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RUEHLP/AMEMBASSY LA PAZ NOV 0198
RUEHPE/AMEMBASSY LIMA PRIORITY 1127
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RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS QUITO 002705 
 
SIPDIS 
 
SIPDIS 
 
USTR FOR GLORIA BLUE 
STATE FOR EB/TPP/BTA 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN EC
SUBJECT: ECUADOR 2007 NATIONAL TRADE ESTIMATE REPORT 
SUBMISSION 
 
REF: STATE 136289 
 
 ¶1.  Below is Embassy Quito's submission for the 2007 
National Trade Estimate Report.  A copy of the report has 
been provided to USTR's Michelle Carrillo via email.  The 
report was a collaborative effort between State, the 
Commercial Service, the Foreign Agricultural Service, and AID. 
 
TRADE SUMMARY 
------------- 
 
The U.S. goods trade deficit with Ecuador is estimated to be 
($4.5) billion in 2006, an increase of ($0.7) billion from 
($3.8) billion in 2005. U.S. goods exports in 2006 are 
estimated to be ($2.5) billion, up (25.8) percent from the 
previous year. Corresponding U.S. imports from Ecuador are 
estimated to be ($7.0) billion, up (20.1) percent. Ecuador is 
currently the (46th) largest export market for U.S. goods. 
(updated numbers to be provided by Washington) 
 
The stock of U.S. foreign direct investment (FDI) in Ecuador 
in 2005 was $760 million, up from $720 million in 2004. U.S. 
FDI in Ecuador is concentrated largely in the petroleum and 
mining sector. 
 
Free Trade Area Negotiations 
---------------------------- 
 
In May 2004, the United States initiated free trade 
negotiations with Colombia, Ecuador, and Peru.  To date, the 
United States has concluded free trade agreements with Peru 
and Colombia.  The United States has significant economic 
ties to the region.  Total two-way goods trade with the 
Andean countries of Peru, Colombia, and Ecuador was 
approximately ($14) billion in 2005.  The stock of U.S. 
foreign direct investment in these countries in 2004 was $7.7 
billion. 
 
IMPORT POLICIES 
--------------- 
 
¶A. Tariffs 
 
When Ecuador joined the World Trade Organization (WTO) in 
January 1996, it bound most of its tariff rates at 30 percent 
or less, except for agricultural products in the Andean Price 
Band System (ABPS).  Ecuador's average applied MFN tariff 
rate is 11.9 percent.  Ecuador applies a four-tiered 
structure with levels of 5 percent for most raw materials and 
capital goods, 10 percent or 15 percent for intermediate 
goods, and 20 percent for most consumer goods.  A small 
number of products including planting seeds, agricultural 
chemicals, and veterinary products are duty-free. 
 
As a member of the Andean Community (CAN), Ecuador grants and 
receives exemptions from tariffs (i.e., reduced ad valorem 
tariffs and no application of the Andean Price Band System) 
for products from the other CAN countries (Bolivia, Colombia, 
and Peru).  Currently, these countries have an Andean Free 
Trade Zone and are soon expected to apply Common External 
Tariffs (CET), as stated in CAN Decision 370.  On January 31, 
2006, the CAN trade ministers decided to postpone the entry 
into force of a new CET with a four-tiered structure (percent 
tariff levels of 0, 5, 10, and 20) for one year, until 
January 31, 2007.  Until then, Peru will apply its own tariff 
schedule while Ecuador and Colombia will apply the structure 
permitted by Decision 370. 
 
Ecuador maintains the Andean Price Band System (APBS) on 153 
agricultural products (13 "marker" and 140 "linked" products) 
imported from outside the CAN.  The 13 "marker" products are 
wheat, rice, sugar, barley, white and yellow corn, soybean, 
soybean meal, African palm oil, soy oil, chicken meat, pork 
meat, and powder milk.   The APBS works as a price 
stabilization mechanism whereby the basic (ad-valorem) tariff 
is adjusted (increased or decreased) using a variable levy. 
The variable levy results from the relation between bi-weekly 
reference prices and floor and ceiling prices established by 
the CAN for each marker product.  The price band works to 
maintain protection for domestic industry by keeping tariffs 
high when world prices fall, and drops tariffs when world 
prices rise. 
 
 
As part of its WTO accession, Ecuador committed to phase out 
its price band system, starting in January 1996, with a total 
phase out by December 2001. No steps have been taken to 
comply with this commitment. In turn, since Ecuador bound its 
final tariffs for agricultural commodities between 31.5 
percent and 85.5 percent (the same bindings as the ABPS), 
Ecuador argues that the continuity of the APBS is 
WTO-consistent and does not constitute a violation of its 
agreements.    The United States Government has sought 
through the free trade negotiations to eliminate Ecuador's 
tariffs and other barriers to trade in agricultural products, 
while providing reasonable adjustment periods and safeguards 
for producers of import-sensitive agricultural products. 
 
¶B. Tariff Rate Quotas 
 
During the Uruguay Round, Ecuador agreed to establish tariff 
rate quotas (TRQs) for a number of agricultural imports.  In 
May of 2000, Ecuador created a TRQ Committee to administer 
and manage TRQs, which have remained constant and in line 
with WTO commitments since 2001.  However, TRQs are not 
always requested by importers because the tariffs under the 
APBS are sometimes lower than the in-quota TRQ tariffs.  At 
the same time, the TRQ committee is highly politicized and 
sometimes does not approve TRQ requests for certain products 
in order to protect local production (this is common with 
products such as poultry and powdered milk). 
 
Products subject to TRQs include wheat, corn, sorghum, 
barely, barely malt, soybean meal, powder milk, frozen 
turkeys, and frozen chicken parts. 
 
¶C. Non-Tariff Measures 
 
Ecuador has failed to eliminate several non-tariff barriers 
since its WTO accession.  Importers must register with the 
Central Bank through approved banking institutions to obtain 
import licenses for all products.  Ecuador requires prior 
authorization from the Ministry of Agriculture (MAG) for the 
importation of most agricultural products.  For certain 
sensitive products such as corn, soybean meal, dairy and 
poultry, the Minister himself or a designee must sign the 
authorization.  The MAG argues that the authorization is to 
ensure sanitary standards and tax rules are followed.  In 
reality, authorizations are granted in a discretionary manner 
based on pressures for protection of domestic production. 
 
Another administrative hurdle agricultural importers must 
overcome is the MAG's use of "Consultative Committees." 
These committees, mainly composed of local producers, often 
advise the MAG against granting import permits to foreign 
suppliers.  The MAG often requires that all local production 
be purchased at high prices before authorizing imports.  If 
these barriers were removed, it is estimated that U.S. corn 
and soybean meal exports could increase by $10-25 million 
each.  The Ministry of Health is required to provide prior 
authorization for processed, canned and packaged products in 
the form of a Sanitary Registration.  In general, the 
bureaucratic procedures that importers must follow in order 
to obtain authorizations continue to be cumbersome, 
protectionist and non-transparent. 
 
Ecuador assesses a special consumption tax (ICE) of 32 
percent on imported and domestic spirits.  However, the 
taxable base upon which Ecuador assesses the ICE is arbitrary 
and complicated and differs for domestic and imported 
spirits.  For imported spirits, the ICE is applied to the 
ex-Customs value, which is then marked-up 25 percent (i.e., 
taxable base = (c.i.f. value   tariff   VAT) marked up by 25 
percent); the ICE is assessed on this inflated value.  In 
contrast, for domestic spirits, the ICE is assessed on the 
ex-factory price, and the 25 percent mark-up, although 
legally required, is not generally applied (i.e., taxable 
base = (ex-factory value   VAT)).  In both cases, the excise 
tax is based on arbitrary values and not on actual 
transaction values.  The U.S. has been addressing Ecuador's 
discriminatory tax policies for imported distilled spirits in 
the free trade negotiations. 
 
Ecuador also continues to maintain a pre-shipment inspection 
(PSI) regime for imports with an f.o.b. value of more than 
 
$4,000.  Pre-shipment inspection by an authorized inspection 
company (both before shipment and after specific export 
documentation has been completed at the intended destination) 
results in delays far exceeding the time saved in customs 
clearance.  Customs authorities perform random spot-checks, 
causing further delays.  These practices generally add 
between six and eight weeks to shipping times.  In the free 
trade negotiations with Ecuador, the U.S. government has 
sought to establish transparent and efficient custom 
procedures and specific commitments to expedite the release 
of goods. 
 
Ecuador maintains bans on the import of used motor vehicles, 
tires, and clothing. 
 
In December 1999, the MAG, through the Ecuadorian Animal and 
Plant Health Inspection Service (SESA), issued a requirement 
that all importers must present a certificate stating that 
imported agricultural products (plants, animals, their 
products, or byproducts) have not been produced using modern 
biotechnology. This requirement was never enforced in 
practice, but created a playing field for further debate on 
the issue of biotechnology. In November 2002, the President 
issued Executive Decree 3399 creating the National Commission 
for Biosafety as an office of the Ministry of Environment, 
which was in charge of developing technical regulations on 
biosafety and biotechnology. 
 
In April 2005, the commission proposed a draft "Law of 
Conservation and Sustainable Management of the Biodiversity" 
(Biodiversity Law) that would have served as a framework for 
Ecuador's regulations on biosafety and biotechnology. The 
legislation aimed at providing technical standards and a 
comprehensive regulatory system that would have ensured 
proper control without blocking trade. Congress debated the 
bill twice without consensus, shelved the proposal, and 
approved a controversial Food and Nutrition Security law in 
April 2006. This bill invoked the precautionary principle and 
in practice prohibited the use, handling, trade or import of 
any food products that may have contained organisms derived 
from biotechnology, since Ecuador did not possess appropriate 
institutions to provide proof of their safety.  The 
prohibition stopped large imports of several commodities in 
high demand by the animal feed and cooking oil industry 
(soybean meal and oil) for several weeks. However, due to 
pressure from local industry, Ecuador's Attorney General 
declared this law unenforceable due to technical errors in 
the text.  A health code bill under discussion in Congress in 
November 2006 could reintroduce these provisions. 
 
The United States is seeking the removal of Ecuador's 
non-tariff measures that impede U.S. exports through the free 
trade negotiations.  The U.S. Embassy has also been working 
closely with local industry and U.S. exporters to remove 
non-tariff barriers. 
 
STANDARDS, TESTING, LABELING AND CERTIFICATION 
--------------------------------------------- - 
 
Ecuador's Animal and Plant Health Inspection Service (SESA) 
is responsible for administering Ecuador's sanitary and 
phytosanitary controls.  According to Ecuadorian importers, 
bureaucratic procedures required to obtain clearance still 
appear to discriminate against foreign products.  Ecuador is 
bound by the WTO Agreement on the Application of Sanitary and 
Phytosanitary (SPS) measures, yet denials of SPS 
certification often appear to lack a scientific basis and to 
have been used in a discriminatory fashion to block the 
import of U.S. products that compete with Ecuadorian 
production.  This occurs most often with poultry, turkey and 
pork meats, beef, dairy products, and fresh fruit.  The 
ability to import some products, such as rice, corn, 
soybeans, and soybean meal, depends entirely on the 
discretion of the MAG which will often look to the 
Consultative Committees for advice. 
 
Ecuador has yet to fulfill its notification obligations under 
the WTO SPS Agreement.  The impact of removing this barrier 
would mean an increase of U.S. exports of up to $10 million. 
 
SESA follows the CAN's "Andean Sanitary Standards."  Some 
standards applicable for third countries are different from 
 
those applied to CAN members. For example, there can be 
differences in the requirements for CAN and third countries 
for the importation of live animals, animal products, and 
plants and plant by-products.  SESA also requires 
certifications for each product stating that the product is 
safe for human consumption or, in the case of live animals, 
that the animal is healthy and that the country of origin or 
the area of production is free from certain exotic plant or 
animal disease.  Industry sources assert that this process 
has been used unreasonably by SESA to prevent entry of animal 
products - especially poultry - that compete with local 
producers. 
 
Sanitary registrations are required for imported as well as 
domestic processed food, cosmetics, pesticides, 
pharmaceuticals, and syringes as well as some other consumer 
goods.  However, in a side agreement to its WTO Accession 
Agreement, Ecuador committed to accept the U.S. Certificate 
of Free Sale authorized by the U.S. Food and Drug 
Administration, instead of the Government of Ecuador's 
Sanitary Registration.  In August 2000, the Government of 
Ecuador passed a law (Ley de Promocion Social y Participacion 
Ciudadana, Segunda Parte - also known as Troley II), followed 
by regulations issued in June 2001, to reform the issuance of 
sanitary permits for food products. 
 
This is a step towards modernizing the issuance of sanitary 
registrations with new regulations that allow the acceptance 
of free sale certificates, require that the government issue 
sanitary permits within 30 days of receipt of a request, and 
reduce the number of documents required to obtain a permit. 
However, it does not appear that these regulations are being 
applied consistently and export losses are estimated to be 
around $5 million. 
 
U.S. firms report that the Izquieta Perez National Hygiene 
Institute (INHIP - the Ministry of Health's executive arm 
responsible for granting the sanitary registration 
certificate) office in Guayaquil accepts the U.S. 
Certificates of Free Sale, but continues to apply the old 
regime for sanitary permits.  In addition, non-transparent 
bureaucratic procedures and inefficiency have delayed 
issuance beyond 30 days and in some cases have reportedly 
blocked the entry of some imported products from the United 
States. 
 
U.S. companies have expressed concerns regarding regulations 
issued by Ecuador's public health ministry requiring foreign 
food manufacturers to disclose confidential information such 
as formulas of imported food and pharmaceutical products. 
This requirement appears to go beyond the requirements of the 
Codex Alimentarius Commission on International Standards and 
Labeling.  Pharmaceutical and agrichemical industry sources 
estimate that lost exports due to this problem amount to $10 
million to $25 million. 
 
The U.S. Foreign Agricultural Service has been facilitating 
SPS training for Ecuadorian officials by providing SPS 
experts for seminars and other training forums. 
 
GOVERNMENT PROCUREMENT 
---------------------- 
 
Government procurement is regulated by the 2001 public 
contracting law.  Foreign bidders must be legally represented 
in Ecuador in order to participate in government 
procurements.  The law does not discriminate against U.S. or 
foreign suppliers.  However, bidding for government contracts 
can be cumbersome and relatively non-transparent. A large 
number of government controlled companies are construed to be 
"private" companies (e.g. fixed-line telephony providers, 
electric power generators and distributors, hospitals, 
clinics, and regional development funds), and are not subject 
to Ecuador's rules on government procurement.  This lack of 
transparency can lead to multiple cancellations of bid 
solicitations, unnecessarily adding to the costs of 
submitting bids and opening the process to possible 
manipulation by contracting authorities. 
 
Ecuador is not a signatory to the WTO Agreement on Government 
Procurement.  In the free trade negotiations with Ecuador, 
the U.S. Government has been seeking reciprocal opportunities 
 
for U.S. companies to bid on Ecuadorian government 
procurement.  If the government procurement process was made 
more transparent and less cumbersome, exports by U.S. 
companies could increase by $50 million to $100 million. 
 
EXPORT SUBSIDIES 
---------------- 
 
Ecuador has created a semi-independent agency, the 
Corporation for the Promotion of Exports and Investments 
(Corpei), to promote Ecuadorian exports.  The agency is 
funded in part by fees on imports and exports, as well as 
grants from multilateral and bilateral organizations.  Corpei 
supports promotional export-related activities such as market 
studies, international promotional events, and feasibility 
studies. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
--------------------------------------------- 
 
In 1998, Ecuador enacted a comprehensive law that 
significantly improved the legal basis for protecting 
intellectual property including patents, trademarks and 
copyrights.  The intellectual property law provides greater 
protection for intellectual property; however, it is 
deficient in a number of areas and the law is not being 
adequately enforced. 
 
Ecuador's current intellectual property regime is provided 
for under its IPR law and Andean Pact Decisions 345, 351, and 
¶486.  Ecuador is a member of the World Intellectual Property 
Organization (WIPO), the WIPO Copyright Treaty, and the WIPO 
Performances and Phonograms Treaty.  Furthermore, Ecuador has 
ratified the Berne Convention for the Protection of Literary 
and Artistic Works, the Geneva Phonograms Convention, the 
Paris Convention for the Protection of Industrial Property, 
and the WIPO Patent Cooperation Treaty. 
 
The United States has been negotiating IPR provisions in the 
free trade negotiations with Ecuador to improve protection 
and strengthen enforcement of IPR.  The U.S. Government is 
seeking to address specific U.S. industry concerns related to 
the protection and enforcement of copyrights and related 
rights, patents, proprietary data for pharmaceutical and 
agricultural products, trademarks and geographical 
indications.  In addition, the U.S. Embassy is working with 
Ecuadorian counterparts to resolve issues in the IPR arena 
and to facilitate IPR enforcement training for local 
officials. 
 
¶A. Copyrights 
 
The Government of Ecuador, through the National Copyright 
Office's Strategic Plan against Piracy, has committed to take 
action to reduce the levels of copyright piracy, including 
implementation and enforcement of its 1998 Copyright Law. 
However, enforcement of copyrights remains a significant 
problem, especially concerning sound recordings, computer 
software, and motion pictures.  The Government of Ecuador has 
taken no action to clarify Article 78 of the 1999 Law on 
Higher Education, which could be interpreted to permit 
software copyright violations by educational institutions. 
 
¶B. Patents and Trademarks 
 
Ecuador's 1998 IPR law provided an improved legal basis for 
protecting patents, trademarks, and trade secrets.  However, 
concerns remain regarding several provisions, including a 
working requirement for patents, compulsory licensing, and 
the lack of enforcement in the protection of test data.  U.S. 
companies are also concerned that the Ecuadorian government 
does not provide patent protection to new uses of previously 
known or patented products. 
 
Government of Ecuador health authorities continue to approve 
the commercialization of new drugs that are the bioequivalent 
of patented drugs, thereby denying the originator companies 
protection against unfair competition for their 
pharmaceutical test data. In effect, the Government of 
Ecuador is allowing the test data of registered drugs from 
originator companies to be used by others seeking approval 
for their own pirate version of the same product. 
 
Confidential chemical formulae and descriptions of 
 
SIPDIS 
manufacturing processes have illegally found their way into 
the hands of competitor companies.  The right of patent 
holders to defend their patents is threatened in a case 
before an appellate court as of November 2006, where 
asserting patent rights is alleged to constitute an illegal 
competitive practice.  In the context of an FTA or through 
separate legislation, the U.S. Government supports Ecuadorian 
efforts to strengthen data confidentiality and the ability to 
defend a patent, as well as against such reliance by another 
on an innovator's test data. 
 
¶C. Enforcement 
 
There continues to be an active local trade in pirated audio 
and video recordings, computer software and counterfeit brand 
name apparel.  The International Intellectual Property 
Alliance estimates that piracy levels in Ecuador for recorded 
music have reached 90 percent, with total estimated damage 
due to piracy of $37.8 million in 2005.  At times, judges in 
IPR cases, before issuing a preliminary injunction, demand a 
guaranty and evidentiary requirements that exceed legal 
requirements and in effect limit the ability of rights 
holders to enforce their rights.  Ecuador has made no 
progress in establishing the specialized IPR courts required 
by Ecuador's 1998 IPR law.  The national police and the 
customs service are responsible for carrying out IPR 
enforcement, but do not always enforce court orders.  Some 
local pharmaceutical companies produce or import pirated 
drugs and have sought to block compliance with Ecuador's 
Intellectual Property law and improvements in patent 
protection.  U.S. industry estimates damage due to the 
failure to provide data exclusivity is at least $5 million. 
The U.S. Government has been supporting provisions to enhance 
enforcement of IPR in Ecuador in the free trade negotiations. 
 
 
SERVICES BARRIERS 
----------------- 
 
Ecuador has ratified the WTO Agreement on Financial Services. 
 The 1993 Equity Markets Law and the 1994 General Financial 
Institutions Law significantly opened markets in financial 
services and provided for national treatment of foreign 
suppliers.  Foreign professionals are subject to national 
licensing requirements. The Superintendent of Banks must 
certify accountants. 
 
In the area of basic telecommunications, Ecuador only 
subscribed to WTO commitments for domestic cellular services. 
 It did not make market access or national treatment 
commitments for a range of other domestic and international 
telecommunications services, such as voice telephony and 
data.  In addition, Ecuador does not adhere to the 
pro-competitive regulatory commitments of the WTO Reference 
Paper.  Several U.S. telecommunications companies have had 
their international circuits disconnected without proper 
notice of alleged infractions. 
 
The U.S. Government has been seeking in the free trade 
negotiations with Ecuador greater access for U.S. providers 
of cross-border services to the Ecuadorian market, including 
in the areas of financial and telecommunications services. 
 
INVESTMENT BARRIERS 
------------------- 
 
Ecuador's foreign investment policy is governed largely by 
the national implementing legislation for Andean Pact 
Decisions 291 and 292 of 1991.  Under Ecuadorian law, foreign 
investors are accorded the same rights of establishment as 
Ecuadorian private investors, may own up to 100 percent of 
enterprises in most sectors without prior government 
approval, and face the same tax regime.  There are no 
controls or limits on transfers of profits or capital.  In 
disputes, U.S. companies have resorted to local courts or 
alternate dispute resolution mechanisms such as the Chambers 
of Commerce; others have pursued international commercial 
dispute resolution mechanisms as provided for in their 
contracts or under the U.S.-Ecuador Bilateral Investment 
Treaty (BIT) as a way to gain maximum impartiality. 
 
The U.S.-Ecuador Bilateral Investment Treaty (BIT), which 
entered into force in May 1997, includes obligations relating 
to national and most-favored-nation treatment; prompt, 
adequate and effective compensation for expropriation; the 
freedom to make investment-related transfers; and access to 
binding international arbitration of investment disputes. 
These and other core provisions of the BIT would also be 
included in the investment chapter of a free trade agreement 
between the U.S. and Ecuador. 
 
In early 2005, Ecuador's Congress modified the Arbitration 
and Mediation Law to prohibit international arbitration of 
investment disputes if the national interest could be 
affected.  Depending on how it is interpreted and applied, 
this modification of Ecuador's law could conflict with 
Ecuador's standing consent to binding arbitration under the 
U.S.-Ecuador BIT and under the investment chapter of a free 
trade agreement.  At a minimum, the new law could create 
confusion among investors regarding their arbitration rights 
and may also reinforce negative impressions among investors 
of Ecuador's commitment to international arbitration. 
 
Certain sectors of Ecuador's economy are reserved to the 
state.  All foreign investment in petroleum exploration and 
development must be carried out under contract with the state 
oil company.  U.S. and other foreign oil companies produce 
oil in Ecuador under such contracts.  Foreign investment in 
domestic fishing operations, with exceptions, is limited to 
49 percent of equity.  Foreign companies cannot own more than 
25 percent equity in broadcast stations, and foreigners are 
prohibited from owning land on the borders or the coast. 
 
Several oil companies are involved in a dispute with the 
government of Ecuador relating to the refund of value-added 
taxes.  In 2004, one of the disputing U.S. companies won a 
$75 million international arbitration award against the 
government of Ecuador.  The government has requested a 
judicial review of the arbitration award.  After notice of 
the award, Ecuador's solicitor general (Procurador General) 
initiated an investigation of the company for allegedly 
transferring assets to another foreign company without 
obtaining the required government authorization. The 
Ecuadorian government has since nullified the company's 
contract and seized the company's considerable assets in 
Ecuador.  The U.S. company has initiated arbitration 
proceedings under the BIT. 
 
In 2006 Ecuador amended its hydrocarbons law, unilaterally 
modifying the terms of oil production sharing contracts in a 
manner that appears to violate the BIT.  As a result, at 
least one U.S. company faces bankruptcy and is attempting to 
negotiate a change to their concession contract that would 
permit them to continue operating and investing in Ecuador 
(they have also initiated arbitration proceedings as allowed 
by their contract). 
 
U.S. investors in the electricity sector face problems of 
chronic underpayment, due in part to government-regulated 
prices and the inability to cut off consumers that do not pay 
their bills; government subsidies only partially offset these 
losses and are not available to all firms.  A 2006 
electricity reform law attempts to address some of the 
problems plaguing the sector but the problem of underpayment 
has not been resolved.  U.S. firms in this sector are also 
pursuing international arbitration, although simultaneously 
attempting to negotiate settlements with the Government of 
Ecuador. 
 
Effective compensation for expropriation is provided for in 
Ecuadorian law but is often difficult to obtain.  The extent 
to which foreign and domestic investors receive prompt, 
adequate, and effective compensation for expropriations 
varies widely.  It can be difficult to enforce property and 
concession rights, particularly in the real property, 
agriculture, oil, and mining sectors. 
 
Foreign oil, energy, and telecommunications companies, among 
others, have often had difficulties resolving contract issues 
with state or local partners.  The transparency and stability 
of the country's investment regime are significantly weakened 
by the existence of numerous investment-related laws that 
overlap or that appear to have mutually inconsistent 
 
provisions.  This judicial complexity increases the risks and 
costs of doing business in Ecuador. 
 
The U.S. Government has worked with the Government of Ecuador 
both before and in parallel with the free trade negotiations 
to ensure a fair resolution of U.S. investor disputes, 
consistent with Ecuadorian law. 
 
ELECTRONIC COMMERCE 
------------------- 
 
Ecuador passed an electronic commerce law in April 2002 that 
makes the use of electronic signatures in business 
transactions on the Internet legally binding and makes 
digital theft a crime.  Ecuador has initiated a program for 
e-government services and to promote public access to 
information technology through funding from international 
financial institutions.  The U.S. has been seeking in the 
free trade negotiations with Ecuador to include rules 
prohibiting duties on and discrimination against digital 
products, such as computer programs, videos, images, and 
sound recordings, based on where they are made or the 
nationality of the firms or persons making them. 
JEWELL