The Ecuadorian Ministry of Production spoke after hearing the observations of the Constitutional Court on the trade agreement with Costa Rica.
President Guillermo Lasso, with his Costa Rican counterpart, Rodrigo Chaves, in San José, Costa Rica, on March 1, 2023.
The Ministry of Production of Ecuador pronounced this Tuesday, August 1, after hearing the observations made by the Constitutional Court to the Ecuador Costa Rica Trade Association Agreement.
On Monday, July 31, the Court declared that most of the articles of the Agreement were constitutional, it made two observations on the text.
The body urged to evaluate the possibility of renegotiating the content of those articles declared unconstitutional.
In a statement published on Twitter, the national government “ratifies that said commercial instrument strictly complies with the principles and guarantees contemplated in the Constitution.”
The Ministry of Production maintains that the Court, “by expanding its power of interpretation, puts at risk (…) the generation of employment and investments that trade agreements promote.”
And he adds that the treaty with Costa Rica is extremely important because it opens the market, especially for micro, small and medium-sized companies in Ecuador.
Specifically, the Agreement will allow for tariff preferences for 97% of Ecuador’s exportable supply.
The Government also maintains that there is a “lack of coherence” in the Court. The statement details that, on the one hand, the body recognized the trade agreement as constitutional, but at the same time it objected to certain articles.
This Monday morning, in an interview with Ecuador TV, the Minister of Government, Henry Cucalón, expressed his discomfort with the decisions that the Court has made regarding the decree laws and now the commercial agreement.
He added that a counterproposal will be discussed with the Ministry of Production. “The important thing is that Ecuador has free trade agreements with the different countries,” he said.
What the Court observed
The observations of the Constitutional Court have to do with the resolution of disputes between investors and the Ecuadorian State.
The trade agreement with Costa Rica observes articles 11.20, which is part of the financial sector; and articles 15.20 to 15.35, including annexes 15.18 and 15.26, which have to do with the investment chapter.
According to the Court, in these articles Ecuador establishes international arbitration as a mechanism for the solution of controversies between investors and the State.
But, according to the Court, this approach is contrary to article 422 of the Ecuadorian Constitution, which prohibits ceding jurisdiction to international arbitration bodies, such as ICSID.
The only exception of the Constitution is an arbitration that is based in Latin American countries, which was not observed in the treaty with Costa Rica, the judges said.
Therefore, the Constitutional Court urged the Government to evaluate a renegotiation of the observed articles.
But the minority report of the Constitutional Court considers that the Agreement does not provide for a single arbitration modality for the resolution of possible controversies, but rather contemplates several alternatives.
And he adds that the choice of one of these options will depend on the consent of both parties, so the report concludes that there is no contradiction with the Constitution.
*Updated at 1:30 p.m. with the pronouncement of the Ministry of Production.
