Required Report - public distribution

**Date:** 6/29/2006

**GAIN Report Number:** EC6007

EC6007

**Ecuador**

**Biotechnology**

**Ecuador Standing Biotechnology Report**

**2006**

**Approved by:**

![](media/image1.wmf)Melinda D. Sallyards

U.S. Embassy

**Prepared by:**

Rene A. Alarcon

**Report Highlights:**

In April 2006, Ecuador\'s congress passed a Food and Nutrition Security
Law that prohibits imports, trade, use and handling in Ecuador of GMO
and GMO-related products for human consumption. This law halts former
efforts to enact a technical law to regulate biosafety and
biotechnology.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Quito \[EC1\]

\[EC\]

## SECTION I. EXECUTIVE SUMMARY

Ecuador does not have a specific law that regulates biotechnology and
its application. However, in April 2006, Ecuador enacted a law on Food
and Nutrition Security that invokes the precautionary principle and
calls for prohibitions to use, handle, trade or import any food products
that are or contain GMOs. This new regulation has created enormous trade
problems with imports of soybean meal and soybean oil, and is expected
to strike other imports such as corn and cotton. Ecuador imports
--mainly from the United States and Argentina- almost 95 percent of its
corn demand, 99 percent of cotton, and 90 percent of soybean meal and
oil, which have always entered the market without any specific
requirements related to biotechnology.

Ecuador ratified the Cartagena Protocol on Biosafety in November 2002,
and its general policies on Biosafety are expressed in several existing
laws, including the Constitution. Article 89 of Ecuador's Constitution
mandates that the Government will take all measures to "regulate, under
strict biosafety standards, the propagation, research, use, trade, and
importation of genetically modified organisms".

## SECTION II. BIOTECHNOLOGY TRADE AND PRODUCTION

According to the Ecuadorian Institute for Agricultural Research (INIAP),
given the incipient technology and infrastructure available, Ecuador
does not have the capacity to conduct any GMO-related research;
therefore it does not commercially produce any biotechnology crops.
However, INIAP conducts genetic research to improve the quality of seeds
through hybrids for cocoa, potatoes, tomato, corn, rice and soybeans.

Furthermore, given the inexistence of technical biotechnology
legislation, Ecuador does not allow importation of seeds containing
GMOs. According to the Ministry of Agriculture, all seeds used for corn,
soybean and other plantations are either hybrids developed by the INIAP
or other certified imported seeds that do not contain GMOs, and which
have passed through a rigorous in-country certification process.

On the other hand, a growing proportion of the supply of corn, cotton,
soybean meal, and soybean oil for industrial use is of foreign origin. A
brief description of the commercial situation of these products follows:

-   Presently, Ecuador imports 58 percent of its corn demand. Imports
    reached 418,000 MT in 2005, 64 percent of which originated in the
    United States and the remaining from Argentina and Uruguay.

-   Ecuador purchases 99 percent of its cotton needs from the United
    States, reaching 13,000 MT in 2005.

-   Soybean meal and oil imports are also rising with Argentina and
    Uruguay as main suppliers. However, depending on prices, in some
    years, Ecuador purchases important volumes of soybean meal from the
    United States. Overall imports in 2005 reached 415,000 MT for
    soybean meal and 85,000 MT of oil.

-   

Finally, Ecuador receives food aid from the United States since 1985,
and in the past five years it has received 60,000 MT of soybean meal,
and 5,000 MT of soybean oil.

## SECTION III. BIOTECHNOLOGY POLICY

### Regulatory Framework

According to the Environmental Management Law, the Ministry of
Environment of Ecuador is the entity in charge of regulating the
production, propagation, research, use, trade and importation of
genetically modified organisms (GMOs). The same law under article 8
establishes the coordination authority of the Ministry of Environment
over the decentralized Environmental Management System, and allows for
other institutions, such as the Ministries of Agriculture, Health and
Foreign Trade to have direct authority over their own relevant issues.

Although the institutions are in place, there is no specific law or
regulation on biotechnology and biosafety. The environmental management
law is very broad and does not deal with specific issues of agricultural
biotechnology and biosafety. However, a broad national policy on
biosafety is clearly expressed in existing laws. The Constitution, for
example, promotes a series of guidelines regarding biotechnology; such
as the right of Ecuador's people to "live in a safe and balanced
environment" (article 23), the government's obligation to promote public
debate regarding decisions that may affect the environment (art. 88),
the precautionary principle (art. 91), the strict regulation of
biosafety (art. 89), and the protection of consumers rights (art. 92).

Other national laws such as the Environmental Management Law, the Health
Code, the Consumer Rights Protection Law, the Agricultural Development
Law, the Law of Seeds, and the Plant and Animal Health Law are of
general applicability but do not provide specific guidance on biosafety
issues.

On the international front, as a signatory of the Convention on
Biological Diversity and the Cartagena Protocol on Biosafety, Ecuador is
obliged to issue policies and regulations in accordance with the
precepts of these international agreements. Also, as a member of the
Andean Community of Nations, Ecuador is subject to Andean Decision 523,
which states an Andean Strategy on Biodiversity that must be taken into
account by all members in issuing their regulations on biosafety.

Until April 2005, there was a proposed text for a "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 text aimed at providing technical standards and a
comprehensive regulatory system that would have ensured proper control
of products derived from biotechnology and would not unjustifiably block
trade.

This proposed bill was first submitted to Congress in April of 2002 and
later debated without consensus. A second debate was scheduled for
February of 2003, but it never happened. This time, political parties
controlled by indigenous, environmentalists and leftist groups in the
Ecuadorian congress used filibusters to delay a decision. Finally, the
proposal was filed away and these groups counter-attacked by adding two
articles to a controversial Food and Nutrition Security bill that bans
any production, use, import or trade of biotech foods in Ecuador.

### Specific Laws dealing with Biosafety and Biotechnology

#### 

#### Labeling: The Law for Protection of Consumer's Rights

This law, enacted on July 10 of 2000, regulates the supplier-consumer
relations by promoting knowledge and protection of consumer's rights. It
has a clause by which ambiguous dispositions should be interpreted to
favor the consumer. The public entity in charge of enforcing this law is
the Office of the Ombudsman. However, little or nothing has been done to
exercise such enforcement.

On regards to Biotechnology, article 13 of this law states clearly that
" in case that products sold for human or animal consumption had been
produced using biotechnology or any type of genetic manipulation, labels
must warn of this fact using highlighted characters". Despite this
specific regulation, there are no products in the Ecuadorian market,
whether imported or locally produced, that contain such warning. Article
14, furthers the explanation of labeling by declaring minimum labeling
requirements for food, which should include the biotech process.

As to health and safety, this law has a supplemental character by
leaving room for specific laws dealing with health protection matters to
regulate specific issues. However, the non-existence of a law on
biosafety and biotechnology provides that this law is currently the only
one in place dealing specifically with biotechnology labeling.

An inter-institutional working group that includes Ecuador's
Standardization Institute and the Ministry of Health was formed to
prepare new standards for food labeling. The proposed text is ready for
submission to the WTO for comment. Based on the provision of article 13
of the aforementioned consumer rights law, the new standard sets a
requirement for biotech foods to be labeled as to contain GMOs, and for
foods containing GMO ingredients to declare the percentage of such GMOs
in their composition. To date, the new standard is not being applied or
enforced.

#### Imports of Vegetable Materials and Animals: Laws of Animal and Vegetable Health

Article 4 of the Vegetable Health law establishes that any import of
vegetable materials for propagation, including those used for research
must obtain a previous authorization from the Ministry of Agriculture.
In the case of animals used for genetic improvement, the Animal Health
law provides requirements and authorizations from the Ministry of
Agriculture, and establishes the obligation to comply with Andean
regulations.

#### Authorized Biotech Foods: Rules for Sanitary Registration and Control

This regulation deals with the sanitary registration of national and
imported food and beverage products for human consumption in Ecuador.
Article 50 of this regulation makes reference to fines and penalties,
which will be applied according to the dispositions of the Consumers
Rights Protection law.

Furthermore, article 54 mentions that biotech and/or GMO foods will only
be authorized to enter Ecuador when such products comply with the
requirements of the Ministry of Health, which would issue a positive
list of transgenic products authorized for import. Such a list does not
exist, and it is unlikely that it will be issued in the future.

#### Food and Nutrition Security Law 

The main objective of this law is to promote and provide access for the
population of Ecuador to food and nutrition. It declares food security
as a primary national policy and creates the "National System for Food
Security and Nutrition" under the Ministry of Health. The law is based
on Constitutional principles such as people's rights to quality of life
through food and nutrition, and to health through protection and
promotion of food security (articles 23 and 42 of Ecuador's
Constitution). Also, it considers the Declaration of Human Rights, the
International Covenant on Economic, Social and Cultural Rights, and
others (excluding the Cartagena Protocol) as the foundations for the
principles of the law.

The Food and Nutrition Security bill is not a technical law and limits
its ruling to social participation, sustainability food sovereignty and
others. The National System for Food Security and Nutrition is managed
by the National Food Security Council (NFSC), which is created under the
umbrella of the Ministry of Health, and is presided by the Minister of
Health. There is no mentioning or participation of the Ministry of
Environment (the authority on biosafety according to Ecuador's
Environmental Management Law) in the NFSC. It rather includes members
from rural and provincial representations usually controlled by
indigenous groups that continue uphold negative views on biotechnology.

Article 21 represents the most controversial part of this law. Literal D
under article 21 prohibits production, use, storage, imports and
marketing of foods for human consumption that are or contain GMOs until
technical studies demonstrate their safety for human consumption and the
environment. The National Agricultural Research Institute (INIAP) and
the Agricultural Safety Service (SESA), both dependencies of the
Ministry of Agriculture, shall carry out such technical studies
depending on the type of product. However, neither INIAP nor SESA have
the technical capacity or economic resources to carry out the necessary
research.

This clearly represents a trade barrier for any commodities imported
into Ecuador that may contain GMOs. In fact, starting in late May 2005
the Ministry of Agriculture of Ecuador has refrained from issuing import
permits for soybean meal and soybean oil that is suspected to be of GMO
origin. This has caused great difficulties to the poultry, animal feed,
cooking oil and tuna canning industries. Given their acknowledged lack
of capacity to certify product safety, the Ministry of Agriculture has
specifically requested that exporting countries share technical
information and certify that products are safe for human or animal
consumption. To date, however, such certifications and information have
not been useful to restart imports of these products and the mentioned
industries are at high risk of having to stop operations.

Furthermore, literal E of article 21 prohibits that Ecuador receives or
uses products that are or contain GMOs in the social food aid programs.
Again, such prohibition stands until technical studies confirm that the
products are safe for human consumption and the environment.

A final article estates that this law shall prevail over other laws that
may oppose its ruling. This means that incase a specific and technical
biosafety law were enacted; the provisions under the Food and Nutrition
Security law would prevail.

The aforementioned industries are already suffering the consequences of
irresponsible congressional ruling and are evaluating the possibility of
challenging the Food and Nutrition Security Law through a constitutional
appeal. This process may take 6 to 8 months to be resolved; meanwhile
industries are on the verge of shutting down operations.

## SECTION IV. MARKETING ISSUES

The use of biotechnology in food is a new and intricate topic for
discussion in Ecuador. The majority of consumers are not aware of the
existence of food products derived from the use of biotechnology, and in
a country with great food insecurity like Ecuador, this may not be an
issue of major concern to the poor and struggling majority. However,
environmental and indigenous groups are fully aware of the issue, and
although they lack scientific evidence of the implications of
biotechnology, they have been successful in keeping any biotech-related
products from entering Ecuador as a requirement to preserve this
country's mega-biodiversity.

There is no specific information related to the market acceptance of
biotech foods. However, our perspective is that if biotech products are
required special labels "alerting" of presumable harmful
characteristics, the majority of Ecuadorian consumers will certainly
reject them. On this point, the Principle of Precaution embodied in
existing laws and in the constitution may cause major issues of concern
if lawmakers interpret it erroneously as has happened with the recently
enacted law of Food and Nutrition Security.

Another concern arises when Ecuador currently imports --basically from
the United States and Argentina- almost 95 percent of its corn demand,
99 percent of cotton and 90 percent of soybean meal without any specific
restrictions related to biotechnology. The animal feed as well as the
poultry, pork, cooking oil, tuna canning and snacks industries currently
use these products in their formulations, and it is unlikely that
Ecuador would have the capacity to supply this demand in the near
future. Therefore, the latest issuance of restrictive rules does not
only would hurt U.S. export interests, but would also complicate the
survival of these local industries.

In addition, Ecuador does not have either the resources or the
scientific capacity to conduct high-level research on agricultural
biotechnology, so it must rely on foreign technologies and research
results. Also, Ecuador is not capable of submitting enough scientific
evidence about the possible risks of the use of biotechnology as a way
to justify restrictive trade measures against biotech foods. However, it
is clear that Ecuadorian authorities are worried about the issue of
"dependence" from foreign technologies and imports of certain products,
such as planting seeds and oilseeds. There is an increased fear from
farmers that allowing biotech seeds will hurt their plantations, and
that using these products will turn their production capacity into a
dependency relationship with multinational corporations.

Even with the generalized misinformation about biotechnology among
consumers and policymakers in Ecuador, few activities related to biotech
capacity building and outreach have been carried out by government
institutions.

The U.S. Agricultural Affairs Office in Quito has been active in the
past few years on issues related towards promoting biotechnology and
agricultural research. In November of 2001, post organized an EMO-funded
conference on Agricultural Biotechnology presented by U.S. scientists
and experts, and which was directed towards local government officials
involved in biotechnology and environmental issues on agriculture. Post
has also made use of Cochran resources to have policy makers, key
players and journalists participate in short training courses on
biotechnology issues in Hawaii and Michigan. Further efforts are being
made to continue with this type of assistance by using USDA's food aid
programs to improve Ecuador's trade capacity by providing funds for
international agricultural training and in-country research.