Ecuador: The Tit for Tat Explusion Not Over Yet — What’s Next? Ay! Mucho Bananas….

'Cavendish' bananas are the main commercial cu...Image via WikipediaA new wrinkle in the US-Ecuador worsening relations after the diplomatic expulsions of the US  ambassador in Quito and the Ecuadorian ambassador in Washington, D.C. last week. On April 8, Reuters reported that “Ecuador’s leftist President Rafael Correa on Friday accused the U.S. embassy of spying on the country’s police and military, adding the espionage was a factor in his expulsion this week of the U.S. ambassador.”

“The serious thing is that WikiLeaks said they (the U.S. embassy) have informants in the police and armed forces … This is espionage,” Correa said in a radio interview, adding the embassy had a duty to inform his government if it had evidence of a crime, but had not done so.
[…]
Correa acknowledged there is corruption in the police force and said his government is striving to stamp it out.

“The serious issue is that if they have information from inside the police, instead of letting the government know … they say nothing, and they try to involve the country’s President,” he said in the radio interview.

Foreign Minister Ricardo Patino said on Wednesday the decision to expel Hodges was made to defend Correa’s honor, even though trade ties with the United States might suffer.

Ecuador’s former foreign minister José Ayala Lasso  understood the duties of foreign representatives better and told IPS that he would have done things differently:

[T]wo specific factors: that ambassadors have an obligation to inform their government of everything they see in the country to which they have been posted, which they must do in an objective, in-depth manner.

“That is an obligation recognised by international law, and their reports are written for private use by their governments, not for international publication,” he said.

The other factor is that the leaked cable “refers to an issue that is very serious in Ecuador: police corruption.”

Also last week, China’s Xinhua reported that President Correa had downplayed the economic impact of the non-renewal of the Andean Trade Promotion and Drug Eradication Act  (ATPDEA).

Correa reportedly said if the United States canceled the ATPDEA due to the current diplomatic impasse, the impact on Ecuador’s economy would only be less than 23 million U.S. dollars for the taxes, which is something the nation “can perfectly afford.”

The report noted that ATPDEA benefits Ecuador with the duty free entrance of 750 products to the United States. The agreement expired on Feb. 12 and is currently under review in the Congress.

President Correa was also quoted as saying, “The country’s dignity” is before the Atpdea, in response to concerns of the nation’s business circles that Quito’s expel of the U.S. ambassador could bring negative effects on the country’s commerce.

Note that the renewal of Andean Trade Promotion and Drug Eradication Act  (ATPDEA) has so far made no ripple in the news this side of the world.  As of this weekend, there were exactly 11 news items related to  ATPDEA and most of them concerns Colombia.

The Andean Trade Preference Act (ATPA) was enacted in December 1991, to help four Andean countries (Bolivia, Colombia, Ecuador, and Peru) in their fight against drug production and trafficking by expanding their economic alternatives.

The Andean Trade Promotion and Drug Eradication Act (ATPDEA), enacted on August 6, 2002, renewed and amended the ATPA to provide duty-free treatment for certain products previously excluded under the ATPA.  

According to the USTR, Ecuador is currently our 42nd largest goods trading partner with $9.2 billion in total (two way) goods trade during 2009. Goods exports totaled $3.9 billion; Goods imports totaled $5.3 billion. The U.S. goods trade deficit with Ecuador was $1.3 billion in 2009.

Besides the US ambassador’s expulsion, an act that Foreign Minister Ricardo Patino called defending the presidential honor, President Correa himself, cited the importance of “the country’s dignity” before the ATPDEA.

Okay, but what else is going on over there besides the tit for tat headlines, and allegations of espionage?  In a few weeks, a referendum on a proposed set of constitutional changes which critics argued were really aimed at tightening Correa’s grip on the country’s institutions is also on. Read here and here.

The bad yanquis — always a reliable punching bag, rain or shine, but more so during referendums and elections.

Anyway, since ATPDEA seems to be in the news over there, perhaps we should look at our trade stuff with Ecuador (data from USTR):

Exports

  • Ecuador was the United States’ 41st largest goods export market in 2009.
  • U.S. goods exports to Ecuador in 2009 were $3.9 billion, up 13.8% ($477 million) from 2008, and up 229% from 1994 (the year prior to Uruguay Round).
  • The top export categories (2-digit HS) in 2009 were: Mineral Fuel (oil) ($1.0 billion), Machinery ($962 million), Electrical Machinery ($288 million), Plastic ($227 million), and Vehicles ($216 million).
  • U.S. exports of agricultural products to Ecuador totaled $223 million in 2009. Leading categories include: coarse grains ($59 million), soybean meal ($30 million), and wheat ($28 million).

Imports

  • Ecuador was the United States’ 41st largest supplier of goods imports in 2009.
  • U.S. goods imports from Ecuador totaled $5.3 billion in 2009, a 41.7% decrease ($3.8 billion) from 2008, but up 205% over the last 15 years.
  • The five largest import categories in 2009 were: Mineral Fuel (crude) ($3.5 billion) Edible Fruit and Nuts (bananas, plantains) ($485 million), Fish and Seafood (shrimp and prawns) ($483 million), Cocoa ($184 million), and Live Trees and Plants (cut flowers-roses) ($119 million).
  • U.S. imports of agricultural products from Ecuador totaled $927 million in 2009. Leading categories include: bananas and plantains ($437 million), cocoa beans ($172 million), and nursery products and cut flowers ($119 million).


If this diplomatic tit for tat gets worse, the export/import sector may become collateral damage. 

 
Related items:

Fifth Report to the Congress on the Operation of the Andean Trade Preference Act as Amended

CRS: ATPA Renewal: Background and Issues | January 21, 2011


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