The agreement with Costa Rica puts exports to Ecuador at risk

The Ecuadorian Federation of Exporters (Fedexpor) believes that the opinion of constitutional Court -which proposes a renegotiation of some articles of the trade agreement with Costa Rica-, prevents the growth of exports and the development of new jobs in the Andean country.

In a statement, the country’s export sector expressed “its deep concern about the negative effects caused by the majority opinion of the Constitutional Court regarding the text related to the contained investment chapter Trade agreement signed with Costa Rica” on March 1.

He believes that this decision “goes in the opposite direction and delays all efforts” that have been promoted to ensure the opening of the market for export products, as well as safe alternatives to attract foreign investment, which expand the capacity to create jobs in production activities.

He remembered that from FedEx Corp they participated in the process by representing “amicus curiae”, which put into context the need and legal feasibility of positive progress in the opinion for approval of the agreement by the Parliament.

“However, the divided decision of the Court, with 4 reserved votes, recognizes that there is no unanimous clarity regarding the constitutional interpretation of these clauses contained in the negotiation text,” he points out.

and highlight how “incomprehensible and irresponsible” that the Court “did not act in a timely manner in making a decision on the interpretation of Article 422 of the Constitution”, which would avoid a situation where the state “must reconsider the renegotiation of the text with an uncertain result, which carries the image and seriousness of Ecuador at the international level for business and job creation”.

For Fedexpor, it is clear that the criteria issued by the five judges who made up the majority in this ruling “are unrelated and foreign to the needs and realities of the country.”

In addition, he believes that the decision “limits the possibility of attracting investments and expanding export opportunities” for more than 1.5 million families that depend on export activity.

According to him Ministry of Production, Foreign Trade, Investments and Fisheries the agreement with Costa Rica “is in accordance with the strict observance of the principles and guarantees provided by the Constitution.”

He added that the Court’s opinion recognized as constitutional the Trade Agreement between Ecuador and Costa Rica in its 26 chapters.

However, the same institution opposed certain articles of Chapters 11 and 15 that refer to investments, leaving out what the constitutional text expressly requires.

constitutional Court
On Monday, in a press release, the court specified that the decision was confirmed by five out of nine plenary judges, and only for certain articles that, in his opinion, exceed the limits imposed by the Constitution.

Therefore, he “called for an assessment of the possibility that the relevant public bodies renegotiate the content of the articles that have been declared unconstitutional or seek alternatives” in order to “correct the unconstitutionality of the analyzed articles” in the opinion.

The Court mentioned its warnings in Chapter 11 of the aforementioned international instrument related to financial services.

He emphasized the need for the private financial system operating in the country, including foreigners accredited in Ecuador, “must be regulated and controlled by means of special and differentiated standards and control entities, which are in charge of preserving its security, stability, transparency and solidity”.

He added that the Constitution establishes that “financial activities are a service of public order” and that they “can be performed with the prior approval of the state, in accordance with the law.”

It also indicated that articles 11.20, and from 15.20 to 15.35, including attachments 15.18 and 15.26 of the “Investments” chapter, are incompatible with what is established in the Constitution.

The application of these articles means that “The Ecuadorian state cedes sovereign jurisdiction to international arbitration instances, since the aforementioned articles consider the possibility of resolving contractual disputes between investors.”

According to the Court, private natural and legal persons, as well as states, could submit the country to international arbitration bodies – such as the International Center for Settlement of Investment Disputes (ICSID) – where Ecuador could cede its sovereign jurisdiction.