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Rafael Correa, President of Ecuador, signed on Tuesday sixteen executive orders that denounce and terminate all investment protection agreements signed by the country, especially in the last decade of the past century. This came after the recommendations by the National Assembly, which on May 3rd had voted in favor of terminating 12 agreements.
The agreements terminated were those signed with the UK, Germany, China, Switzerland, Chile, Sweden, France, the Netherlands, Venezuela, Argentina, Canada, the US, Spain, Peru, Bolivia and Italy.
Moreover, the decision by the Ecuadorian president also follows the recommendations by the Ecuadorian Citizens’ Commission for a Comprehensive Audit of Investment Protection Treaties and of the International Arbitration System on Investments (CAITISA), established by the Ecuadorian government in October 2013 to study the benefits and costs of these agreements.
On May 8th, a few days after the vote at the National Assembly, CAITISA submitted in Quito, capital of Ecuador, the outcomes of its work. Real World Radio interviewed the president of this commission and researcher at the Transnational Institute of the Netherlands (TNI), Cecilia Olivet, to know more about the main findings of the working group. The interview was conducted on Monday, before the signing of the executive orders by President Correa.
The commission was made up by 12 people, among them government officials, academics, lawyers and civil society groups. It is necessary to highlight the presence of the foremost expert on investment law, Muthucumaraswamy Sornarajah, and the former Attorney General for Argentina, Osvaldo Guglielmino.
CAITISA finished its tasks in 2015, after two years of work, but the complete results were submitted last week (the report is around 700 pages long). The Ecuadorian government analyzed the results even after pressure was exerted for it to not follow the recommendations, which were not binding. But the administration led by Rafael Correa followed them anyway.
The fact that “bilateral investment treaties signed by Ecuador failed to deliver on the promise of foreign direct investment” was one of the main findings of the study, according to Olivet. Despite previous promises that the signing of these agreements would attract investments, “from those seven largest (foreign investors), only 23 per cent come from a country which has an investment treaty with Ecuador”.
Moreover, “the principal forces of foreign direct investment into Ecuador are from Brazil, Mexico and Panama, yet none of these countries have bilateral investment treaties with Ecuador”, Olivet made reference to the environmental, social and economic effects caused by investment agreements in Ecuador. She said that the companies that sued the governments before international tribunals have not contributed to production growth, job creation or technology transfer, promises that are always promoted by countries and the corporations that defend these agreements.
On the contrary, “the cost for Ecuador has been immense”, warned the president of CAITISA. According to data by the working group, Ecuador has faced so far 26 investment arbitration cases in international tribunals (almost always favored in litigations) and these arbitrations have cost 1.5 billion US dollars to be paid to investors, arbitrators and lawyers. “This is more or less equivalent to 62 per cent of the overall health budget of the country”, said Olivet.
In addition, there are several open international arbitration cases against Ecuador, which could have to pay up to 13.4 billion dollars. “This is equivalent to 52 per cent of the general state budget for 2017”, said the TNI researcher.
Another interesting fact is the incidence of extractivism in international lawsuits against Ecuador. Over 60 per cent of cases come from oil and mining companies. The expert ensured that bilateral investment treaties have limited the capacities of the State to regulate companies.
Another one of the aspects highlighted by Olivet in the CAITISA study is that there were no processes of negotiation for the signing of investment protection treaties in that last decade of the past century. She said that there were no attempts to improve the terms of these agreements, and that they were models imposed by Northern countries, without legislative debates, despite being passed by Parliament.
Imagen: Agencia Pública de Noticias del Ecuador y Suramérica (ANDES)
“This is the greenest Programme for Government in the history of the Scottish Parliament. The Scottish Government has put improving and protecting the environment at the heart of their legislative and policy programme”.
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