UPDATE 1-Ecuador joins Andean neighbours with EU free-trade deal

Thu Jul 17, 2014 2:26pm EDT

* Ecuador joins Colombia, Peru in group with EU trade deals

* Ecuador's success with EU contrasts with tension with United States (Adds EU reaction, context on the deal quote)

By Robin Emmott and Alexandra Valencia

BRUSSELS/QUITO July 17 (Reuters) - Ecuador sealed a free-trade deal with the European Union on Thursday, giving the Andean nation greater access to the EU's 500 million consumers and offering the EU's fragile economy another market for its cars, whisky and luxury goods.

Ecuador joins Colombia, Chile, Mexico and Peru in the group of Latin American economies that have free-trade pacts with the European Union, the world's biggest trading bloc.

"(This) will boost our bilateral trade and investment and act as an important driver for development in Ecuador," the EU's Trade Commissioner Karel de Gucht said after the deal was done in Brussels.

Following the failure of global trade talks, the European Union is trying to sign accords with much of Latin America and Asia as well as with developed countries including Japan and the United States, to revive its economy after the euro zone crisis.

The European Union is the biggest buyer of Ecuador's exports, excluding oil, which totalled $3 billion in 2013.

In 2013, bilateral trade was worth 5 billion euros ($6.76 billion), and officials now expect that to grow.

Ecuador's success in dealing with Europe contrasts with its strained ties with the United States.

Last year, Quito renounced the U.S. trade benefits it received in exchange for fighting the narcotics trade, accusing Washington of using the Andean Trade Promotion and Drug Eradication Act as a political weapon.

The EU deal also deepens a divide in Latin America between the free-trading nations of the Pacific on one side and Argentina, Brazil and Venezuela on the Atlantic, which have been more reluctant to drop barriers to trade.

Ecuador's Trade Minister Francisco Rivadeneira said the EU will extend its system of preferential tariffs for Ecuador that had been due to expire in December, until the new trade deal takes effect in the second half of 2016.

"After almost four years of work, finally we have reached a balanced agreement with the European Union," Rivadeneira said in Brussels.

The agreement must be approved by Ecuador's national assembly and the European Parliament.

The agreement will give Ecuador unfettered access to the EU's consumers who buy its cut flowers, coffee, cocoa, tropical fruit juice and bananas.

For European exporters, the deal offers better access to Ecuador in areas such as the automotive sector and for alcoholic beverages.

EU officials also see the agreement about more than just opening markets and hope it will set the basis for a more stable investment climate, bound by strict rules agreed in the pact. ($1 = 0.7396 Euros) (Additional reporting by Peter Murphy; Editing by Hugh Lawson)