Ecuador will renegotiate 16 investment treaties
In the coming days the National Government will deliver a new scheme to resolve the differences over the agreements denounced last year. A new format of Bilateral Investment Treaties plans to present next week the Ecuadorian Government to the ambassadors of the 16 countries, whose agreements were denounced by the previous administration in May 2017.
The Minister of Foreign Trade and Investment (MCEI) , Pablo Campana, announced that the draft will be formally delivered at a public event. The document was prepared by the Ministry of Foreign Affairs in coordination with the MCEI, the Ministry of Economy and Finance (MEF), the National Secretariat for Planning and Development (Senplades) and the State Attorney General’s Office.
“We have been very emphatic in fulfilling the mandate of Montecristi, since one of the problems was the arbitration clause that did not comply with what the Constitution mandates,” said Campana and indicated that the Foreign Ministry will carry out the negotiations.
Of the 16 countries involved, seven are part of the European Union (EU). The Government is analyzing to promote a joint agreement with them. The EU ambassador in Ecuador, Marianne Van Steen, said that during this week she will have a meeting with Campana in which she will request more details about the proposal.
“We hope to receive the draft soon to determine whether or not it is possible to enter into a new negotiation,” Van Steen said. In their opinion, BITs are not a strict condition for attracting capital, but they are determinants in investors’ decision-making because they provide a legislative framework that allows them to project in the long term.
Daniel Legarda, executive president of the Ecuadorian Federation of Exporters (Fedexpor), added that 90% of all those interested in investing in the country request an investment protection agreement. When the previous Government denounced the BITs, the business associations warned that this will entail complications in order to obtain future investments, so now they celebrate the announcement of the negotiations. For the current government, the absence of BIT makes it difficult to attract direct private investment. They are basic and important to achieve new investments, emphasized Campana.
Through 16 executive decrees, on May 16 of last year, former President Rafael Correa terminated the treaties for the reciprocal promotion and protection of investments. The decision was based on the ruling issued by the Constitutional Court on October 7, 2010 in which it states that the agreements contradict Article 422 of the Constitution.
The Magna Carta states that international treaties or instruments may not be concluded in which the Ecuadorian State cedes sovereign jurisdiction at the request of international arbitration, in contractual or commercial disputes between the State and private natural or legal persons.
For the ex-chancellor Marcelo Fernández de Córdova the complaint was an error because the treaties are covered by the regulations in force in Ecuador at the time they were signed. Fernández believes that the new format prepared by the authorities will not have greater variations in the resolution of conflicts, because in case of emergency “it is essential to resort to international courts of mediation and arbitration, that cannot change”
The Senae will respond to the CAN for customs duty
The Bilateral Investment Treaties (BITs) are one of the two main issues that, according to businessmen and analysts, must be solved to pave the way towards a commercial agreement with the United States.
The other is the elimination of the customs control rate that raised concerns on the part of the Andean Community of Nations (CAN) that asked to clarify details about its application. The National Customs Service of Ecuador (Senae) will respond to the agency on February 20 (morning), said the director of the entity, Mauro Andino.
The CAN request arose from the observations that Peru and Colombia made at the beginning of the year regarding the fact that the rate would not meet regional and international trade regulations. “There has been no affectation, it is an issue that is going to improve the customs service, that will make it much easier for us to trade,” said Andino.
On February 8, the Special Court for the Taxation of the National Court of Justice (CNJ) described the lawsuit filed by the National Federation of Chambers of Commerce and the Chamber of Commerce of Guayaquil (CCG) against the tax charged $ 0.10 to imports. The guilds ensure that the measure is not justified and harms the trade because it is a “disguised tax”.
Audit Report of the caitisa
On May 8, 2017, the Commission for the Audit of the BITs (Caitisa) delivered the final report in which it analyzed 27 agreements. One of the conclusions is that “treaties have not been decisive in attracting foreign investment.” 30 bilateral investment treaties signed Ecuador since 1965; 27 are in effect.
The Assembly denounced
The ex-ambassador and current ambassador of Ecuador in Cuba, María Augusta Calle, promoted the measure. He argued that the payments to lawyers and arbitration until May 2015 were more than $ 300 million. (I)