As the Office of the U.S. Trade Representative (USTR) conducts its annual review to determine whether Ecuador still qualifies for trade preferences under the Andean Trade Preferences Act (ATPA), the NAM has urged USTR to examine carefully whether Ecuador has lived up to its ATPA eligibility requirements. 

The NAM has long been concerned with Ecuador’s repudiation of its legal obligations and its breaches of the basic rule of law.  In May, the NAM recommended to USTR that Ecuador be granted three additional months to prove its ability and willingness to live up to its ATPA obligations.

Regrettably, those three months have passed and Ecuador’s actions with respect to U.S. companies or ensuring the rule of law have not improved.  Indeed, Ecuador has taken action in the past months directly contrary to international arbitration awards issued pursuant to the U.S.-Ecuador Bilateral Investment Treaty.  As a result, Ecuador is out of compliance with the mandatory ATPA eligibility requirements and its benefits under ATPA should be promptly revoked.

U.S. preference programs should not be treated as an entitlement, but rather as a partnership between the United States and nations willing to live up to the specified eligibility criteria, which includes abiding by basic standards of the rule of law and protection for U.S. investment.

To continue granting Ecuador preferential treatment under ATPA despite its failure to meet such standards, would send a dangerous message to other nations that they can disregard the basic eligibility criteria without consequences, thereby diminishing the incentive that nations have to live up to their international obligations.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

Late last week the National Association of Manufacturers (NAM) sent a letter to Deputy National Security Advisor for International Economic Affairs Michael Froman about manufacturers concerns over Ecuador’s disregard of its obligations under the Bilateral Investment Treaty (BIT) and recent findings of the International Tribunal.

The NAM believes that Ecuador is not in compliance and meeting its obligations of the BIT and should be given three months to show it is willing to comply. One needs to look no further than the claim filed against the Government of Ecuador by Chevron for violations under the United States-Ecuador BIT. Below is an excerpt from the letter to Mr. Froman:

The highly visible case in point is the international arbitration claim against the Government of Ecuador (GOE) filed by Chevron for violations of the Ecuadorian government’s obligations under the United States-Ecuador Bilateral Investment Treaty (BIT). Ecuador had issued an $18 billion judgment against Chevron, in a case in which fraud has been documented by at least seven courts in the United States. The BIT arbitral panel has issued several awards directing the GOE to take measures to prevent enforcement of this judgment pending final disposition of the case by the BIT panel. Further, early this year the International Tribunal made additional rulings rejecting all of Ecuador’s objections and also issued for the second time an order directing Ecuador to take all measures necessary to suspend the enforcement and recognition within and without Ecuador, of the judgment.

Manufacturers believe it’s critical that all nations adhere to the rules of trade and investment agreements. Ecuador must live up to its Andean Trade Preference Act (ATPA) eligibility requirements or lose its preferences.

The NAM is asking the Administration to give Ecuador three months to meet the requirements and standards or it should be removed from the ATPA, resulting in a loss of trade preferences. If Ecuador is able to continue to receive preferences while failing to meet such standards it sends a dangerous message to other developing nations.

The U.S. Trade Representative’s press schedule today lists a meeting:

Deputy United States Trade Representative Miriam Sapiro will meet with former Congressman Tom Downey and the Amazon Defense Coalition (ADC) to discuss renewal of the Andean Trade Preference Act.
Washington, DC
1:30pm EDT
Closed Press

The issue is whether Ecuador has lived up to the requirements — such things as protection for investment, an adherence to the rule of law — to receive U.S. trade preferences under the Andean Trade Preferences Act. Of course it hasn’t. The National Association of Manufacturers supplied a statement last November to the House Ways and Means Committee detailing the predations of President Rafael Correa’s government against foreign investors.

Ecuador [has] continued to abuse foreign and domestic investors, including using the judiciary and police as harassment arms for the political leadership, rather than independent bastions of and protectors of democracy and rule of law. Over the past five months we have also seen the President of Ecuador issue decrees to revoke patent protections for international pharmaceutical and agricultural chemical manufacturers and threaten to annul many of Ecuador’s long-standing investment treaties including the Ecuador-U.S. Bilateral Investment Treaty (BIT) which has been in force and benefiting both parties since 1997.

Investor’s Business Daily added a tough editorial earlier this month after Secretary of State Hillary Clinton’s gave Correa a warm personal and policy embrace in Quito:

Correa is one of the most anti-American leaders in the hemisphere. He has trashed democracy in his own country, taking over the National Assembly by ousting elected lawmakers on spurious legal grounds. His rubber-stamp legislature now structurally resembles that of communist Cuba.

He’s also corrupted the judicial system, taking over the Supreme Court and making every judge a crony. Small wonder recent tapes show rulings-for-sale by an Ecuadorean judge in a $26 billion lawsuit against Chevron. Now Correa’s going after the press, jailing even leftist reporters and shuttering 95% of the private media.

The Chevron dispute is one important issue, as Ecuador’s government lines up with U.S. trial lawyers and activists to rig their $27 billion lawsuit against the company. The anti-Chevron activists at the Amazon Defense Coalition — El Frente de Defensa de la Amazonía* –express outrage when Chevron objects to trade preferences for Ecuador. Rep. Linda Sanchez (D-CA) has excoriated the company’s lobbying, calling it extortion. (Chevron makes no apology for pointing out Ecuador’s corruption, nor should it.)

It is amusing to see the Amazon Defense Coalition so overtly engaged in the lobbying game. The ADC’s flacks are always claiming the moral high ground, wrapping their causes in the alpaca cloak of global environmental justice and throwing around ridiculous terms like “Amazonian Chernobyl.” Yet now the group is down in the D.C. dirt, appealing to the U.S. Trade Representative for the extension of U.S. trade preferences to Ecuador. Shall we call that extortion or just hypocrisy?

Call it revealing hypocrisy. According to the USTR schedule cited above, the Amazon Defense Coalition is being accompanied by Tom Downey, the former Congressman from New York and well-known lobbyist. But Downey is not a lobbyist for the Amazon Defense Coalition. According to House lobbying disclosures, Downey represents the Law Offices of Steven R. Donziger, the New York trial lawyer driving the contingency fee litigation against Chevron. (The Philadelphia firm of Kohn, Swift and Graf is financing the lawsuit; Downey represents them as well.)

So U.S. trial lawyers are lobbying to preserve the trade preferences for the anti-American, anti-business, anti-rule-of-law government of Ecuador, where a corrupted judicial system could reward those same U.S. trial lawyers with billions of dollars.

Outrageous? Of course. But to anyone watching this theater piece play out, it’s hardly a surprise.

* Frente recently associated itself with the lobbyists of Sharp & Barnes.

Journal of Commerce, “House Votes to Extend Trade Programs”

The House on Monday voted to extend two widely-supported trade programs, but for only one year.

The General System of Preferences and the Andean Trade Preference Act were to expire on Dec. 31. The GSP, now in its 35th year, allows developing nations to export selected goods to the United States duty-free. There are currently 132 countries in the program, shipping some 3,400 products.

ATPA, started in 1991, gives similar benefits for exporters in Ecuador, Colombia, and Peru in exchange for cooperation in counter-narcotics efforts. President Obama suspended Bolivia’s ATPA privileges for failing to commit to an anti-drug program.

Latin Business Chronicle, “Business Concern Over Ecuador Benefits,” citing rising objections to the deterioration of the rule of law in Ecuador under President Rafael Correa.

“We are disappointed that the Congress did not include a message specifically putting Ecuador on notice that its behavior puts its continued receipt of preferences benefits at serious risk,” Franklin J. Vargo, NAM’s international vice president, said in a letter Monday to the chairman and ranking member of the U.S. House Committee on Ways & Means. “In light of the deteriorating investment climate in Ecuador, as well as Ecuador’s repudiation of its Bilateral Investment Treaty (BIT) with the United States and President Correa’s announcement on sweeping aside fundamental patent protections for pharmaceutical and agricultural chemical products, the NAM believes that language specific to Ecuador should have been maintained in the extension language of [the bill passed].”

NAM is concerned that without continuing language aimed at challenging Ecuador’s actions, other nations receiving preference programs will be tempted to follow suit, leading to worsening investment conditions and undermining a central tenant of preference programs that participants uphold their commitments to the United States on investment and rule of law, it said.

In any case, the House has now gone on record in support of lowering U.S. trade barriers to imports from foreign countries. It’s time to now lower foreign barriers to U.S. exports by approving the U.S.-Colombia, U.S.-Panama and U.S.-Korea free trade agreements.