Ecuador and U.S. Take Preliminary Steps toward Free Trade Agreement

NotiSur - South American Political and Economic Affairs, February 20, 2004 | Go to article overview

Ecuador and U.S. Take Preliminary Steps toward Free Trade Agreement


A team of Ecuadoran trade negotiators announced plans to meet with US officials to plan steps for setting up a free-trade agreement between the two countries. They intend to define dates and methodology for an agreement process to commence possibly in the middle of this year.

Banco Central director Mauricio Yepez headed up the seven-member Ecuadoran team on its trip to Washington where members met with the office of the US Trade Representative (USTR) and Treasury Secretary John Snow. Ecuadoran Minister of Foreign Trade Ivonne Baki met previously with US Trade Representative Robert Zoellick and spoke with him about advances in resolving litigation with US businesses that operate in the Andean country. The elimination of these conflicts is a condition the US demands if Ecuador is to remain a beneficiary of preferential tariff arrangements for Andean states and if conversations about a free-trade agreement are to open up.

Baki said the White House had agreed to wait until March for the resolution of the litigation, which involves the interests of Bellsouth, IBM, and Duke Energy.

The US government has been seeking to forge bilateral deals with individual countries after its efforts to pass the 34-country, hemispheric Free Trade Area of the Americas (FTAA) hit repeated roadblocks (see NotiSur, 2003-12-05). The US has also completed negotiations with five Central American countries to pass the Central America Free Trade Agreement (CAFTA), although the agreement still has to be ratified by the legislatures of all signatory nations (see NotiCen, 2004-01-29, 2003-12-18). CAFTA could soon include the Dominican Republic as well (see NotiCen 2004-01-22).

In its negotiations with the US, the Ecuadoran government also faces challenges from its large debt burden and the strong restructuring measures demanded by the International Monetary Fund (IMF) to maintain economic agreements (see NotiSur, 2003-04-25). On Feb. 8, an IMF mission arrived in Ecuador for a two-week visit to reactivate its current agreement with Ecuador. The agreement extended a US$205 million credit to Ecuador in five payments, two of which have been delivered, and which expires in March. The mission seeks to extend the agreement to December.

Resistance from agribusinesses and indigenous

Free-trade negotiation with the US could worsen Ecuadoran President Lucio Gutierrez's relationship with the powerful indigenous organizations he has alienated since taking power in January 2003. These groups turned against him after his right-leaning, pro-business policies caused former supporters to declare opposition to his government (see NotiSur, 2004-01-30). Groups like the Confederacion de Nacionalidades Indigenas de Ecuador (CONAIE) and its political party Patchakutik represent around four million indigenous citizens and virulently oppose free-trade policies like the FTAA and the adoption of IMF initiatives. Violent protests against Gutierrez in recent days have led to multiple injuries and the shooting death of one woman.

The Ecuadoran preparations for a free-trade process also are occurring amid resistance by businesspeople from the agricultural sector and campesino groups. The indigenous, agricultural, and campesino organizations fear that opening markets to US products could destroy national agriculture, given the subsidies that their northern counterparts receive and their enormous technological development.

The council of Ecuadoran agribusiness, Federacion Nacional de Camaras de Agricultura, announced that it would abstain from participating in negotiations with the US until the government came up with a strategy that would defend sensitive products. The president of the federation, Patricio Maldonado, told the Ecuadoran newspaper Hoy that it would not participate in the process "as long as things don't change, because we're not going to be accomplices in improvisation."

Maldonado said members of the agricultural field were concerned about the impact an eventual accord could have on each of the country's productive sectors.

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Ecuador and U.S. Take Preliminary Steps toward Free Trade Agreement
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