It’s Time to Revoke Trade Privileges for Ecuador

Sep 19, 2012

A man sits outside Carondelet Palace in Quito, Ecuador. Photographer: Jorge Vinueza/Bloomberg.

The U.S. Chamber sent a strong message that countries must play by the rules and respect the rule of law if they want to reap the benefits of trade in global markets.  On behalf of our members who operate in foreign markets and the countries who adhere to their international commitments, we petitioned the Office of the United States Trade Representative (USTR) for the withdrawal of Andean Trade Preference Act (ATPA) benefits for Ecuador after the country’s repeated and deliberate failure to meet the ATPA’s eligibility criteria relating to the fair treatment of U.S. companies.

For many years, the Chamber has been a consistent and outspoken supporter of ATPA due to the trade and foreign policy benefits it has afforded the United States, and its effectiveness in generating trade, growth, and jobs among beneficiary countries. 

Countries like Peru and Colombia, which graduated from the program after their respective trade promotion agreements with the United States were implemented in 2009 and 2012, are great examples of the benefits that the ATPA can provide. But unfortunately, Ecuador’s record stands in stark contrast with the success of other beneficiaries.

Ecuador has repeatedly failed to respect the rule of law, private property, and the sanctity of contracts in ways that impact a wide variety of companies in numerous sectors. This raises serious questions regarding whether the country meets the statute’s eligibility criteria.

Unfortunately these are not new developments in Ecuador.  These issues have been noted repeatedly in the President’s annual reports to Congress on Ecuador’s ATPA eligibility, and in statements from the U.S. Department of State, and the Chamber has continued to raised concerns with the country’s troubling pattern of disregard for the rights of foreign investors.  I reiterated these concerns this summer in my testimony before the Senate Foreign Relations Committee on the positive trends and serious challenges of doing business in Latin America:

Not only has Ecuador withdrawn from the World Bank’s Convention on the Settlement of Investment Disputes between States and Nationals of Other States and stated its intention to terminate the U.S.-Ecuador Bilateral Investment Treaty (BIT), it has also failed to comply with the pre-existing order of an international arbitration tribunal convened under Article 6 of the U.S.-Ecuador BIT and administered by the Permanent Court of Arbitration in The Hague, “(whether by its judicial, legislative or executive branches) to take all measures necessary to suspend or cause to be suspended the enforcement and recognition within or without Ecuador” of the $18.2 billion judgment by Ecuadoran courts against the Chevron Corporation. The Government of the Republic of Ecuador has flouted this and other BIT awards, with President Correa himself denouncing the panel’s findings.

We regret that both the judicial and executive branches of the Government of the Republic of Ecuador have publicly denounced the arbitration award and stand silently by while efforts are made to seek foreign enforcement of the judgment, most recently in Canada and Brazil, in direct violation of the international tribunal’s ruling award.

Trade preferences like this are a privilege, not a right, and Ecuador has continued to flout its international investment commitments. The rule of law in Ecuador has continued to deteriorate and until the government of Ecuador demonstrates the political will to meet the criteria set forth by the ATPA, their benefits should be withdrawn.

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