Industry News

U.S., Ecuador 2020 Protocol on Trade Rules and Transparency

Dec. 21, 2020


On December 8, 2020, the United States and Ecuador announced the successful conclusion of a new trade agreement, formally known as the Protocol on Trade Rules and Transparency. The Protocol is part of the 1990 U.S. – Ecuador Trade and Investment Council Agreement (TIC) and is designed to make cross-border trade simpler, faster, and ultimately more cost-effective. While a comprehensive high-standard trade deal remains a long-term goal, the phase one deal represents a significant step forward for U.S. Ecuador trade.

The primary focus of the protocol is trade facilitation. The new protocol is comprised of four annexes.

Annex I addresses Customs administration and trade facilitation. Further to this, the annex requires online publication of critical customs and border information (e.g., practical steps for import, export, and transit; current duties, taxes, and fees; customs broker requirements, customs rulings, and procedures to correct errors). The annex also expands the acceptance of electronically submitted trade documentation (e.g., customs declarations and e-phyto electronic phytosanitary certificates) as a means of streamlining the movement of goods between the two nations. Third, the annex makes clear that penalties are not to be associated with most minor customs errors and calls for the implementation of procedures allowing for the correction of any such errors. Finally, the annex requires the “appropriate border treatment” for goods vulnerable to deterioration (e.g., agricultural goods) and the expansion of customs cooperation between the two countries, including on the issue of trade enforcement.

Annex II requires a more defined, consistent, and transparent methodology for reviewing proposed regulatory changes in Ecuador. It also contains a guarantee of the online publication of draft agreements, an industry comment period, and “appropriate consideration of comments” by the Government of Ecuador. Third, Annex II requires the eventual creation of a publicly available website in Ecuador, which is to contain information relevant to the regulatory update process.

Annex III addresses corruption and the means to combat it. Both countries agreed to adopt and/or maintain measures to prevent and combat bribery. In addition, included in the protocol is a requirement for both countries to impose effective and persuasive penalties on any identified corrupt acts, along with defined procedures for reporting such acts and strong whistleblower protections.

Finally, Annex IV addresses small and medium sized enterprises (SMEs). Based largely on Chapter 25 of the USMCA, Annex IV recognizes the importance of small businesses to the overall economies of both nations. To increase trade and investment opportunities specific to SMEs, Annex IV promotes cross border cooperation, committing both countries to providing “useful” online information for SMEs. Additionally, Annex IV “creates a periodic SME dialogue” designed to foster communication between and with a wide variety of SMEs.

If you have any questions about The U.S. - Ecuador Protocol on Trade Rules and Transparency, please contact an attorney at Barnes, Richardson & Colburn, LLP.