Many news reports have recently suggested that the Ecuadoran government is on the verge of expelling Julian Assange from its embassy in London. Back in 2012, there was a suggestion that Ecuador’s preferential trading relationship with the US might be put at risk on account of the Assange affair. I am unaware of any direct evidence that the US/Ecuador trade relationship is related to the recent speculation about Mr. Assange’s future, but I offer for your consideration this update on trade with Ecuador. It seems plausible to me that the two issues are linked.
In 1991, Congress enacted the Andean Trade Preference Act. The purpose of the Act was to help four Andean countries, including Ecuador, to create economic alternatives to drug production and trafficking. In prior posts, I discussed Chevron’s lobbying against Ecuador’s continuing receipt of trade preferences under the Act.
The legal landscape has changed, and due to a lapse in the President’s authority to authorize preferences under the Act, Ecuador no longer has preferential treatment under ATPA. However, Ecuador is still designated as a Beneficiary Developing Country under the Generalized System of Preferences. In 2016, according to figures from US Customs and Border Protection, the trade preference was worth $390 million to Ecuador, which in that year had a GDP of $97.8 billion.
Under the law, a country is ineligible for this designation if it
fails to act in good faith in recognizing as binding or in enforcing arbitral awards in favor of United Citizens or a corporation … which is 50 percent or more beneficially owned by United States citizens, which have been made by arbitrators appointed for each case or by permanent arbitral bodies to which the parties have submitted their dispute.
In 2012, the US Trade Representative invited “petitions … to review the GSP status of any beneficiary developing country.” Chevron filed a petition in October 2012 seeking withdrawal of suspension of Ecuador’s designation on the same grounds I noted in my earlier posts—Ecuador’s failure to comply with the interim award in the Ecuador/Chevron BIT arbitration requiring Ecuador to suspend the operation of the Lago Agrio judgment pending the outcome of the arbitration. Ecuador’s basic defense is as it was before: under the doctrine of separation of powers, the executive lacked the power to suspend the effect of a valid judgment in a private litigation—that it is in the same situation the United States found itself in in the Medellín case. Of course, in that case the United States was in the wrong, but it’s still a reasonable argument to make. Ecuador also claims that the rule of ineligibility doesn’t apply because the award in question is an interim award. All of the documents are publicly available.
A FOIA request to the USTR didn’t reveal anything new or interesting, except evidence that Chevron, as we know it did before, has been keeping the USTR in the loop on developments in the Ecuador litigation, and a statement, in an email from André Montalvo, then the chargé d’affaires a.i. at Ecuador’s embassy, to Erland Herfindahl, Deputy US Trade Representative for the GSP, indicating that the case is a “very important case for us.”
Some more facts. Vice President Pence had a closed-door meeting with President Moreno about a month ago. According to VOA, “Winning back trade privileges that Ecuador’s former president, Rafael Correa, rejected were expected to be a central part of the talks …” The two men discussed Mr. Assange at the meeting. A hearing was held on Chevron’s petition to the USTR in September 2017, and both Chevron and Ecuador submitted post-hearing briefs in mid-October. The USTR has made no decision.
So here is the speculation. The USTR is in the Executive Office of the President, and the statutory power to designate countries for the GSP president was delegated expressly to the President, not to any cabinet secretary. So to the extent that the USTR’s decisions are or are perceived to be subject to political influence, it seems plausible in light of the timing to think that it’s not just Ecuador’s failure to comply with the interim award that is in play—its continued sheltering of Mr. Assange may also be playing a role in the USTR’s decision behind the scenes. And while this doesn’t appear in the papers filed publicly, perhaps Ecuador has an implicit card to play in its case against Chevron—if it expels Mr. Assange from its embassy in London, perhaps its chance to keep its trade preference goes up. And so perhaps there is some tension, behind the scenes, between what the United States wants from Ecuador and what Chevron wants from Ecuador and from the USTR.