Thursday, April 10th, 2014
Published by THE HILL
April, 10, 2014
As economies around the world become increasingly connected and intertwined, we must put a global trade system in place that can adapt to this ever-changing 21st century world. Foreign direct investment (FDI) has the potential to contribute significantly to sustainable economic development but we must have trade policies that meet the needs of not just the industrialized world, but also developing economies.
For decades, FDI has been largely guided by bilateral or multilateral investment treaties. Currently, there are more than 3,000 bilateral and regional agreements for the protection of investments around the world. These agreements provide the underlying legal structure for the international system of investments.
However, the implementation of these treaties has increasingly led to negative consequences to developing countries like Ecuador, leading to a growing wave of criticism. Those consequences have included the outsized power of international arbitrators to interpret these treaties; the lack of transparency in the process; and the marginalization of the capacity for a state to implement oversight policies. This all can have a negative impact not only on a government but on the people it serves.
For example, Nobel Prize-winning economist Joseph Stiglitz has correctly observed that this system has significantly hindered the ability of developing countries to protect their environment from extracting activities carried out by mining and oil companies; their citizens’ health from the tobacco companies; and their economies from the ruinous financial products that played such a large role in the 2008 global financial crisis.
In the mid-20th century, countries in Latin America often fell victim to this imperfect system as their resources were exploited by foreign companies drawn to newly discovered oil. Most of these nations at the time, like Ecuador, suffered from the lack of a cohesive structure for dealing with foreign companies and investors. We also suffered institutional weaknesses that undermined the ability to formulate appropriate public policies to regulate our markets.
Now, in 2014, countries in Latin America are seeing unprecedented growth due in part to reforms that have stabilized markets and have encouraged investments for the economic and social development of each nation. The region has experienced growth rates surpassing 4 percent for the last decade – during a time when even countries like the United States were experiencing economic difficulties.
Since being elected in 2007, Ecuadorean President Rafael Correa has been instrumental in achieving economic stability after nine presidents were dismissed from office since 1996. The steadiness during his presidency has positioned Ecuador as a regional leader, drawing recognition from the World Bank for advancing from being a middle-income economy to an upper middle-income one. Most recently, one major U.S. multinational company committed to expand by $1 billion over the next five years. Additionally, Ecuador has adopted one of the world’s most environmentally-friendly Constitutions – it provides nature with rights and a regulatory framework governing public and private operations.
On a broader scale, we convened a conference this week with the VALE Columbia Center on Sustainable Foreign Investment with world-class economists, attorneys and academics to discuss and develop solutions to improve development and investment treaties. To that end, Ecuador’s story provides an important lesson as we expand global trade initiatives and work to fix the current investor-state arbitrator system.
Oil was discovered in the Ecuadorean Amazon in the 1960s and its extraction controlled by Texaco (now owned by Chevron). Our rainforest is considered to be one of the most bio diverse habitats, and yet its ecology has suffered devastating damages as a result of the callous techniques used under Texaco’s direction. Over the past 20 years there have been countless legal actions between harmed citizens, Texaco, Chevron and the Ecuadorean state.
Despite years of litigation – ten in the United States and ten in Ecuador – the damage is not remedied. The Chevron case is a textbook example of why the arbitration system needs overhauling – the endless litigation has yet to produce a viable resolution and our people still suffer.
Reform should address the legitimacy, consistency, and predictability of the system by instituting: 1) a transparent selection of arbitrators who only exercise this role and do not defend companies in other venues, which can result in obvious interest conflicts, 2) the establishment of an appellate body within the arbitration system, 3) the incorporation in investment treaties investors’ obligation to file claims only after local legal avenues have been exhausted, and 4) the incorporation of the right of States to exercise their regulatory capacity on issues related to health, environment and industrial policy, among others.
These needed reforms cannot happen overnight but we must have open and transparent discussions on reforming the system so that we can have a regulatory and legal framework that works in the modern, global 21st century economy. The hard lessons we painfully learned in Ecuador must be a teachable moment. We cannot let this opportunity pass us by.
Wednesday, April 9th, 2014
It is disappointing that a small group of U.S. Senators have chosen to publicly misrepresent the actions and policies of the Republic of Ecuador, especially after the Embassy has engaged in ongoing direct communications with these same officials in order to share further information on the issues they raised in their letter.
As we have informed this small group of Senators, the move by USAID to halt operations in Ecuador was a unilateral decision by USAID, not the Government of Ecuador. We value constructive cooperation with the U.S. that contributes to the development of our country, such as the cooperation being established during the President’s visit to the U.S. this week. We welcome future dialogue in this respect.
Additionally, the legal and political issues referenced in the letter have been reviewed and processed by an independent judiciary, consistent with national and international law. Political opposition is welcome and encouraged in our Ecuador, and we encourage the Senators to read the hundreds of Ecuadorian newspapers to discover the colorful diversity of views that are freely expressed every day. We value diversity of opinion as part of our healthy, robust democracy; we cannot countenance the intentional dissemination of lies.
Finally, regarding the Inter-American Commission of Human Rights, Ecuador is one of many countries calling for increasing the effectiveness of rapporteurs for women, children, indigenous people, and others in order to strengthen the system.
It is disappointing and disingenuous that these facts were not shared or referenced in today’s letter. The Embassy of Ecuador remains open to continuing these conversations with all representatives of the Senate, and we recognize that these 8 Senators do not represent the opinions of the entire U.S. government or the American people.
As President Correa visits the U.S. this week, we are excited by the many new opportunities for education exchange, technology transfer, and increased trade and investment that are being discussed. We and many others recognize the mutual benefits of such cooperation for our countries.
Tuesday, April 8th, 2014
LEADING ECONOMISTS, ACADEMICS, AND ATTORNEYS COME TOGETHER TO FIND COMMON GROUND; POLICY SOLUTIONS
WASHINGTON, April 8, 2014 /PRNewswire/ — On April 8, the Embassy of Ecuador and Vale Columbia Center on Sustainable International Investment convened a forum titled “Development, FDI and Investment Treaties” at the Cultural Center of the Inter-American Development Bank in Washington, DC. The forum brought together leading economists, attorneys, and academics in an open discussion to find policy solutions on foreign investment and the international frameworks that govern it.
“We firmly believe that foreign direct investment (FDI) has the potential to contribute significantly to sustainable economic development but we must have trade policies that work in a 21st century world,” said Ecuadorian Ambassador to the United States Nathalie Cely. “Today’s conference brought together stakeholders from around the world to help establish a global set of firm standards and regulations that meet the needs of not just the industrialized world, but also developing economies. The government of Ecuador fully supports the principle that all investment risk should be rewarded, but we must balance corporate interests with public interests. Our experience in Ecuador shows that profitable and responsible investments are not mutually exclusive.”
Among participants in the conference were leading economics professor Ha-Joon Chang of University of Cambridge; Richard Kozul-Wright, director of the Unit on Economic Cooperation at the United Nations Conference on Trade and Development; Julian Arato, a fellow at the Vale Columbia Center on Sustainable Development at Columbia University; legal expert José Daniel Amado; and law professor Gus van Harten of York University and previously the London School of Economics. The panelists discussed the role of FDI in the sustainable economic diversification of developing countries and the roles of investment treaties in shaping international investment.
In her remarks, Ambassador Cely argued that reform should address the legitimacy, consistency, and predictability of the system by instituting: 1) a transparent selection of arbitrators who only exercise this role and do not defend companies in other venues, which can result in obvious conflicts of interest, 2) the establishment of an appellate body within the arbitration system, 3) the incorporation in investment treaties investors’ obligation to file claims only after local legal avenues have been exhausted, and 4) the incorporation of the right of States to exercise their regulatory capacity on issues related to health, environment and industrial policy, among others.
“It is entirely possible to reverse these rules,” Professor Chang said. “They are entirely man-made. The only reason that these rules exist is because powerful countries wrote them that way, not because they are some inevitable consequence of economic development.”
“Through creative treaty-shopping, multinational corporations can today attach robust property-style protections for their contracts with foreign sovereigns,” said Fellow Arato. “I thus argue that corporations must today be understood as international lawmakers whose agreements with states yield major consequences for domestic public law.”
“What makes foreign direct investment treaties unique is that unlike other international treaties, when it comes to systems of arbitration, there’s no requirement to exhaust reasonably available local remedies,” Professor van Harten said.
To see the full list of presenters and read the presentations from today’s conference, please see: http://www.ecuador.org/blog/?p=3596.
Friday, April 4th, 2014
Speaking at Duke University Law School, Ambassador Nathalie Cely Details Ecuador’s Experience of Historic Pollution by Chevron-Texaco, and Outlines Need for International Legal Reforms
Durham, NC—Today, at Duke University Law School, Ecuador’s Ambassador to the US, Nathalie Cely, described her country’s experience with oil giant Texaco-Chevron which caused unprecedented damage to Ecuador’s Amazonian rainforest and indigenous communities. Citing Chevron’s ability to avoid legal or moral responsibility for decades, Ambassador Cely called for greater efforts by the international community to hold multinational corporations accountable for violations of environmental and human justice rights.
Ambassador Cely was speaking at the Duke Environmental Law and Policy Forum Symposium on Environmental Justice, which brought senior government leaders, legal experts, and academics, together to examine race, class, policy and the role of transnational corporations in the fight for environmental and social justice around the world. Charles Lee, Director of the U.S. Environmental Protection Agency’s Office of Environmental Justice and one of the pioneers of the environmental justice movement, was among the guest speakers.
“When Texaco-Chevron left Ecuador, it left unprecedented damage to the Amazonian rainforest and no compensation to those affected,” said Ambassador Cely during her Symposium address. “Together we must fight to have a binding international framework that will ensure multinational [companies] respect the rights [of citizens].”
For more than a decade, Texaco-Chevron has employed every judicial maneuver imaginable and waged an aggressive PR and lobbying campaign against the indigenous plaintiffs, their attorneys, the government of Ecuador and all who seek justice to distract from the fact that the oil company’s irresponsible drilling practices caused unprecedented damage.
“Our country’s efforts alone cannot sufficiently address the need to transform investment treaties and arbitration mechanisms for sustainable development,” added Ambassador Cely. “That is why Ecuador seeks to bring together stakeholders from around the world, including the United Nations, other concerned countries from our region as well as Europe, Africa, Asia, and key civil society voices in order to establish a global set of fair minimum standards and regulations that will hold transnational corporations accountable when they invest and obtain reasonable profits.”
The Symposium’s theme “Reflecting on 20 Years of Domestic and International Law Policy” commemorated the twenty years since President Bill Clinton’s executive order which mandated that “each Federal agency shall make achieving environmental justice part of its mission.”
An in-depth article by Ambassador Cely titled “Responsible, Sustainable, & Profitable: A Possible Yet Challenging Balance – Lessons Learned from the Chevron case in Ecuador” will be published in an upcoming issue of the Duke Environmental Law & Policy Forum.
To view the recorded webcast of the Symposium, please visit: http://bit.ly/1hJeLkm
Saturday, March 29th, 2014