USTR Report Highlights Issues with Ecuador Trade and Investment Agreement Obligations

By July 17, 2012Trade

The U.S. Trade Representative (USTR) recently submitted its sixth report to Congress regarding the Andean Trade Preference Act (ATPA), as amended by the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The ATPA was enacted in 1991 and offers trade benefits to help Bolivia, Colombia, Ecuador and Peru strengthen legitimate domestic industries.

The eligibility criteria for APTA and ATPDEA benefits requires a country to “act in good faith in recognizing as binding or in enforcing arbitral awards.” The USTR report highlighted several important issues with Ecuador, including concerns about Ecuador’s handling of international arbitration for investor disputes.

In August 2011, a U.S. company obtained an arbitral award against Ecuador for violating the United States-Ecuador BIT by failing to provide effective means of resolving commercial disputes in Ecuadorian courts. The case relates to claims filed in Ecuador by the company in the early 1990s, the resolution of which the arbitral tribunal held to have been unduly delayed. The government’s petition to have the award set aside was denied in May 2012, although that decision may be appealed. In September 2009, the company filed another arbitration claim against Ecuador under the BIT, claiming, among other things, government mistreatment in connection with a then-pending lawsuit in the Ecuadorian courts, a lawsuit decided against the company in February 2011. The Ecuadorian government sought a stay of the arbitration in U.S. federal court, but that request was denied. In February 2012, the arbitral panel issued an interim award directing the Ecuadorian government to suspend enforcement and recognition of the judgment against the company in the lawsuit. The Administration is monitoring developments in connection with these matters under the relevant ATPA eligibility criteria.

Manufacturers believe it’s critical that all nations adhere to the rules of trade and investment agreements. In June, the NAM sent a letter to the White House outlining manufacturers’ concerns about Ecuador’s disregard for its obligations under the Bilateral Investment Treaty (BIT). The NAM will continue to encourage the Administration to stay vigilant on this issue. Extending trade preferences to Ecuador even while it fails to meet its obligations and BIT standards would send a dangerous message to other developing nations.

Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.

Lauren Wilk

Lauren Wilk

Director of Trade Facilitation Policy at National Association of Manufacturers
Lauren Wilk is the Director of Trade Facilitation Policy for the National Association of Manufacturers (NAM). In that capacity, Lauren works with NAM member companies to develop and advocate the association’s position on export controls, sanctions, export credit and financing, international investment, trade facilitation and customs issues, export promotion and other policies related to national security and global competitiveness. She currently serves on the steering committee of the Coalition for Security and Competitiveness and the Exporters for Ex-Im Coalition.
Lauren Wilk

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