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The Honorable Howard L. Berman
U.S. House of Representatives
2221 Rayburn House Office Building
Washington, DC 20515-0528
Dear Congressman Berman:
On May 22 the National Foreign Trade Council (NFTC), an association of some 300 U.S. companies engaged in international trade and investment, wrote the U.S. Trade Representative in response to a Federal Register notice requesting comment regarding Ecuador’s compliance with the eligibility criteria of the Andean Trade Preference Act (ATPA) and the Generalized System of Preferences (GSP).
Ecuador has violated its commitments under the U.S.-Ecuador Bilateral Investment Treaty (BIT) which commits both parties to enforce the judgments of arbitration panels. In the Lago Agrio case after 18 years of heavily contested litigation an Ecuadorian court ordered Chevron to pay $18 billion for environmental damages by Texaco prior to its acquisition by Chevron. A tribunal convened under the BIT directed the Ecuadorian government to prevent enforcement of the court’s judgment. Ecuador has refused to comply with the tribunal’s order, inaccurately maintaining that they are not bound by the judgments of a BIT panel whose ruling President Correa has called a “monstrosity.”
I am attaching the May 22 letter in which the NFTC urged USTR to cite Ecuador’s breach of its commitment to honor and enforce judgments of arbitration panels under the U.S.-Ecuador BIT. Bilateral Investment Treaties are vital elements of U.S. trade policy. The USTR has recently updated its model BIT and efforts are underway to negotiate BITs with some of our major trading partners. It is therefore of great importance that the U.S. upholds the integrity of commitments made under BITs, especially compliance with arbitral decisions by BIT panels. The NFTC hopes Congress will take note of the failure of Ecuador to honor the panel decision in the case of Chevron. If Ecuador continues to ignore its obligations the U.S. should revoke the trade preference privileges extended under the ATPA and the GSP.
William A. Reinsch
Advancing Global Commerce for Nearly A Century