Ecuador WT/TPR/S/254/Rev.1 
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  II. TRADE AND FOREIGN INVESTMENT REGIME 
(1) OVERVIEW  
1. During the period under review (2005-11), Ec uador has undertaken major constitutional 
amendments and related institutional changes, w ith potentially far-reaching implications for its 
economic and social development strategy, and par ticularly the roles of trade and foreign direct 
investment (FDI).  These constitutional amendments provide for, inter alia , greater state involvement 
in, and/or control of, "strategic" sectors of the economy and envisage an increasingly inward-looking 
trade regime, with greater emphasis placed on selec tive import substitution, for example.  The new 
Constitution has frequently been the source of litigati on, controversy, and investor concern, possibly 
to the detriment of FDI.  Issues like total factor productivity, and thus international competitiveness, 
as well as product and market diversification have  also become important features of economic 
policy.  As legislation implementing these constitutiona l and institutional changes is in the process of 
being passed, no evaluation of their impact is available at present. 
2. Action has also been taken to improve and institutionalize transparency and thus public 
accountability, thereby reducing the scope for admi nistrative discretion and thus corruption.  
Nevertheless, Ecuador's internati onal ranking has been relatively low in areas such as corruption (and 
the related cost of doing business).  Ecuador has made  notifications to the WTO in several areas;  the 
timeliness of these is being improved with the technical support of the WTO Secretariat. 
3. Despite new constitutional provisions focused on regionalism, Ecuador, a beneficiary of 
WTO trade-related technical assistance, recognizes  that multilateral trade rules provide a certain 
degree of security and predictability, and has used  the WTO Dispute Settlement procedures to defend 
its trade interests in several cases during the review  period.  Its regional integration objectives have 
increasingly been based more on political or social criteria than on conventional economic priorities, 
with initiatives oriented more towards its relativel y small Latin American trading partners.  As a 
result, no significant preferential trade liberalizing ac tion has been taken so far, or seems in sight in 
the near future, as negotiations for free-trade agreem ents with major trading partners have either 
stalled (in the case of the United States) or progressed slowly (in the case of the EU).  Following a recent pragmatic policy shift, Ecuador envisages negotiating more comprehensive agreements for 
development, covering several policy areas rather than  just trade.  Such agreements are now being 
negotiated (with Turkey, for example) or explored  (China, Korea (Rep. of), Gulf Cooperation Council 
countries, and EFTA). 
4. A wide-ranging Organic Code of Production, Trade and Investment, passed in 2010, 
streamlined the legal framework governing FDI, and provided for, inter alia , national treatment to 
foreign investors under certain conditions;  it also allowed for additional guarantees involving 
investment contracts.  The FDI re gime remains, in principle non-discr iminatory, except for investment 
in "strategic" sectors and certain other areas (e.g. fi sheries, media, extractive activities, and maritime 
transport), where the Government maintains certa in exclusive rights.  Nevertheless, Ecuador's 
constitution-driven initiatives have been perceived as a source of uncertainty and a deterrent to 
foreign direct and possibly domestic investment. 
(2) R
ECENT CONSTITUTIONAL AND INSTITUTIONAL DEVELOPMENTS  
5. Ecuador's 20th Constitution, passed in 2008, has 444 articles.1  The power of the executive 
branch has increased rela tive to other branches of government, and the role of the State has been 
                                                      
1 National Assembly online information, " Constitución del Ecuador ".  Viewed at:  
http://www.asambleanacional.gov.ec/documentos/cons titucion_de_bolsillo.pdf [2 February 2011]. WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 18 
  
  considerably expanded in major "strategic" (a nd potentially lucrative) sectors of the economy 
(Chapters III(4)(iv) and IV(3), (4), (5), and (6)(v)).  The 2008 Constitu tion sets framework rules 
paving the way for government intervention and preferences to nationals in numerous economic 
policy areas;  the rules dealing with developmental issues govern, inter alia , planning, food security2, 
energy sovereignty3, economic sovereignty (including trade policy provisions, section (5)), strategic 
sectors/services/public enterprises4, and production and labour.  It also contains guidelines for 
international relations and good living that, inter alia , deal with "inclusion" and equity, biodiversity, 
and natural resources.  Transparency and social control are also dealt with by the 2008 Constitution 
(section (3)(ii)).  A referendum consisting of ten questions, held on 7 May 2011, approved, inter alia , 
to limit banking operations by financial services companies, forbid media company ownership by 
non-media companies, restructure the judicial system, and prohibit casinos and gambling. 
6. Ecuador is a unitary republic.  Executive power is vested in the President who is Head of 
State and Government.  The new Constitution allowe d a one-time presidential re-election and set an 
earlier election date (26 April 2009) for the preside ncy and the legislature, which was renamed the 
National Assembly.5  The President alone is empowered to appoint and remove ministers of state 
without the approval of the National Assembly;  the majority of the 37  members of the Cabinet of 
Ministers are from the political party of the President.  The President retains sole authority for submitting the State Budget to the National Assemb ly for approval, and establishing, amending or 
abolishing customs tariff rates and tariff nomenclatur e, as well as determining foreign policy.  Under 
the Constitution, the President alone is empowered to  negotiate international treaties.  International 
treaties relating to integration ag reements, which confer legal aut hority on an international or 
supranational agency, or which contain an undertak ing to enact, amend or repeal a law, must be 
approved by the legislature.
6 
7. Legislative power is exercised by the unicameral National Assembly, which consists of 
124 members (previously 100) elected in 24 provinc ial constituencies by proportional representation 
for a four-year period.  The Legislature has sole au thority to approve the State Budget and to set or 
alter taxes, with the exception of custom s tariffs.  Draft laws may be introduced, inter alia , by 
deputies, the President, the Constitutional Court (see below), government agencies, and by Ecuadorian citizens if the draft is s upported by 0.25% of registered voters.
7  The President (through 
referendum) and deputies (no less than one third of them) may propose constitutional amendments.8  
Ecuadorian citizens also enjoy a right of initiativ e in this respect, provided that the proposed 
constitutional amendment is supported by at least  8% (previously 1%) of registered voters. 
                                                      
2 Article 281 of the 2008 Constitution recommends, inter alia , the adoption of fiscal (budgetary), tax, 
and tariff policies to protect the agriculture and fisheries sector, so as to avoid dependence on food imports. 
3 Articles 284, 304, and 334. 
4 Under Article 313, the following "strategic" sect ors (of major economic importance for Ecuador) are 
reserved for the State's operations:  energy (all form s), telecommunications, non-ren ewable natural resources, 
transport and refining of hydrocarbons, biodiversity and genetic heritage, the radio waves spectrum, water, and all other sectors as determined by law.  Article 314 stipul ates that the State shall be responsible for the provision 
of public services, such as drinking water and irrigation, sanitation, electricity, telecommunications, roads, port 
and airport infrastructure, and others determined by law. 
5 As the 2008 Constitution officially considers the pres ent term to be the President's first, the current 
Head of State can run for another four-year term in 201 3.  Under the previous Constitution, the President could 
be re-elected, but only after at least four years had elapsed following the end of a term of office. 
6 Article 134 of the 2008 Constitution. 
7 Article 103 of the 2008 Constitution. 
8 Article 441 of the 2008 Constitution. Ecuador WT/TPR/S/254/Rev.1 
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  8. Judicial power is in the hands of the Nationa l Court of Justice (replacing the Supreme Court 
of Justice), the provincial courts, the tribunals, and judges.  The nine judges of the Constitutional 
Court are appointed for an initial period of nine y ears (renewable in three-year terms) by a committee 
consisting of two members from the Legislature, the Executive, and a Transparency and Social 
Control body (section (3)(ii)).9  As indicated above, the May 2011 referendum on constitutional 
reforms approved judicial reform, partly a res ponse to heightened public concern over crime and 
security issues.  In proceedings involving Andean  Community rules, the courts may suspend the 
internal procedure and refer the matter for interp retation to the Court of Justice of the Andean 
Community.  The interpretation rendered is binding on the national judges who consulted the Court.  
Between 2005 and the first quarter of 2011 th ere were 255 interpretation cases, and 21 
non-compliance actions.  
9. Ecuador is divided into 4 autonomous re gions, 24 provinces, and 229 cantons for 
administrative purposes.  The Constitution specifies th e exclusive powers attributed to each level of 
government.10  The central Government's exclusive powers include:  national defence;  internal 
security and public order;  interna tional relations;  national planning;  economic, tax, customs, tariff, 
fiscal, monetary, trade, and governme nt debt policies;  protected areas and natural resources;  natural 
disaster management;  the radio spectrum and the general system of communications and telecommunications;  ports and airports;  ener gy resources, minerals, hydrocarbons, water, 
biodiversity, and forest resources;  and the control and management of national public enterprises.  To 
promote regional development, in October 2010 Ecua dor introduced an Organic Code of Territorial 
Organisation, Autonomy, and Decentralisation, c ontaining a compulsory and progressive model to 
reallocate fiscal revenue from the central Govern ment to regional governments;  it was to be 
implemented in the course of 2011.
11 
(3) INSTITUTIONALIZATION OF TRANSPARENCY  
(i) Trade policy formulation and evaluation 
10. The December 2010 Organic Code of Production,  Trade and Investment  created a Committee 
on Foreign Trade (COMEX) as an inter-agency bod y in charge of trade policy formulation and 
regulation.12  As from April 201113, COMEX's Technical Secretariat, i.e. the former Foreign Trade 
and Investment Council (COMEXI)14, has been responsible for designing, monitoring, and evaluating 
Ecuador's trade policy.  Government entities partic ipating in COMEX's works include the ministries 
in charge of foreign trade policy, agricultural polic y, industrial policy, and public finances as well as 
the Internal Revenue Service, the customs author ity, and the National Secretariat of Planning and 
Development (SENPLADES).  Under the Decembe r 2010 Organic Code, an Advisory Council on 
Productive Development and Foreign Trade has been  set up to make recommendations on productive 
development, investment, and foreign trade (secti on (8));  its membership includes representatives of 
the private sector, mixed companies (i.e. public and private ownership), trade unions, local 
governments, and academics.  A Sectoral Counc il for Production, under the 2010 Organic Code, 
                                                      
9 Articles 432 and 434 of the 2008 Constitution. 
10 Articles 261 to 264 of the 2008 Constitution. 
11 Organic Code of Territorial Organisation, Autonomy, and Decentralisation, 19 October 2010 
(Economist Intelligence Unit, 2010). 
12 Articles 71 and 72 of the Organic Code of Production, Trade and Investment, Official Register  
No. 351, 29 December 2010. 
13 Executive Decree 73 3, 11 April 2011. 
14 Prior to the establishment of COMEX, foreign trade policy was "determined" by COMEXI.  For 
more information on COMEXI, see WTO document WT/TPR/S/148/Rev.1, 25 July 2005. WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 20 
  
  formulates the production and "productive development"  policies;  the Ministry of Coordination of 
Production, Employment and Competitiveness is, inter alia , responsible for coordinating and 
harmonizing policies and cross-sectoral acti ons of relevant public sector institutions.15  The Ministry 
of Foreign Affairs, Trade and Integration (MRE), is, inter alia , in charge of implementing trade policy 
in its areas of competence in coordination with ot her agencies participating in COMEX.  As a result 
of institutional reforms since th e previous TPR of Ecuador, the executive branches of government 
were expanded;  in June 2011, there were 20 mini stries, 8 coordinating ministries, and 9 national 
secretariats.16 
11. No independent (non-governmental) bodies (e.g . economic research institutes) evaluate 
Ecuador's trade and trade-related policies or provide  advice to policy makers.  Prior to formulating 
policies, adopting measures or undertaking trade ne gotiations, the Government consults the private 
sector, on an ad hoc  basis. 
(ii) Domestic transparency 
12. Despite action taken in recent years, transparency17 and consequently corruption, remain a 
concern and a challenge in Ecua dor.  Ecuador is a signatory of the 1996 Inter-American Convention 
Against Corruption and the 2003 United Nations Convention against Corruption18;  it participates in 
the events relating to these agreements and thei r recommendations as well as in the Mechanism for 
Monitoring the Implementation of the Inter-Ame rican Convention against Corruption (MESICIC).  
Furthermore, it participates in the activities of the Andean Observatory on Transparency and Fight 
against Corruption, which was established in Februa ry 2011 to promote work on the harmonization of 
legislation of the partner countries, the preparation of a system of indicators for measuring levels of 
corruption and management transparency, and the implementation of a common system of penalties.19  
The authorities indicated that one of the main ax es of the current government is Revolution by the 
Fight against Corruption, which aims to combat  the unscrupulous handling of public funds and of 
                                                      
15 The following institutions form part of the Sectoral Council for Production:  the Ministry of 
Agriculture, Livestock and Fisheries;  the Ministry of Industry and Productivity;  the Ministry of Foreign Affairs, Trade and Integration;  the Ministry of Touris m;  the Ministry of Transport and Public Works;  the 
Ministry of Labour Relations;  the Internal Revenue Service;  the Customs;  the National Council for Vocational 
Training;  the Ecuadorian Institute of Intellectual Pr operty;  and the National Secretariat of Science and 
Technology (Sectoral Council for Production, 2010). 
16 The coordinating ministries monitor the activities within their portfolio (Presidency of the Republic 
of Ecuador online information, " Directorio de Instituciones ".  Viewed at:  http://www.presidencia.gov.ec/ 
index.php?option=com_sobi2&Itemid=118). 
17 Transparency International consistently ranks Ecuador near the bottom among countries it surveys in 
the region.  Ecuador ranked 146 out of 180 countries surveyed for Transparency International's Corruption 
Perceptions Index 2009  and received a score of 2.2 out of 10 (10:  highly clean, 0:  highly corrupt).  In the 
Western Hemisphere, only Paraguay, the Bolivarian Repub lic of Venezuela, and Haiti received lower scores 
than Ecuador (Transparency International, 2010).  Ac cording to the 2007 national survey on corruption and 
good governance estimates, 2,320 acts of corruption in 23  public utilities represented an annual average cost to 
Ecuadorian households of about US$178 per year, implying a total amount of about US$533 million paid each year in bribes for the use of these services.  Accordin g to the authorities, the index of perception of corruption 
dropped from 86% in 2006 to 74% in 2010. 
18 Ecuador is not a signatory to the 1999 OECD Convention on Combating Bribery of Foreign Public 
Officials in International Business Tr ansactions;  Argentina, Brazil, Chile, and Mexico are the only Latin 
American signatories. 
19 Secretariat of Transparency Management, Press Release 137, " Ecuador presidirá Observatorio 
Andino de lucha contra la corrupción ", 1 March 2011.  Viewed at:  http://www.secretaria 
transparencia.gov.ec/index.php?option=com_phocadownload&view=file&id=256%3A137-ecuador-presidir-
observatorio-andino-de-lucha-contra-la-corrupcin&Itemid=16&lang=es [2 July 2011]. Ecuador WT/TPR/S/254/Rev.1 
 Page 21 
 
 
  privatizations, as well as "dishonorable" debts and in stitutionalized looting.  Ecuador has laws and 
regulations to combat official corruption, but they  appear to be inadequately enforced, though action 
is being taken via a planned refo rm of the judiciary (section (2)).20  Offering or accepting bribes is 
illegal and punishable by imprisonment of up to five years. 
13. The 2008 Constitution created the Transparency and Social Control branch of government, 
tasked with preventing and combating corruption, among other things.21  In December 2008, a 
National Secretariat of Manageme nt Transparency (SNTG) was cr eated to investigate and denounce 
acts of corruption in the public sector, and ensure strict compliance with the provisions of the Law on Transparency and Access to Public Information (see above)
22;  a registry of proven corruption cases 
was under preparation.  Both entities may conduct inv estigations into alleged acts of corruption but 
responsibility for prosecution remains with the Offi ce of the Prosecutor General.  The Comptroller 
General of the Nation is responsible for the ove rsight of public funds, and there are frequent 
investigations and occasional prosecutions for irre gularities;  autonomous agencies seem subject to 
little effective oversight.  The authorities indicated th at many former public officials are involved in 
money-laundering activities but cannot be prosecuted due  to the legal vacuum, i.e. the public sector is 
considered as the sole operator likely to commit acts of corruption.  So far, out of all cases 
investigated by SNTG, only one preliminary investig ation of falsification of migration documents was 
completed;  the remaining cases are under the purv iew of Office of the Prosecutor General or 
Comptroller General pending the examination of evidence. 
14. An Anti-Money-Laundering Law, passed in 2010, set strict controls to detect assets or 
financial movements resulting from criminal activity a nd organized crime.  Seiz ure of property arising 
from criminal activities in Ecuador is now authorized.  Financial institutions are required to record the 
identity, occupation, home address, and civil status of their clients.  Companies must identify their 
shareholders, assets and participation, legal repres entatives, and headquarters address.  Movement in 
cash exceeding US$10,000 must be re ported to the customs authorities.23 
 
                                                      
20 According to the Secretary of Transparency Manage ment, "If the work of th e judiciary is not based 
on ethics/values and it is motivated only by money and power, it will not be possible to achieve a transparent 
state as the main reason why corruption persists is im punity" (National Secretariat of  Management Transparency 
online information, " Para el Secretario Nacional de Transparencia la impunidad es la causa de la corrupción ", 
16 June 2011 (unofficial translation from Spanish or iginal text).  Viewed at:  http://www.secretaria 
transparencia.gov.ec/index.php?option=com_content&view=category&layout=blog&id=1&Itemid=64&lang=es 
[7 July 2011]. 
21 Constitutional provisions on transparency and social  control promote the control of public sector 
entities and organizations, and individuals or corporations  in the private sector that provide services or 
undertake activities of public interest, so that they act in a responsible, transparent, and fair manner.  These provisions also encourage the participation of citizens in the transparency and social control operations that 
should protect the observance and enforcement of rights, and prevent and combat corruption.  These 
transparency and social control func tions are operated by the Council of  Citizen Participation and Social 
Control, the Office of the People, the Comptroller Gene ral, and the Superintendencies.  These entities have 
administrative, financial, budgetary, and organizati onal autonomy (Article 204 of the 2008 Constitution). 
22 For more information on the National Secretar iat of Management Transparency, see National 
Secretariat of Transparency Ma nagement online information, " Mapa del Sitio ".  Viewed at:  
http://www.secretariatransparencia.gov.ec/index. php?option=com_xmap&sitemap=1&Itemid=4&lang=es. 
23 Economist Intelligence Unit (2010). WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 22 
  
  15. The 2004 Law on Transparency and Access to P ublic Information guarantees access to public 
information, and requires, inter alia , dissemination through an in formation portal or website.24  This 
information requirement includes the public entity's organizational structure;  legal framework;  the 
directory of the institution;  the services offered and how to access them;  full text of all existing 
collective agreements of the institution;  the application forms or formats;  the annual budget 
specifying income, expenses, financing, and ope rating results;  and complete information on 
contracting processes.  Ministries and national secret ariats are subject to control, monitoring, and 
evaluation via software programs such as the "Govern ment for Results", the "Information System for 
Democratic Governance" (SIGOB), and the Resu lts-based management (RBM).  The authorities 
indicated that the World Bank congratulated Ecuador for its important preventive actions in favour of 
transparency and against corruption. 
(iii) Transparency in relation to the WTO 
16. In addition to undergoing its current Trade Policy Review, Ecuador has made efforts to 
submit WTO notifications in several areas (Table AII.1).  Despite some improvement since its last TPR, Ecuador's record of WTO notification has been characterized by irregular frequency, with long 
periods without submissions in several areas, e.g.  agriculture (four-year gap), questionnaire on import 
licensing procedures (seven-year gap), sanitary  and phytosanitary measures (from 2005 onwards, one 
notification in 2009, one notification in 2010), state- trading enterprises (first notification in 2010), and 
tariff and trade data (last submission in 2008).  In May 2011, the authorities indicated that a project 
for improving the submission of notifications was being put in place with the support of the WTO 
Secretariat. 
(4) T
RADE LAWS AND REGULATIONS  
17. The hierarchy in the application of the legi slative rules remains:  the Constitution;  
international treaties and conventions;  organic laws ;  ordinary laws;  regional norms and district 
ordinances, decrees and regulations;  ordinances;  agreements and resolutions;  and other acts and 
decisions issued by the authorities.25  Legal texts are published in the Official Register , which is 
available online26, and the most important are also available at the relevant ministries' online sites. 
18. During the review period, regulatory reform was driven by an effort to unify the legal texts 
governing trade and finance, to bring them into line with the new economic and social development 
strategy (section (5)) and the relevant constitutiona l principles and provisions.  Action was taken in 
many trade and trade-related areas, e.g. productio n, trade and investment, government procurement 
regime, public enterprises, standards, sanitary and phytosanitary measures, mining, and hydrocarbons.  
Nevertheless, over 14,000 laws and re gulations are in force;  it seems that some of these have been 
conflicting, which contributed to unpredictable a nd sometimes contradictory judicial decisions.   
                                                      
24 Law on Transparency and Access to Public Information (LOTAIP) No. 24, Official Register  
Supplement No. 337, 18 May 2004.  Viewed at:  h ttp://www.secretariatransparen cia.gov.ec/index.php?option= 
com_phocadownload&view=file&id=2% 3Aley-orgnica-de-transparencia -y-acceso-a-la-informacin-pblica-
lotaip-formato-pdf-de-56-2-kb&Item id=9&lang=es [2 July 2011]. 
25 Article 425 of the 2008 Constitution.  For more information on the definition of each  type of legal 
instrument, see WTO document WT/TPR/S/148/Rev.1, 25 July 2005. 
26 Judiciary Review online information.  Vi ewed at:  http://www.d erechoecuador.com/. Ecuador WT/TPR/S/254/Rev.1 
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  (5) TRADE POLICY OBJECTIVES  
19. Ecuador is in the process of thoroughly red esigning its economic and social development 
strategy, with a view to, inter alia , diversifying the economy and making it more inclusive.  
According to the authorities, this transformati on requires the setting of new fundamentals for the 
country's trade policy, which needs to establish social welfare as an end in itself and implement the 
2008 constitutional principles.  Under the 2008 Cons titution, trade policy objectives are to:  develop 
and strengthen the domestic market in line with the strategic objectives set by the National Development Plan (see below);  regulate and pr omote the country's integration into the global 
economy;  boost domestic production;  contribute to  ensuring food and energy sovereignty, and 
reduce internal disparities;  promote the developm ent of economies of scale and fair trade;  and 
prevent monopoly and oligopoly practices, particularly  those of the private sector, and others that 
distort the functioning of the markets.
27  The State is expected to pr omote environmentally responsible 
exports, preferably those that generate higher empl oyment and value added, an d exports in particular 
from small and medium-size producers and handicrafts sector.  The State should also promote the imports that are necessary for development, and discourage those that adversely affect domestic 
production, the population, and nature. 
20. Ecuador's National Development Plan 2008-11 rega rded the consolidation of growth as a tool 
for promoting "inclusive" development.
28  The challenge has been to overcome growth constraints and 
to construct effective government intervention th at combines economic, social, and environmental 
policies.  According to the Inter-American De velopment Bank (IDB), whic h provides substantive 
lending support to Ecuador for carrying out its progr ammes, risks to Ecuador's  development strategy 
were posed by macroeconomic and political factors as well as its institutional framework. 
21. The National Development Plan 2009-13 (or National Plan for Good Living, PNBV) 
proposes, inter alia :  democratization of the means of prod uction, re-distribution of wealth and 
diversification of forms of owners hip and organization;  transformati on of the pattern of specialization 
of the economy through the selective substitution of im ports;  increase in total factor productivity 
(TFP)29 and diversification of expor ts, exporters and export market s;  strategic and sovereign 
integration in the world and Latin America;  tr ansformation of higher e ducation, and knowledge 
transfer in science, technology, and innovation;  connectivity and telecommunications to build the information society;  and change of the energy matrix/pattern.
30 
22. In line with the objectives set by all these te xts and the December 2010 Organic Code of 
Production, Trade and Investment31, Ecuador envisages (see below) using or has already used, tariff 
and non-tariff measures (e.g. government procur ement, state enterprises) to support domestic 
production, selective import subs titution, and promote exports.  Fr om end-2010, assistance is being 
                                                      
27 Articles 304 to 307 of the 2008 Constitution. 
28 Inter-American Deve lopment Bank (2008). 
29 In 2005 Ecuador's relative total factor productivity was 39.7% of that of the United States;  Ecuador 
ranked 15th out of 18 countries in the region covered under this measurement.  Furthermore, it ranked 17th (out 
of 24 countries) in terms of average (1961-07) total factor productivity in agriculture (Inter-American 
Development Bank, 2010). 
30 National Secretariat of Planning and Development (SENPLADES), Press Release No. 163, " Ecuador 
cuenta con un nuevo Plan Nacional de Desarrollo para el período 2009–2013 ", 5 November 2009.  Viewed at:  
http://www.senplades.gob.ec/c/document_library/get _file?uuid=0c4a1216-2a15-41a9-994b-bd3c8d743402& 
groupId=18607 [2 February 2011];  and SENPLADES online information, " Plan Nacional para el Buen Vivir 
2009-2013:  Construyendo un Estado Plurinacional e Intercultural ".  Viewed at:  http://plan.senplades.gob.ec/ 
web/guest/inicio;jsessionid=834F69B3E3B3DCBB1D32AD4AF5E44D3D [2 July 2011].   
31 Organic Code of Production, Trade and Investment, Official Register  No. 351, 29 December 2010. WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 24 
  
  intensified through tax and non-tax incentives as well as  increased involvement of and/or control by 
the State in economic activities (Chapters III(4 )(iv) and IV(3), (4), (5), and (6)(v)). 
23. The extensive 2010 Agenda for Productive Transformation (ATP)32, sets a new economic 
policy strategy consisting of the accumulation and rebalancing of income from capital and labour, in 
order to foster human development, and defines a "productive development" policy as its instrument.  
This model is to be implemented within a framework  of respect for private property, legal certainty, 
and under a public-private partne rship cooperation scheme.  The ATP, which recognizes the country's 
internal structural heterogeneity, its highly concentrated economy (Chapter III(4)(iii)(a)), and 
productivity and international competitiveness difficulties, is based on four principles:  equity, 
environmental sustainability, energy  efficiency, and systemic competitiveness.  It aims at achieving a 
shift from a primary export model economy to a knowledge-based economy with high value-added 
exports in harmony with environmental protection considerations .  The ATP's eight pillars are:  
change in the production pattern (matrix);  reduction of structural heterogeneity;  democratization of 
resources-quality jobs;  human talent;  comprehens ive system for innovation and entrepreneurship;  
systemic competitiveness and productivity;  environmen tal sustainability;  and change in culture and 
country image.  The ATP envisages labour productivity growth rising from 2.9% (2010) to 7.1% 
(2011), 11.3% (2012), and 15.5% (2013).  Between 2009 and 2013 the number of non-oil export items is to increase from 3,154 to 4,691, and export destin ations from 153 to 174.  The ATP indicates that 
Ecuador's international trade commitments undertak en at sub-regional, regional, and multilateral 
(WTO) level consist of obligations  and rights allowing for flexible use of certain policy tools. 
24. According to the PNBV 2011-13, the endogenous development strategy, the rigidity of the 
monetary system, and the rise in imports require, inter alia , mechanisms to underpin a strategy of 
internal development and a re duction of dependence on imports.
33  These mechanisms will include:  
tariff measures for reducing excessive reliance on im ported components;  domestic support for the 
development of activities involving an increase in va lue added or a transformation process (preferably 
by SMEs);  and long-term measures promoting exports and attracting productive investments.34  The 
sectors subject to selective import substitution measures are:  fertilizers, agrichemicals, pesticides and 
fungicides, soaps, detergents and cosmetics, othe r chemicals, ceramics, tiles and floors, textiles, 
clothing, footwear, leather, manufacture of radio, television, phones, electronics in general, and electrical appliances.  More specifically the Agenda  targets a reduction of the share of imports of 
corn, soybean, wheat, and barley in domestic consump tion to 40% by 2013.  Furthermore, it envisages 
to evaluate and "refine" the margin of preferen ce for public procurement from domestic producers and 
suppliers (Chapter III(2)(ix)) in line with the obj ectives of the strategy of import substitution and 
transformation of the country's production pattern/matrix. 
(6) T
RADE AGREEMENTS AND ARRANGEMENTS  
(i) WTO 
25. Ecuador, a WTO Member since 21 January 1996, has not signed the Agreement on 
Information Technology or any of the plurilate ral agreements, including the WTO Agreement on 
Government Procurement.  Its 2008 Constitution recognizes interna tional law as the standard of 
                                                      
32 Sectoral Council fo r Production (2010). 
33 Ministry of Economic Policy and Coordination (2011a). 
34 Article 13 of the 2010 Organic Code of Production, Trade and Investment defines productive 
investment as the flow of resources to produce goods and services, to expand productive capacity and to 
generate jobs. Ecuador WT/TPR/S/254/Rev.1 
 Page 25 
 
 
  conduct, and seeks the democratization of internati onal organizations and the equitable participation 
of states within them.35 
(a) Doha Development Agenda (DDA) 
26. Since its previous TPR, Ecuador has participat ed actively in the DDA of multilateral trade 
negotiations;  its latest individual or joint submissi ons relate to TRIPS and TRIPS-related issues (e.g. 
biological diversity, wines and spirits), fisheri es subsidies, trade facilitation, market access for 
non-agricultural products, agriculture, and regional trade agreements. 
27. At the November 2009, WTO Ministerial Conf erence in Geneva, Ecuador reiterated that 
multilateral trade rules provide a certain degree of  security, but it was imperative to complete the 
DDA without losing sight of the need for specific flexibilities for the countries of the South;  the 
application of the principles of special and differe ntial treatment and less-than-full reciprocity;  and 
the promotion of balanced agreemen ts in each of the negotiating processes.36  It stated that, to 
confront global challenges, the WTO should defi ne a new system of governance and must reform 
itself in order to exercise the necess ary leadership in setting fair and equitable trade rules that will 
reduce the widening gaps in welfare and technology between the South and the North.  Ecuador called 
on the countries of the North to recognize their res ponsibility in the global crisis and eliminate their 
subsidies, their distorting measures of support and any other measure limiti ng the market access of 
products from the countries of the South.  The multila teral trading system must be an instrument for 
development as well as being "inclusive", socially responsible, and capable of formulating innovative 
solutions for alleviating poverty a nd counteracting the harmful effects of world trade on the biosphere 
and on climate change.  The WTO agenda should incl ude the adoption of a new system of financial 
monitoring and regulation. 
(b) Trade-related technical assistance 
28. Between 2005 and late 2011 Ecuador's officials benefited from up to 236 activities organized 
under the WTO's Trade-Related Technical Assistan ce (TRTA) in the form of distance (online) 
learning, national seminar/workshops, regional trade policy courses, regional training courses, 
specialized courses, advanced courses, and thematic courses.37  These activities included general, 
tariff negotiations (non-agricultural market access), ne gotiation techniques, rules, technical barriers to 
trade, TRIPS, regional trade agreements, trad e facilitation, trade and environment, trade 
mainstreaming in development and poverty re duction programmes and development plans, 
agriculture, and services issues.  At end-November 2010, Ecuador participated in a regional training 
event with a special focus on aid for trade, in Quito;  the activity was aimed at training participants to 
complete the Aid-for-Trade self-assessment questi onnaire and to identify and submit Aid-for-Trade 
case stories.38 Ecuador's priority TRTA needs (areas/themes of interest) for the years to come include 
contingency measures, technical barriers to trade,  sanitary and phytosanitary measures, and customs 
valuation. 
                                                      
35 Article 416 of the 2008 Constitution. 
36 WTO document WT/MIN(09)/ST/38, 1 December 2009. 
37 WTO Institute for Training and Technical Cooperation. 
38 WTO document WT/COMTD/AFT/W/16/Add.3, 15 February 2011. WT/TPR/S/254/Rev.1 Trade Policy Review 
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  (ii) Preferential and regional trade agreements 
29. Since its previous TPR, Ecuador's emphasis on in tegration priorities has shifted from a global 
to a more region-focus (section (c)).39  Under the 2008 Constitution, its strategic and priority objective 
is political, cultural, and economic integration in  the Andean region, South America, and Latin 
America.40  Nevertheless, Ecuador did not undertake major trade liberalizing initiatives at regional 
level during the review period;  these initiatives we re confined to a Partial Scope Agreement of 
Economic Complementarity with Guatemala, a bilate ral protocol maintaining the Bolivarian Republic 
of Venezuela's preferences granted within the Andean Community, and an  Economic Cooperation and 
Complementarity Agreement replacing the protocol in  question (section (a)).  Ecuador's policy is to 
negotiate comprehensive trade agreements for deve lopment covering several policy areas rather than 
free-trade agreements confined to trade. 
(a) Andean Community 
30. Ecuador is a member of the Andean Community  of Nations (CAN) whose key goals include 
the establishment of a free-trade area and the eventual creation of a customs union41;  in 2009, CAN's 
members accounted for 11.8% and 13.9% of Ecuador's total exports and imports, respectively.42  A 
free-trade area comprising the Plurinational Stat e of Bolivia, Colombia, Ecuador, Peru, and, until 
mid-2006 the Bolivarian Republic of Venezuela, has been in place since 1993, and covers all tariff 
lines (Chapter III(2)(iv)(d)).  Ecuador began tariff-fr ee trade with Peru in 2000.  The customs union 
remains to be finalized as the implementation of  a common external tariff, previously set in 
October 2002, has been postponed several times.  A High Level Working Group on Tariff Policy was 
created on 1 August 2007 to make recommendations for a draft decision establishing a Tariff Policy 
of the Andean Community that includes all memb er countries by not later than 31 January 2008.43  No 
further progress has been made;  a bilateral pr otocol maintaining the Bolivarian Republic of 
Venezuela's preferences granted within the And ean Community expired in late April 2011 and was 
replaced by an Economic Cooperation and Complementarity Agreement. 
31. The European Union and the Andean Community have been working towards a bilateral trade 
and investment agreement since 1993;  in May 2006, they agreed to initiate the negotiating process as 
soon as possible.  Although Colombia and Peru reached a free-trade agreement with the European Union in May 2010 (to be signed in 2011,  ratified by mid-2012), efforts by Ecuador and the 
Plurinational State of Bolivia have stalled.  Although there was no progress at the last meetings 
between Ecuador and the EU in November 2010, in  June 2011 the authorities indicated that the 
                                                      
39 As indicated in its previous TPR, Ecuador's Medium-Term Government Plan 2003-07 sought to 
"promote global, hemispheric regional and sub-regional integration by adopting a firm national stance in negotiations in the framework of th e Free Trade Area of the Americas, ME RCOSUR, the European Union, and 
the Pacific Basin, and by strengthening Andean Comm unity and LAIA trade agr eements" (WTO document 
WT/TPR/S/148/Rev.1, 25 July 2005). 
40 Articles 416 and 423 of the 2008 Constitution. 
41 In May 1969 Ecuador joined the Andean Pact, which became the CAN in 1997.  Other members are 
the Plurinational State of Bolivia, Colombia, and Peru;  the Bolivarian Republic of Venezuela withdrew from the CAN in July 2006.  For more information on the Andean Community of Nations, see CAN online 
information.  Viewed at:  http://www.comunidadandina.org/index.htm;  and WTO document 
WT/TPR/S/148/Rev.1, 25 July 2005. 
42 UNSD, Comtrade database (SITC Rev.3). 
43 CAN online information, " Política Arancelaria ".  Viewed at:  http://www.comunidadandina.org/ 
comercio/union.htm [17 February 2011]. Ecuador WT/TPR/S/254/Rev.1 
 Page 27 
 
 
  negotiations would possibly conclude by the end of the year;  pending issues from Ecuador's side 
included government procurement and telecommunications matters.44 
32. The Andean Community Agreement, which has be en in force since May 1988, was notified to 
the GATT under the Enabling Clause in October 1990.  During the review period the Andean 
Community did not submit any reports to the WTO Committee on Trade and Development on 
measures taken by its members. 
(b) Latin American Integration Association (LAIA) agreements 
33. Ecuador has been a member of the Latin Amer ican Integration Association (LAIA) since 
August 1980;  LAIA's long- term objective is the establishment of  a free-trade zone among all member 
countries.45  LAIA members accounted for 23.9% of Ecuador 's total exports and 31% of its imports in 
2009.46  Ecuador has signed Partial Scope Agreem ents with Chile, Cuba, MERCOSUR members 
(Argentina, Brazil, Paraguay, and Uruguay), and Me xico (Chapter III(2)(iv)(d), Table AIII.2) but 
none of these has been notified to the WTO.  Ecuador 's tariff cuts are as much as 100% of the rate, 
and coverage ranges from 3.3% of tariff lines (Cuba) to 99.4% (Brazil), depending on the agreement.  
The partial-scope agreement with Chile exclud es about 230 predominantly agricultural products.47  
Under the agreement with MERCOSUR that was jo intly signed by Ecuador, Colombia, and the 
Bolivarian Republic of Venezuela, about one fift h of Ecuador's imports from Brazil and Argentina 
received duty-free access when the ag reement entered into force, and the remaining tariff lines will be 
eligible for such treatment by 2018 at the latest.48  The only new agreement signed by Ecuador within 
the LAIA framework during the review period was a Partial Scope Economic Complementarity 
Agreement with Guatemala on 15 April 2011.49  This agreement provides for gradual trade 
liberalization of 700 tariff items, including shri mps, flowers and ornamental plants, fruits, 
confectionery, canned goods, rubber, vegetables, me dicines, handicrafts, leather goods, steel, iron, 
white goods, and textiles and clothing, within a fi ve-year period;  sensitive products like coffee and 
bananas are excluded.  Ecuador undertook to grant preferential treatment to 21,000 tonnes of sugar 
from Guatemala each year. 
34. The LAIA, which has been in  force since March 1981, was notified to the GATT under the 
Enabling Clause in July 1982.  During the review pe riod, the LAIA Secretariat submitted two biennial 
reports (2007, 2010) to the WTO Committee on Tr ade and Development on measures taken by its 
members.50 
                                                      
44 For more information on the EU-CAN negotiations, see Bilaterals.org online information, 
"Negotiations:  EU-CAN".  Viewed at:  http ://www.bilaterals.org/spip.php?rubrique150. 
45 Other LAIA members are Argentina,  the Bolivarian Republic of Venezuela, the Plurinational State of 
Bolivia, Brazil, Chile, Colombia, Cuba, Mexico, Paraguay, Peru, and Uruguay.  For more information on LAIA 
agreements and activities as well as agreements involving Ecuador, see LAIA online information.  Viewed at:  
http://www.aladi.org/nsfweb/sitio/index.htm;  and WTO document WT/TPR/S/148/Rev.1, 25 July 2005. 
46 UNSD, Comtrade database (SITC Rev.3). 
47 Economic Complementarity Agreem ent No. 32, 20 December 1994. 
48 The agreement with MERCOSUR members establishe s a system of special measures for agricultural 
products, allowing the member countries to reduce or suspend tariff preferences if import volumes or prices 
exceed a specified threshold (Economic Complementarit y Agreement No. 59, 16 December 2003, Annex I, 
Article 24). 
49 MRE online information, " Negociaciones exitosas entre Ecuador y Guatemala ", 28 January 2011.  
Viewed at:  http://www.mmrree.gob.ec/2011/bol065.asp [17 February 2011]. 
50 WTO documents WT/COMTD/59, 25 January 2007, and WT/COMTD/72, 8 November 2010. WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 28 
  
  (c) Other reciprocal agreements 
35. Ecuador participates in the Global System of Trade Preferences among Developing Countries 
(GSTP), which was notified to the GATT under the Enabling Clause in September 1989;  Ecuador's 
GSTP commitment consists of tariff cuts on six tariff items (rum, spirits, synthetic rubber, polyesters, 
and parts and accessories for motors) ranging from 10% to 40%.51 
36. In May 2008, Ecuador joined the 12-member Union of South American Nations (UNASUR), 
a political and economic integration initiative in the region.52  In August 2009, Ecuador joined the 
Bolivarian Alternative for the Nations of Our Am erica (ALBA), which seeks to intensify economic, 
political, and social integration among its eight member countries.53  ALBA is an attempt at regional 
economic integration based on a vision of social welf are, bartering, and mutual economic aid, rather 
than trade liberalization.  ALBA nations are in th e process of introducing a new regional currency, the 
Unitary System of Regional Compensation (SUCRE) at  a rate of SUCRE 1.25 to the U.S. dollar as 
their common virtual currency, an d eventually a hard currency;  on 6 July 2010, the Bolivarian 
Republic of Venezuela and Ecuador conducted the first bilateral trade deal between two ALBA 
countries using the SUCRE instead of the U.S. dollar. 
(d) Agreements under negotiation 
37. At present Ecuador is pursuing "intelligent inte gration into the global market" by negotiating 
trade agreements based on economic complementarity  and development consid erations while taking 
into account the asymmetries between countries.  No substantial trade liberalizing preferential 
arrangements of economic importance are likely to be  reached in the short-run;  negotiations for a 
free-trade agreement with the United States were abandoned in 2006 and are currently under study, 
while those with the EU are expected to conclude in 2011 (section (a)).  In 2009, the United States 
and the EU were Ecuador's main export markets (Cha pter I(6)).  Ecuador and Turkey are to finalize 
negotiations on a trade agreement for development in  2011.  Opportunities are now being explored for 
launching negotiations with other strategic or potential  trading partners (e.g. China, Korea (Rep. of), 
Gulf Cooperation Council countries, EFTA countries, Central American countries). 
(e) Unilateral preferential arrangements 
38. Ecuador remains a beneficiary of the Generalized System of Preferences schemes of 
Australia, Canada, the European Union, Japan, New Zealand, the Russian Federation, Turkey, 
Switzerland, and the United States.  The GSP schemes of the EU and the United States are the most important for Ecuador in terms of  export value and employment.  A vast number of Ecuador's exports 
to the United States receive duty-free treatment  under the Andean Trade Promotion and Drug 
                                                      
51 UNCTAD online information, "Global System of Trade Preferences:  Concessions granted by 
Ecuador".  Viewed at:  http://www.unctadxi. org/Secured/GSTP/Concessions/Ecuador_en.PDF. 
52 Other UNASUR signatories are:  Argentina, the Bolivarian Republic of Venezuela, the Plurinational 
State of Bolivia, Brazil, Colombia, Chile, Guyana, Paraguay, Peru, Suriname, and Uruguay.  For more 
information on the UNASUR treaty, see MRE online information, " Tratado Constitutivo de la Unión de 
Naciones Suramericanas ".  Viewed at:  http://www.mmrree.gob.ec/po l_exterior/trata_const_unasur.pdf;  and 
Economist Intelligence Unit (2010). 
53 The Executive joined ALBA by means of Presidential Decree, without submitting the proposal to the 
legislature for ratification.  Other ALBA members ar e:  Antigua and Barbuda, Bolivarian Republic of 
Venezuela, Plurinational State of Bolivia, Cuba, Domini ca, Nicaragua, and Saint Vincent and the Grenadines.  
ALBA's members amount to less than 7% of Latin America's GDP. Ecuador WT/TPR/S/254/Rev.1 
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  Eradication Act (ATPDEA) until July 2013.54  The ATPDEA is estimated  to benefit 336 tariff lines, 
representing exports of US$430 million (equivalent to 24% of non-oil trad e or 5.9% of total trade with 
the United States);  in practice, as a result of, inter alia , avoidance of ATPDEA-related documentation 
procedures, submission of inadequate documentatio n, and lack of knowledge, exports that actually 
benefited amounted to US$356 million.55  According to the authorities, the non-renewal of the 
ATPDEA preferences does not necessarily imply a re duction in demand for Ecuadorian exports in the 
United States, which suggests that these preferences may not have increased Ecuador's exports in the 
first place.  Ecuador, the Plurinational State of Bolivia, and Paraguay benefit from several unilateral 
preferences accorded by the LAIA member count ries under the regional market-opening agreements 
signed in 1983;  these regional ag reements have not undergone any significant expansion since 1989, 
with a resulting erosion of preferences as LAIA countries gradually negotiate deeper agreements.56 
(7) TRADE DISPUTES AND CONSULTATIONS  
(i) WTO 
39. Since its last Trade Policy Review, Ecuador has not been a respondent in any disputes before 
the WTO Dispute Settlement Body;  it has been a co mplainant in two cases, one against the European 
Communities regime for the importation, sale, and distribution of bananas57, and a second against a 
United States anti-dumping measure on imports of shrimps.58  Ecuador has been a third party in five 
other cases.59  Ecuador confirmed its commitment to th e WTO/"single undertaking", including its 
dispute settlement mechanism. 
(ii) Other 
40. Following constitutional changes, Ecuador exited the World Bank's International Centre for 
Settlement of Investment Disputes (ICSID), a conflict -resolution tribunal, in July 2009 and officially 
as of 7 January 2010;  its Constitutional Court, rule d that international arbitration does not comply 
                                                      
54 The ATPDEA Act was originally effective until February 2011.  It was renewed in October 2011 and 
extended until July 2013, and applied retroactivel y.  Viewed at:  https://www.mincomercio.gov. 
co/publicaciones.php?id=10542. 
55 Ministry of Economic Policy Coordination (2011b). 
56 WTO document WT/TPR/S/148/Rev.1, 25 July 2005. 
57 On 23 February 2007, Ecuador requested the es tablishment of a panel to examine whether the 
European Communities' bananas regime, which had been found inconsistent with WTO obligations in an earlier 
dispute, had been brought into compliance with WTO rules.  The Panel and Appellate Body reports circulated in 
2008 found that the new bananas regime did not co mply with WTO obligations .  On 15 December 2009, 
Ecuador, the European Union and a number of other WTO Members signed the Geneva Agreement on Trade in 
Bananas, bringing to an end 15 years of disputes regarding the EC/EU bananas regime.  This agreement was 
ratified by the European Parliament on 3 February 2011 (WTO online information, "Dispute Settlement:  
DS27".  Viewed at:  http://www.wto.org/english/tratop _e/dispu_e/cases_e/ds27_e.htm [21 February 2011]). 
58 This case was initiated in 2005, and terminated in August 2007 with the United States reporting that 
it had implemented the Panel's recommendations (WTO online information, "Dispute Settlement:  DS335".  
Viewed at:  http://www.wto.org/e nglish/tratop_e/dispu_e/cases_e/ds 335_e.htm [21 February 2011]). 
59 Involvement as a third party related to the following disputes:  Colombia's indicative prices and 
restrictions on ports of entry;  United States' measures on the importation, marketing and sale of tuna and tuna products;  and three cases on China's measures on the exportation of various raw materials (WTO online 
information, "Member information:  Ecuador and th e WTO".  Viewed at:  http://www.wto.org/english/ 
thewto_e/countries_e/ecuador_e.htm). WT/TPR/S/254/Rev.1 Trade Policy Review 
Page 30 
  
  with the 2008 Constitution.60  Ecuador indicated that it had complied with the relevant withdrawal 
provisions of the ICSID.  Similarly it will abide by the provisions relating to the validity of the 
Treaties of Reciprocal Protection of Investments subsequent to their termination, as well as those 
protecting investments made under these instruments (section (8)).  In September 2009, a case was 
filed against Ecuador, by a foreign multinational firm , for international arbitration with the United 
Nations Commission on International Trade Law ( UNCITRAL);  in July 2011, the case remained 
unresolved.  At the same time 15 suits by foreign companies against the Ecuadorean State remained 
legally valid before the ICSID. 
(8) FOREIGN INVESTMENT REGIME  
41. While Ecuador still seems relatively open to fo reign investment in most sectors, its 
investment climate has become uncertain as economic policies continued to evolve in response to key 
provisions of the 2008 Constitution.  Expectations on the repositioning of the State's role in and/or 
control of the economy as a result of constitutional changes (Chapters III(4)(iv) and IV(3), (4), (5), 
and (6)(v)), in combination with a stated preferen ce for domestic over foreign investment and frequent 
changes to the laws, has seemingly fostered a percep tion of some uncertainty regarding the security of 
foreign investments and contractual agreements with in the country (section (3)(i)).  Until recently the 
legal complexity resulting from interpretation of investment laws complicated enforcement of 
contracts, and increased the risks and costs of doing business in Ecuador.61  This transitional period 
seems to have been terminated after the passing of the 2010 Organic Code of Production, Trade and 
Investment and its implementing regulations, as well as action taken to streamline business-related 
administrative procedures (see below and Chapter III(4)(iii)). 
42. During the period under review the legal fra mework has undergone several substantive 
changes relating to Ecuador's approach to foreign in vestment.  In principle, foreign investors are now 
granted national treatment under certain rules.62  Under the 2008 Constitution, "the State will promote 
national and foreign investment… pr ioritizing national investment."  Also, "foreign direct investment 
will be complementary to national investment… a nd be targeted in accord ance to the needs and 
priorities defined in the National Development Plan."63  In other words, foreign investment should 
reflect the priorities of the National Development Plan 2009-13 and complement domestic investment.  
The 2008 Constitution ensures that public enterprises operate exclusively or through a majority stake 
in joint ventures in the so-called "strategic" sectors (section (2)) of the economy64;  according to the 
authorities, this implies that the State reserves the right of planning, decision making, and investment 
                                                      
60 Article 27 of the 2010 Organic Code on Production, Trade and Investment provides for the inclusion 
in framework investment contracts (see section (8)) of a clause stipulating that disputes can be settled via mutually agreed international arbitration mechanisms in  accordance with existing treaties to which Ecuador is a 
signatory.  Nevertheless, Article 422 of the 2008 C onstitution recognizes only local or Latin American 
arbitration centres, or other fora as agreed to by the parties, for settlement of disputes between the State and 
investors, and could limit future arbitration options for investors. 
61 In 2011, the World Bank ranked Ecuador 130 (out of 183 economies) for overall ease of doing 
business, three positions lower than in 2010;  its ranking in terms of protecting investors was 132 and at starting a business 158 (World Bank and International Financial Corporation, 2010).  Ecuador ranks 38
th (37th in 
2007/08) among 48 economies based on the 2009 Opacity Index , which measures the degree to which they lack 
clear, accurate, easily discernible,  and widely accepted practices go verning the relationships among 
governments, businesses, and investors.  The Opacity Index  consists of five components that may be thought of 
as "negative social capital":  corruption, legal system inadequacies, economic enfo rcement policies, accounting 
standards and corporate governance, and regulation (Milken Institute, 2009). 
62 Article 17 of the 2010 Organic Code of Production, Trade and Investment. 
63 Article 339 of the 2008 Constitution. 
64 Article 315 of the 2008 Constitution. Ecuador WT/TPR/S/254/Rev.1 
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  modalities for these sectors in order to meet constitutional objectives and provide basic public 
services.  New investment rules have had the most impact on extractive industries, such as mining and 
hydrocarbons (Chapter IV(3) and (4)(i)).  The December 2010 Organic Code of Production, Trade 
and Investment governs, inter alia , foreign investment in Ecuador (Chapter III(3)(iv)(c) and (d)).  The 
2010 Code replaced the Law on Investment Promotion and Guarantees of December 199765, and 
13 additional laws that had previously governed fore ign investment, in an effort to improve policy 
coherence in certain areas.  Acco rding to the authorities, the 2010 Code improved coherence between 
policies, policy tools, and trade activities.  Curre ntly, the Sectoral Council for Production formulates 
investment policy;  MIPRO forms part of this Council (section (3)(i)).  Since 2009,  
INVESTECUADOR, a support unit of the Sectoral Council for Production has provided support for 
the preparation of productive investment projects;  to facilitate investment procedures, it operates a 
one-stop shop.66 
43. The 2010 Code establishes so-called investor rights, including freedom of production and 
marketing, access to administrative procedures a nd control measures against unfair competition, 
freedom of import and export of goods and services, a nd the free transfer abroad of foreign exchange 
earnings.67  To benefit from these guarantees, these investme nts must be consistent with the policy of 
prioritizing social and environmentally sustainable investment, i.e. to generate employment and not 
cause environmental damage. 
44. Foreigners with Ecuadorean residenc y are considered domestic investors.68  F o r e i g n  
investment is defined as investment that is the prope rty of or is controlled by a person or legal entity 
domiciled outside the country or that incl udes capital not generated inside Ecuador. 
45. No authorizations, other than those expressly stipulated by law, are required to access the 
incentives provided under the 2010 Organic Code (Chapter III(3)(iv) and (4)(c)).69  A Law Amending 
the Law of Companies in May 2009 made it compul sory for companies in Ecuador to register the 
names of stakeholders each year at the Superi ntendency of Companies in order to receive 
authorization to continue operations.  Since 2004, an one-stop shop/window has helped to process the 
registration of new companies.70  Businesses may also submit nearly all required paperwork via the 
local chambers of commerce.  The central Govern ment and a number of provincial governments have 
been exploring ways to provide services to attract ne w investment, facilitate its entry, and alleviate the 
bureaucratic and other hurdles.  Under the ATP, as from 2012, the NO STEPS programme is to 
reduce red tape for new businesses;  full implementation of the programme is to cut cost by an 
estimated US$2.5 million.71 
46. Foreign investment with up to 100% foreign equity is currently allowed without prior 
authorization or screening in most sectors of the economy currently open to domestic private investment.  Nevertheless, in addition to constitu tional provisions strengthening the State's role in 
"strategic sectors" of the economy and affecting a ll private investors, foreign direct investment 
                                                      
65 Law No. 46, Official Register  No. 216, December 1997. 
66 For more information on INVESTECUADOR's coverage, see INVESTECUADOR online 
information.  Viewed at:  http://www.investecuador.ec/. 
67 Article 19 of the 2010 Organic Code of Production, Trade and Investment. 
68 Article 13 of the 2010 Organic Code of Production, Trade and Investment. 
69 Article 14 of the 2010 Organic Code of Production, Trade and Investment. 
70 According to the World Bank, it takes an average of 13 steps, 56 days, and a cost of 32.6% of GDP 
per capita to start a new business in Ecuador.  The aver age for Latin America and the Caribbean is nine steps, 
57 days, and a cost of 36.2% of GDP per capita (World Bank and International Financial Corporation, 2010). 
71 Sectoral Council fo r Production (2010). WT/TPR/S/254/Rev.1 Trade Policy Review 
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  remains subject to access restraints in certain activ ities.  The National Fisheries Development Council 
must approve investment in aquaculture, larva laborat ories, and research centres.  Small-scale fishing 
remains reserved for Ecuadorian fish ermen, and access by shrimp a nd lobster trawlers flying foreign 
flags is prohibited.  Fishing by foreign companies is permitted provided that the catch is processed in 
Ecuador.  Ceilings remain in place on the number of  foreign employees authorized to acquire mining 
titles and of contractors in the hydrocarbons sector.  The transport of hydrocarbons is reserved for 
domestic shipping companies in which the State holds  a controlling interest.  According to the Radio 
and Television Law72, individuals who receive radio and te levision concessions must be Ecuadorean 
by birth;  legal entities that receive the concessi ons must also be Ecuadorean and may not receive 
more than 25% of their capital from foreign in vestors.  Neither foreign businesses nor foreign 
individuals may acquire real estate property or est ablish industrial or agricultural activities within 
50 km (31 miles) of national borders, without prior authorization from the National Security 
Council.73  However, this has rarely impeded foreig n investment as several private oil producers 
operate fields adjacent to the border with Colombia. 
47. Pursuant to its commitments under the Genera l Agreement on Trade in Services, Ecuador 
grants foreign investors market access and national treatment in ten sectors, including certain business 
services, certain telecommunication services, site preparation work for mining, environmental services, health-related and social services, tourism and travel-related services, and recreational, cultural, and sporting services.
74  Ecuador has undertaken to grant market access and national 
treatment to investors from Andean Community me mbers in all sectors except those contained in 
Decision 659 which are subject to certain conditions.75 
48. The 2008 Constitution requires that the Stat e manages land use and access to lands, while 
recognizing and guaranteeing the right to private property, "which should fulfil social and environmental functions".
76 
49. Confiscation remains prohibited under th e Constitution and the 2010 Organic Code.77  
Expropriation of property by the State is author ized in exceptional circ umstances for implementing 
social development, sustainable environmental management, and collective welfare plans in a 
non-discriminatory manner, subject to  fair and adequate compensation.78  Property, whether land or 
movable assets jointly owned by several persons or  companies, may be seized by Ecuadorian courts 
through judgments or seizure orders in complianc e with constitutional and le gal requirements.  All 
cases, such as land expropriations upon compensation fo r road construction or other infrastructure are 
published in the Official Register . 
50. As from 2010, investors may sign mutually agreed  investment contract s ensuring the stability 
of tax incentives for the duration of the contr act, as well as the monitoring mechanisms and 
compliance parameters for each project;  the Sect oral Council for Production (section (3)(i)) sets these 
                                                      
72 Law No. 691, May 1995. 
73 Foreigners Law No. 887, August 1979;  and Economist Intelligence Unit (2010). 
74 WTO document WT/TPR/S/148/Rev.1, 25 July 2005. 
75 These include financial, professional, water transp ort, public utilities, exploitation or exploration of 
natural resources, public works, port, and broadcasting services (Andean Community Decision 659, 
14 December 2006.  Viewed at:  http://www.comunidadandina.org/norma tiva/dec/D659.htm [17 May 2011]). 
76 Article 282 of the 2008 Constitution. 
77 Article 323 of the 2008 Constitution. 
78 Article 18 of the 2010 Organic Code of Production, Trade and Investment. Ecuador WT/TPR/S/254/Rev.1 
 Page 33 
 
 
  parameters.79  A dispute settlement clause may be inserted in these contracts (section (7)(ii)).80  In 
2008, the National Assembly authorized the termina tion of eight bilateral investment agreements 
signed with Central American and Caribbean c ountries, and from October 2010 to May 2011 those 
with France, Finland, Germany, Sweden, and the United Kingdom.  In May 2011, Ecuador was 
examining the compatibility of its remaining 12 bila teral treaties with its c onstitutional requirements 
(section (7)(ii)), and was envisaging their terminati on;  the arbitration process of these agreements is 
linked to ICSID (section (7)(ii)), from which it withdrew in 2009.81  In 2005, Ecuador maintained 
20 bilateral agreements on the promotion and reciprocal protection of investments.82  Ecuador 
maintains 13 double taxation treaties83, and applies Andean Community Decisions 40 and 578 in this 
area.  Some of these treaties contain "tax sparing" (Brazil) or MFN (Belgium, Canada, and Chile) 
provisions. 
                                                      
79 Article 25 of the 2010 Organic Code of Production, Trade and Investment and Executive Decree 
No. 757, Regulation of the structure and institutionalization of productive development, investment, and development mechanisms and instruments established by the Organic Code of Production, Trade and 
Investment, 6 May 2011, Official Register  Supplement No. 450, 17 May 2 011.  Executive or Presidential 
Decrees may be viewed at Inform ation System for Democratic Governance (SIGOB) online information, 
"Sistema de Información de Decretos Presidenciales ".  Viewed at:  http://www.sigob.gov.ec/ 
decretos/. 
80 Article 27 of the 2010 Organic Code of Production, Trade and Investment indicates all possible 
dispute settlement methods (sec tion (7)(ii)).  Disputes that are not settle d amicably via administrative procedures 
are subject to a mandatory mediation request, and in cas e of failure the dispute may be submitted to national or 
international arbitration in accordan ce with the provisions of treaties to  which Ecuador is a member.  These 
arbitration procedures do not cover taxation issues. 
81 Ecuador's departure from ICSID took place after Perenco, a French oil and gas company, filed a 
dispute in July 2009 against the government with ICSID for US$327 million.  PETROECUADOR, Ecuador's 
state oil company, seized Perenco's Ecuadorean assets in July 2009 in an attempt to claim unpaid windfall taxes 
(Economist Intelligence Unit, 2010). 
82 The signatories to these agreements were Argen tina, the Bolivarian Republic of Venezuela, the 
Plurinational State of Bolivia, Canada, Chile, China, Cuba, El Salvador, Finland, France, Germany, Nicaragua, 
Paraguay, Peru, Romania, Spain, Switzerland, the United Kingdom, the United States, and Uruguay (WTO document WT/TPR/S/148/Rev.1, 25 July 2005). 
83 The signatories to these agreem ents are:  Argentina, Belgium,  Brazil, Canada, Chile, France, 
Germany, Italy, Mexico, Romania, Spain, Switzerland, and the Andean Community countries.