Businesses, Industry Groups Spar Over Continued ATPA Benefits for Ecuador
Continuation of benefits for Ecuador under the Andean Trade Preference Act stimulated a host of comments from industry: influential business groups such as the Chamber of Commerce urging against it, citing Ecuador’s “flouting” of international commitments, while import and export reliant businesses warned of job and revenue losses if Ecuador’s benefits expire. Tangled in the debate is also a decades-long case between Chevron and indigenous Ecuadorians over pollution of the country’s rain forest; and claims that the company wants to suspend U.S.-Ecuadorian trade relations as a punishment for the separate legal dispute. The comments, 117 in all, will be used to prepare a June 30 report the U.S. Trade Representative will submit to Congress. AT PA is set to expire this July (see 13040509 for more on the original Federal Register notice).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
In comments, industry groups painted a picture of Ecuador as a country that fails to respect rules of law, intellectual property and contracts. Allowing Ecuador to continue as a beneficiary under ATPA “sends a troubling message to other nations that they can disregard mandatory eligibility criteria without consequence, thereby diminishing the incentive that nations have to meet those standards,” said the National Association of Manufacturers.
Nearly every group advocating against benefits cited Ecuador’s refusal to comply with international dispute panel rulings. Shaun Donnelly, vice president-investment and financial services for the U.S. Council of International Business, said Ecuador “demonstrated a callous disrespect for the entire international arbitral process.” Ecuador is seeking to terminate its Bilateral Investment Treaty with the U.S., comments said, while continuing to disregard rulings of an international arbitration tribunal hearing.
That hearing was requested by Chevron in 2011, after an Ecuadorian court ruled the company should pay $19 billion for vast environmental damage in a section of northeastern Ecuador where Texaco (now owned by Chevron) extracted oil for decades. The case against Chevron was brought by a group of indigenous people and settlers living in the region. The international panel, at The Hague, has twice affirmed its 2011 ruling, which said that Ecuador should suspend the enforcement of any judgment against Chevron.
Ecuador’s refusal to abide by the tribunal’s rulings is “an outright attack on the arbitral tribunal itself,” said Chevron in comments. “Ecuador’s conduct is harmful not only to Chevron’s particular interests, but also to the broader interests of the United States in the protection of U.S. investors and investments overseas.”
Comments written on behalf of the Ecuadorian Amazon region residents in the case, however, said Chevron’s concerns should not affect AT PA. The company’s attempt to tarnish Ecuador’s response to the tribunal so much that it disqualifies Ecuador from AT PA is a “flagrantly cynical and disingenuous mischaracterization of the situation that should be rejected outright,” said comments from Forum Nobis, a law firm specializing in international issues and human rights. An analysis of AT PA should instead focus on the substance of the U.S.-Ecuador trading relationship, the comments said.
Nathalie Cely, Ecuador’s Ambassador to the U.S., agreed. The Chevron dispute is a private-party lawsuit in which Ecuador is not a party, Cely said in her comments. And regardless of varying opinions on the case, “legal disputes should be resolved in the legal arena … the United States and Ecuador should not permit bilateral relations to be damaged, or political decisions influenced, on account of a private litigant’s efforts to use the political process to affect the judicial processes,” Cely said.
Cely advocated for Ecuador’s continued benefits under AT PA and said the country has satisfied all other final international decisions against it. The Hague ruling is a special case: it would require an overruling of the judiciary, a power the government does not have, and violation of international obligations under certain human rights conventions, Cely said. “This is not a question of willingness to comply or lack of good faith; it is a question of ability to comply,” Cely said. “Nor is Ecuador alone. In similar circumstances, the U.S. Supreme Court affirmed the primacy of domestic law over an international arbitral award.”
She also discounted claims about the Bilateral Investment Treaty, instead saying Ecuador is simply creating a new one and will negotiate “in good faith” with the U.S. Cely also pointed to Ecuador’s progress combating drug trafficking, as did many of the comments from businesses. Illinois-based Direct Floral Source International, which imports cut flowers and foliage from Ecuador, said ending AT PA means “thousands of employees in Ecuador would lose their jobs and become vulnerable to the narcotics trade in the region.” Another floral importer, Prime Air Cargo, said it would lose 12 percent in total sales, if duty free access for Ecuadorian roses, which the company imports, were to expire. The Port of Los Angeles said trade with Ecuador increased 160 percent from 2009-2011 in the Los Angeles Customs District, and a “lapse in the program could result in significant lowering of our current trade activity and projected growth.”