manifests company for 2018 until November 2019. 6.2.1 Analysis of the import of pigments under tariff heading 3206200000 Based on the analysis of the tariff statistical information, the pigments were grouped under heading 3206200000 according to the type or use reported in that tariff, the following table presents a summary:
Table 49. Classification of pigments (heading 3206200000), according to the tariff report l
Description Type
Masterbatch It includes the following types of masterbatch: green, yellow and beige
Chrome yellow pigment It comprises the yellow pigments found in chrome yellow 73, chrome yellow 90, yellow paste and yellow pigments in general
Molybdate orange pigment It contains: orange molybdate 36 and orange molybdate 38
Pigments based on chromium This group includes the other pigments that are defined compounds in the statistical basisas: dyes for use in the manufacture of footwear, overseas pigments and their preparations, pigments for the treatment of skins and leathers.
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
The analysis of imports considered the classification form 2018 to November 2019. P a g e | 86
Table 50. Imports of pigments (tariff heading 3206200000) 2018 to Nov-2019
Net weight (Ton) Tariff Heading Description 2018 2019 Masterbatch 8,7 16,6 Chrome yellow pigment 81,1 85,7 Pigments and preparations based Molybdate orange pigment 21,2 22,4 on chromium Pigments based on chromium compounds compounds 89,9 38,7 Total (ton) 200,9 163,3 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER Imports for this heading represented a total of 200,9 tons in 2018 and 163,3 tons until November 2019. The following graph shows the performance of these imports.
Graph 29. Imports of pigments (tariff heading 3206200000), 2018 to Nov-2019.
100,0 45% 60% 90,0 40% 52% 50% 80,0 70,0 40% 60,0 50,0 30% 24% 40,0 20% 30,0 11% 14%
Net weight Net weight (metric tons) 10% 20,0 4% 10% 10,0 81,1 85,7 89,9 38,7 21,2 22,4 8,1 16,6 0,0 0% PIGMENTO AMARILLO PIGMENTOS A BASE DE PIGMENTO NARANJA MASTERBATCH CROMO COMPUESTOS DE MOLIBDATO CROMO Heading 3206200000
2018 2019
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER The pigments of heading 3206200000 with the highest import volume correspond to the yellow chrome pigments with a total of 93%, followed by pigments based on chromium compounds with 68%, then there are orange pigments molybdate with 24% and finally there are imports of masterbatch, used in the plastic industry with 14%. The heading pigments based on chromium compounds, although they represent a large volume of imports, there is not enough tariff information to identify the type of chromium pigment, to assign them a more appropriate classification. P a g e | 87
In 2019, there was an increase in imports of chrome yellow pigments, molybdate orange pigments and masterbatch. However, the pigments based on chromium compounds report a decrease of 21%.
6.2.1.1 Country of origin of imports of pigments of tariff heading 3206200000. These were the countries from which the import of chromium-based pigments was reported during 2018 and 2019:
Colombia India Mexico Brazil China United States Canada Peru The following graph shows the percentages of import volumes per country.
Graph 30. Countries of origin of imports of pigments tariff heading 3206200000 (2018-Nov 2019)
% Imports of pigments according to country of origin
PERU
0,2% UNITED STATES 0,0% 3,1% BRAZIL 2019 2018
7,1% INDIA
1,8% CANADA 6,7% 7,7%
Countries Countries origin of CHINA 12,5% 8,9% MEXICO 20,9% 71,2% COLOMBIA 58,9% 0% 20% 40% 60% 80% % weight Source. Foreign Trade Statistics (SENAE) Prepared by: CEER Most of the imports of pigments come from Colombia, followed by Mexico and China.
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6.2.1.2 Main pigment importers of tariff heading 3206200000 Below is a summary of importing companies based on the productive activity reported in the Internal Revenue Service (SRI):
Table 51. Activities according to the SRI of importers of heading 3206200000
Description The activity of the importer Manufacture of plastic for the packaging of products: bags, drawers, boxes, bottles, etc. Masterbatch Wholesale of several products without specialization. Manufacture of other primary plastic products. Manufacture of grenades and fire extinguishing pumps, preparation, and loading of extinguishing devices. Manufacture of other primary plastic products. Manufacture of paints, varnishes, enamels or lacquers pigments and dyes, opacifiers and prepared colors. Chrome Yellow Pigment Manufacture of plastics in primary forms: polymers, including polymers of ethylene, propylene, styrene, vinyl chloride, vinyl acetate and acrylics; polyamides, phenolic and epoxy resins and polyurethanes, alkyd resins and polyester and polyester resins, silicones, polymer-based ion exchangers. Wholesale of various products without specialization. Wholesale of adhesive substances. Manufacture of gelatin and its derivatives, glue and adhesive preparations, including glue and rubber-based adhesive. Manufacture of grenades and fire extinguishing pumps, preparation, and loading of extinguishing devices. Molybdate orange pigment Manufacture of paints, varnishes, enamels or lacquers pigments and dyes, opacifiers and prepared colors. Wholesale of various products without specialization. Wholesale of adhesive substances. Activities of legal entities for securities or other financial assets, without management. Deep-sea and coastal fishing activities: extraction of fish, crustaceans and marine mollusks, turtles, sea urchins, ascites and other tunicates, etc. Metal cladding service activities: plating, anodizing, coloring, plasticizing, enameling, lacquering, chrome plating, etc., performed in exchange for a fee or contract. Colorant Pigments Manufacture of grenades and fire extinguishing pumps, preparation, and loading of extinguishing devices. Manufacture of other primary plastic products. Manufacture of other chemical products for agricultural uses n.c.p. Mail collection services and packages deposited in public mailboxes or post offices include the distribution and delivery of correspondence and packages. P a g e | 89
Description The activity of the importer The activity can be carried out in one or several of its means of transport (private transport) or public transport. Wholesale of footwear. Wholesale of several products without specialization. Wholesale of building materials: stone, sand, gravel, cement, etc. Wholesale of clothing, including sportswear. Wholesale of industrial chemicals. Wholesale of adhesive substances. Retail sale of clothing accessories such as gloves, ties, braces, including umbrellas, etc. In specialized establishments. Retail sale of a wide variety of products among which food products, beverages or tobacco do not predominate, selling activities of clothing, furniture, appliances, hardware, cosmetics, jewelry, toys, sporting goods, etc. Source. Foreign Trade Statistics (SENAE) Prepared by: CEER The following table shows the quantity of imported chromium-based pigments, depending on the commercial activity of the importing companies:
Graph 31. Imports of pigments according to the economic activity of the importer (2018-Nov 2019)
Los demás 7%
Venta al por mayor de calzado. 6%
Fabricación de granadas y bombas 10% extintoras de fuego, preparación y…
Venta al por mayor de productos 17% químicos industriales.
Venta al por mayor de sustancias 18% Economicactivity adhesivas.
Fabricación de pinturas, barnices, 18% esmaltes o lacas pigmentos y tintes,…
Venta al por mayor de diversos 24% productos sin especialización.
0% 5% 10% 15% 20% 25% 30% % Imports
Source. Foreign Trade Statistics (SENAE) Prepared by: CEER Most of the pigments that enter the country are destined for commercial companies or chemical distributors. P a g e | 90
6.2.2 Analysis of the import of pigments under heading 3212 Although this heading does not include pigments that may contain lead, the search was carried out to show if there are importers that enter pigments of heading 3206200000 under this denomination. When analyzing the statistical data of the indicated budget items, a single importing company was found, declared under this heading:
Table 52. Chromium-based pigments imported within heading 32129
Commercial Net Weight (Ton) Country of Pigment Tariff description product origin description 2018 2019 Chrome 3212901000 France 0,08 - yellow Chrome Pigments (including powder and Chrome yellow metal flakes) dispersed in non- Hong kong 0,06 - yellow pigment aqueous, liquid or paste media of the types used for the Light chrome Spain 0,59 - manufacture of paints yellow 3212901000 Pigments (including powder and 2k molybdate metal flakes) dispersed in non- Lebanon - 0.02262 aqueous, liquid or paste media, red Molybdate of the types used for the red pigment manufacture of paints 3212902000 Chrome Dyes and other colorants Spain - 0,004 materials presented in forms or effect containers for retail sale Total 0,74 0,027 Source. Foreign Trade Statistics (SENAE) Prepared by: CEER
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7 HEALTH IMPACTS OF THE USE OF LEAD PAINTS Lead is a heavy and toxic metal that, being exposed to humans can cause metabolic disorders of different natures, causing even death (Ascione, 2001). This due to the alteration of the metabolism of certain key compounds such as calcium and iron against the presence of lead in the body, that is why WHO has stated that there are no safe concentrations in the face of this element (Azcona-Cruz, Ramírez, & Vicente-Flores, 2015). Sources of exposure. Sources of lead can occur in homes, workplaces and in open environments contaminated by this metal, WHO has identified the following sources: • Casting, recycling, painting, or gas station industries. • Food products, cosmetics, unregulated medicines. Routes of entry. Lead can enter the body through the respiratory system t by inhaling particles emitted by combustion processes, or by the intake of water, food, and dust, causing in all cases an intoxication in different levels of intensity, depending on the concentration and exposure time, it is important to mention that the absorption is 4 to 5 times greater in children than in adults (WHO, 2019)
Health effects. Although the effects caused by lead have been recognized since ancient times and in old civilizations such as the Turkish or Roman (Balparda, 2008) it is not until recent years that it has become of great public interest, due to the damages to several organs such as the brain, kidneys, liver, reproductive system, blood problems. The following shows the main effects depending on the exposed individual:
Table 53. Effects of lead in humans
Exposed person Effects
Intellectual disability Underperforming at school Children performance Behavior problems
Ischemic heart disease. Adults Stroke
Pregnant women Affectation to the development of the fetus.
Source: WHO. Prepared by: CEER.
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Lead in paints Paints may contain lead this is because this metal is found as a constituent of some pigments or driers used during the manufacture (Doadrio, 2006). The following table describes the main lead raw materials used for paints.
Table 54. Forms of lead used in the paint industry
Compound Colour Index8 Hazard Statements according to GHS9
Lead chromate Molybdate sulphate red H350 – May cause cancer. Pigment Red 104 (PbCrO4 (CrH2O4.Pb) H360 – May damage fertility or the unborn child. Pigment Yellow H373 – May cause damage to organs through Lead chromate (PbCrO4) 34 prolonged or repeated exposure. H400 – Very toxic to aquatic life. Chrome green (mixture of Pigment Green 15 lead chromate and iron blue) H410 – Very toxic to aquatic life with long lasting effects. Fast chrome green; Pigment
Green 48 (mixture of lead Pigment Green 48 chromate and phthalocyanine blue) H272 - May intensify fire; oxidiser. H302 - Harmful if swallowed. H332 - Harmful if inhaled. H351 - Suspected of causing cancer. Lead tetra oxide - minium Pigment Red 105 H360 – May damage fertility or the unborn child. (Pb3O4) H372- Causes damage to organs through prolonged or repeated exposure. H410 – Very toxic to aquatic life with long lasting effects. Lead monoxide Pigment Yellow H302 - Harmful if swallowed (PbO) 46 H332 - Harmful if inhaled H360 - May damage fertility or the unborn child H373 - May cause damage to organs through White lead prolonged or repeated exposure Pigment White 1 (2PbCO3×Pb(OH)2) H400 - Very toxic to aquatic life H410 - Very toxic to aquatic life with long lasting effects
Source: Lead Paint Reformulation Technical Guidelines, 2019. Prepared by: CEER.
8 The Colour Index (CI), identifies each pigment by giving it a unique colour index name and colour index number. 9 The degree of hazard, according to GHS, is determined from the data in the Material Safety Data Sheets (MSDS). P a g e | 93
The population may be exposed to lead paints by being in direct contact with these products or by those powders and particulate materials from remodeling works or deteriorated paints in homes (Kianoush, Sadeghi, & Balali-Mood, 2015). Lead-based paints have caused worldwide interest, being common in the 90s the disorder called pica in children in the United States due to the contact of toys and homes contaminated by using paints with a high content of lead (Ascione, 2001). For instance, in Israel, a study revealed that 90% of public access surfaces in parks that are painted exceed 90ppm, detecting that spray paints can also exceed the limits established by the United States; producing effects on children such as reduction of IQ, lack of attention and behavioral changes (Berman, y otros, 2018) Nepal, for its part, has detected in a study carried out in 2012 that 93% of the paints contain lead without any warning of the risk faced by consumers (Gottesfeld, Pokhrel, & Pokhrel, 2014). In Ecuador was collected 10 samples of household paints in warehouses accessible to the population, where lead content was analyzed, detecting an average concentration of this metal of 31,960ppm (Clark, Rampal, Thuppil, & Roda, 2009). On the other hand, it was reported that the blood lead content in workers of a paint industry is less than15 μg/dL (Moreno-Cabrera, 2018). Lead poisoning is not only present through architectural use paints, but also in those used on glass or restoration, producing the disease known as the disease of artisans where several symptoms are identified like: hand tremor, nausea, stomach ache among others, (Labanda & Fernández, 2012).
Prevention (Kianoush, Sadeghi, & Balali-Mood, 2015), suggests a primary prevention, in which the possible sources are identified before they come into contact with humans, thus limiting the spread of the disease; the secondary prevention consists in detecting possible patients with a high content of lead in their blood, through the use of questionnaires, to subsequently carry out specific detection tests, as well as finding and reducing the source of exposure. In the case of the industries to verify the content of lead in the workers they use analysis in regulated intervals for its part by assessing dietary deficiency it is tried to identify the population susceptible to absorb this metal. Other ways to determine lead content can be through blood, urine and X-ray tests (Markowitz, 2003). Treatment The treatment is based on the decontamination of lead from the body, so the patient must be removed from the source of exposure (Kianoush, Sadeghi, & Balali-Mood, 2015), subsequently as one of the alternatives is the beginning of pharmacological treatments and the use of chelation therapy (Balparda, 2008)
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8 BIBLIOGRAPHY Ascione, I. (2001). Intoxicación por plomo en pediatría. Archivos de Pediatría del Uruguay, 72, 133-138. Azcona-Cruz, M., Ramírez, R., & Vicente-Flores, G. (2015). Efectos tóxicos del plomo. Revista de Especialidades Médico-Quirúrgicas, 72-77. Balparda, J. (2008). Intoxicación por plomo: una revisión con énfasis en la población pediátrica. CES Medicina, 22, 43-58. Berman, T., Barnett-Itzhaki, Z., Reicher, S., Ardi, R., Shammai, Y., Aruas, L., & Negev, M. (2018). Lead in spray paint and painted surfaces in playgrounds and public areas in Israel: Results of a pilot study. Science of the Total Environment, 455-459. Chaverra, D. (06 de marzo de 2018). Reciente informe sobre expectativas del mercado global de pinturas y recubrimientos. Obtenido de Inpralatina: https://www.inpralatina.com/201803067399/noticias/empresas/reciente-informe- sobre-expectativas-del-mercado-global-de-pinturas-y-recubrimientos.html Clark, S., Rampal, K., Thuppil, V., & Roda, S. (2009). Lead levels in new enamel household paints from Asia, Africa and South America. Environmental Research, 109, 930-936. Doadrio, A. (2006). Ecotoxicología y acción toxicológica del plomo. Anales de la Real Academia Nacional de Farmacia, 72, 409-422. Gestión. (s.f.). Consumo de pintura llega a 1.3 galones per cápita, uno de los más bajos en la reglón. Retrieved from Revista Perú Construye: https://peruconstruye.net/2018/11/16/consumo-de-pintura-llega-a-1-3-galones-per- capita-uno-de-los-mas-bajos-en-la-region/ Gottesfeld, P., Pokhrel, D., & Pokhrel, A. (2014). Lead in new paints in Nepal. Environmental Research, 132, 70-75. INEC. (2010). El Censo informa: Educación. Retrieved from Ecuador en cifras: http://www.ecuadorencifras.gob.ec/wp- content/descargas/Presentaciones/capitulo_educacion_censo_poblacion_vivienda.pdf INEC. (2015). Compendio Estadístico 2015. Retrieved from Ecuador en cifras: https://www.ecuadorencifras.gob.ec/documentos/web- inec/Bibliotecas/Compendio/Compendio-2015/Compendio.pdf INEC. (2017). Tabulados de educación . Retrieved from Ecuador en cifras: https://www.ecuadorencifras.gob.ec/educacion/ INEC. (2019). Encuesta Nacional de Desempleo y Subempleo (ENEMDU) Indicadores Laborales Septiembre 2019. Retrieved from Ecuador en cifras: https://www.ecuadorencifras.gob.ec/documentos/web- inec/EMPLEO/2019/Septiembre/201909_Mercado_Laboral.pdf INEC. (2019). Estadísticas Vitales - Registro Estadístico de Nacidos Vivos y Defunciones 2018. Retrieved from Ecuador en cifras: https://www.ecuadorencifras.gob.ec/documentos/web- inec/EMPLEO/2017/Diciembre/122017_M.Laboral.pdf P a g e | 95
INOCAR. (2012). Información General de la República del Ecuador. Retrieved from Instituto Oceanográfico de la Armada del Ecuador: ww.inocar.mil.ec/docs/derrotero/derrotero_cap_I.pdf Kianoush, S., Sadeghi, M., & Balali-Mood, M. (2015). Recent advances in the clinical management of lead poisoning. Acta Medica Iranica, 53, 327-336. Kother, & Armstrong. (2018, mayo). Fundamentos de Marketing. Retrieved from https://bloggeronlineweb.blogspot.com/2018/05/fundamentos-de-marketing- kotler.html Labanda, P., & Fernández, C. (2012). Saturnismo: a propósito de un caso. Medicina y Seguridad del Trabajo, 58, 168-173. Latin Press. (2012, Febrero 12). Industria de pinturas continúa agitada. Retrieved from Inpralatina: https://www.inpralatina.com/201202172271/articulos/pinturas-y- recubrimientos/industria-de-pinturas-continua-agitada.html Latinpin. (2019, Diciembre 11). Datos interesantes del sector. Retrieved from Latinpin: http://www.latinpin.com/seccion/?se=10 Madera Valencia, B. (2013, Noviembre). Estado de situación del sector de elaboración de pinturas ecuatoriano para el periodo 2007-2011. Retrieved from Pontifica Universidad Católica del Ecuador: http://repositorio.puce.edu.ec/handle/22000/6875 Markowitz, M. (2003). Manejo de la intoxicación por plomo en la niñez. Salud Publica de Mexico, 45, 225-231. Moreno-Cabrera, K. P. (2018). Determinación de los niveles de plomo en sangre en trabajadores de una fábrica de pinturas en la ciudad de Quito, por espectrofotometría de absorción atómica con horno de grafito. Retrieved from Pontificia Universidad Católica del Ecuador: http://repositorio.puce.edu.ec/bitstream/handle/22000/12367/Disertación Katherine Paola Moreno Cabrera.pdf?sequence=1&isAllowed=y OMS. (2019). Intoxicación por plomo y salud. Retrieved from Organización Mundial de la Salud: https://www.who.int/es/news-room/fact-sheets/detail/lead-poisoning-and-health WHO. (2019). Intoxicación por plomo y salud. Retrieved from World Health Organization: https://www.who.int/es/news-room/fact-sheets/detail/lead-poisoning-and-health OMS-UN Environment (2019), Lead Paint Reformulation Technical Guidelines. Legal Instruments. • Ministerial agreement No. 026. Procedures for registration of hazardous waste generators, hazardous waste management before environmental licensing, and for the transport of hazardous materials. Official Register No. 334 of May 12, 2008 • Ministerial agreement No. 142. National list of hazardous chemicals, hazardous and special waste. Official Register No. 856 of December 21, 2012 • Ministerial agreement No. 061. Reform of Book VI of the unified text of secondary legislation. Official Register No. 316 of May 4, 2015 • The organic law of Production, Commerce and Investments, COPCI. Law 0. Official Register Supplement 351 of December 29, 2010. Last modification: August 21, 2018 • Organic Environmental Law. Law 0. Official Register Supplement 983 of April 12, 2017 P a g e | 96
• Constitution of the Republic of Ecuador. Legislative Decree 0. Official Record 449 of October 20, 2008 • Basel Convention on the control of transboundary movements of hazardous wastes and their disposal • Rotterdam Convention on the prior informed consent procedure for certain hazardous chemicals and pesticides in international trade • Foreign Trade Law. Law 12. Official Register 82 of June 9, 1997 • Organic Health Law. Law 67. Official Register Supplement 423 of December 22, 2006. Last amendment: April 12, 2017 • Law of the Ecuadorian Quality System. Law 76. Official Register Supplement 26 of February 22, 2007. Last modification: June 09, 2014 • NTE INEN 2288:2000. Hazardous industrial chemicals. Precautionary labeling. Specifications • NTE INEN 2266: 2013. Transport storage and handling of hazardous materials. Requirements • NTE INEN 1021:1984. Paints. Classification • NTE INEN 1022: 1984. Paints and varnishes. Inspection and preparation of samples for tests • NTE INEN 2093:1998. Paints and related products. Determination of total lead. Flame atomic absorption spectrometric method • NTE INEN 2123: 2001. Paints and related products. Determination of total lead by means of concentrate nitric acid. Flame atomic absorption spectrophotometric method • NTE INEN 2280: 2001. Paints. Nitrocellulose lacquers for vehicles repainting. Specifications • NTE INEN 2281: 2001. Paints. Acrylic lacquers for vehicles repainting. Specifications • NTE INEN 2282: 2001. Paints. Nitrocellulose sealcoat for wood. Specifications • NTE INEN 2283: 2001. Paints. Nitrocellulose lacquers for finishes on wood. Specifications • NTE INEN 2285: 2001. Paints. Alkydic varnishes of air drying. Specifications • NTE INEN 2286: 2001. Paints. Nitrocellulose bases for repainting in the automotive industry. Specifications • NTE INEN 1043: 2001. Paints. Anticorrosive prime with alkydic vehicle. Specifications • NTE INEN 1046: 2001. Paints. Anticorrosive primer with epoxy vehicle. Specifications • NTE INEN 1044. 2001. Paints. Anticorrosive coatings for high temperatures. Specifications • NTE INEN 2287: 2001. Paints. Nitrocellulose and polyester mastic. Specifications • NTE INEN 2271: 2001. Paints and related products. Determination of bleeding degree in pigments • NTE INEN 1042: 2009. Traffic signs paints. Requirements • NTE INEN-ISO 4618: 2016. Paints and Varnishes — Terms and Definitions (Iso 4618:2014, IDT) • NTE INEN 2095: 2017. Paints. Modified alkydal enamels for vehicles. Requirements • NTE INEN 1544: 2018. Architectural paints. Emulsion water-based paint (latex). Requirements P a g e | 97
• NTE INEN 2284: 2018. Paints. Lacquers catalyzed by acid for finishing on wood. Requirements • NTE INEN 2094: 2019. Paints. Synthetic alkyd enamels of air drying. Requirements • Safety and health regulation for workers. Executive Decree 2393. Official Register 565 of November 17, 1986. Last modified: February 21, 2003. • General regulation to the Law of the Ecuadorian Quality System. Executive Decree 756. Official Register Supplement 450 of May 17, 2011. Last modification: June 09, 2014. • Regulation of the Organic Environmental law. Official Register Supplement No. 507 of June 12, 2019. • Ecuadorian Technical Regulations RTE INEN 061 Paintings (in the approval process)
OTHER SOURCES OF INFORMATION. The following institutions are government and private organizations that provided the information, through digital media, public consultation or specialized statistics databases.
Institution Type of organization Type of information
Superintendencia de Control entity • Data about companies according to Compañías, Valores Public sector CIIU: location, economic activity, y Seguros, administration, workers, etc. SUPERCIA. • Income from internal net sales and exports
https://www.supercias.gob.ec/portalscvs/
Servicios de Rentas Control and collection • Data about companies: location, Internas del entity economic activity, administration, Ecuador, SRI. Public sector activity status, etc. • Sales revenue according to CIIU
https://www.sri.gob.ec/web/guest/home
Banco Central del Control and collection • General databases on foreign trade Ecuador, BCE entity Public sector
https://www.bce.fin.ec/
Servicio Nacional de Control entity • Information and data on foreign Aduana del Ecuador, Public sector trade SENAE. https://www.aduana.gob.ec/ P a g e | 98
Institution Type of organization Type of information
Datarsur Selling Customs and • Database on imports and exports Foreign Trade Statistics Information Private Company
www.dasatur.com