Contemporary World Report

ECUADOR
Challenges and Economic World Policy

Reporter: Anna Marie R. Miano, Eric Vaugh Maquinana &

John Marlou Ante

Roilan Villegas
Ecuador

Ecuador is a country in
northwestern south America,
bordered by Columbia on the
north, Peru on the east and south,
and the Pacific Ocean on the west.
Ecuador also includes the
Galapagos Islands in the Pacific,
about 1,00 kilometers (621mi) west
of the mainland. The country’s
capital and largest city is Quito
Ecuador is known for producing

Ecuador is known for

Exports include crude oil
and derivatives, shrimp,
bananas, coffee, cut
flowers, cocoa, and
Panama Hats.
Exports In Pie Graph
Exports
6%

58%

90% 10%

22%

93%

Crude Oil Bananas Shrimp Coffee Panama Hats Cut Flowers

Crude Oil Bananas Shrimp Coffee

We must accept finite We must accept finite We must accept finite We must accept finite
disappointment, but disappointment, but disappointment, but disappointment, but
we must never lose we must never lose we must never lose we must never lose
infinite hope. infinite hope. infinite hope. infinite hope.
Exports In Pie Graph
Exports
6%

58%

90% 10%

22%

93%

Crude Oil Bananas Shrimp Coffee Panama Hats Cut Flowers

Panama Hats Cut Flowers

We must accept finite We must accept finite

disappointment, but disappointment, but
we must never lose we must never lose
infinite hope. infinite hope.
Ecuador is known for producing

Ecuador has the

third-most oil
reserves in Latin
America, after
Venezuela and Brazil.
 Challenges
PART 1 Let’ s all discover the Ecuador
Challenges of Ecuador

Poor prison conditions Violence

Indiscriminate use
Freedom of Expression of force
Challenges of Ecuador

Restriction on women’s
Challenges about
and girl’s access to
Crude Oil
reproductive health care
Challenges

Poor prison condition

Ecuador prison system is designed for about
30,00 inmates, but at last month, the 53
states prisons housed about 35,00 people

Violence
The murder in Ecuador nearly doubled in 2021
to 14 per 100,000 inhabitants, and reached 18
per 100,000 between January and October of
2022, according to official data
Challenges

Freedom of Expression
Eliminating the Superintendency of
Information and Communication
(SUPERCOM)

Indiscriminate use of force

Police uses indiscriminate force, including
firing teargas
Challenges

Women’s and children’s rights

Increasing rates of rape and sexual
violence against young girls and
adolescents

Challenges about crude oil

Land subsidence leading to outages and

ruptures to the SOTE and OCP pipelines
 Economic World Policy
Part two The policies of Ecuador
What is Economic Policy?

Economic Policy
The economy of governments covers the
system for setting levels of taxation

Economy Policy
government budgets, the money supply and interest
rates as the labor market, national ownership, and many
other areas of government interventions into the
economy.
ECONOMIC POLICIES AND TRADE PRACTICES

General Policy 01 02 Exchange Rate

Framework

03 04 Debt Management
Structural Policies Policies
ECONOMIC POLICIES AND TRADE PRACTICES

Significant Barriers 05 06 Export Subsidies

Policies
to U.S Exports

Protection of US
07 08
Workers Rights
Intellectual Policy
GENERAL POLICY FRAMEWORK

The Ecuadorian economy is based on petroleum production, along with exports of bananas,
shrimp, and other primary agricultural products.

Industry is largely oriented to servicing the domestic market, but is becoming more export-
oriented. During the oil boom of the 1970's, the Ecuadorian government borrowed heavily
from abroad, subsidized consumers and producers, and expanded the state's role in economic
production. These policies led to chronic macroeconomic instability in the 1980's. Since 1992,
the government of President Sixto Duran-Ballen has sought to stabilize the economy,
modernize the state, and expand the role of the free market. While the macroeconomic
program has been relatively successful, the economy suffered a series of shocks during 1995
and the government has had difficulty implementing the structural reforms required to
improve the investment climate and prospects for long-term growth.
Exchange Rate Policy

In 1992, Ecuadorian monetary authorities carried out a substantial one-time devaluation,

liberalized exchange rate policy and embarked on a controlled float of the sucre. A high
interest rate differential between Ecuador and the United States attracted substantial net
capital inflows and kept the nominal depreciation of the sucre below the rate of inflation. The
strong currency and earlier trade liberalization measures made imports more competitive and
served as an anchor against inflation. Ecuadorian exporters, however, are increasingly caught
between rising sucre costs and stagnant sucre earnings.
Structural Policies

The Duran-Ballen administration has enjoyed only partial success with a structural reform
program designed to promote investment and economic growth. Progress was made on
budgetary reform, reduction of public employment levels, and elimination of unnecessary and
market-distorting regulations. With a few exceptions for pharmaceuticals, some foodstuffs,
and fuels, all prices are now set by the free market. New laws have estabished a basis for the
development of equity capital markets, modern regulation of financial institutions, and
improvement in the security of agricultural land tenure for both peasants and agrobusiness. In
most cases, however, implementation has lagged behind legislation.
Debt Management Policies
In February 1995, Ecuador and its commercial creditors exchanged financial instruments to
complete a comprehensive restructuring of its $7.1 billion external commercial bank debt and
associated arrears. Under the agreement, creditors exchanged existing instruments for new
bonds carrying a 45 percent discount or for par bonds with fixed interest rates varying from 3
to 5 percent. The government spent about $540 million, using multilateral bank financing, to
purchase collateral for debt principal and interest. Service on the commercial debt should
average about 1.7 percent of GDP through the year 2000, but will rise thereafter unless the
government takes steps to retire some of its debt stock

Significant Barriers to U.S. Exports

Ecuadorian trade policy was substantially liberalized during the early 1990's, resulting in a
reduction of tariffs and tariff dispersion, elimination of most non-tariff surcharges, and
enactment of an in-bond processing industry (maquila) law. The Duran-Ballen
administration continued the move towards open trade by concluding bilateral free trade
agreements with its Andean Pact partners Colombia, Bolivia, and Venezuela. After two
years of negotiations with its major trading partners, Ecuador signed its accession to the
World Trade Organization (WTO) in September 1995, and became a WTO member on
January 30, 1996.
Export Subsidies Policies
Ecuador does not have any explicit export subsidy programs. The government has terminated a
temporary program to compensate banana and shrimp exporters for increases in fuel costs

Worker Rights
a. The Right of Association: Under the Ecuadorian constitution and labor code, most
workers in the private and parastatal sectors enjoy the right to form trade unions. The
revised labor code of November 1991 raised the number of workers required for an
establishment to be unionized to 30. Less than 14 percent of the labor force, mostly skilled
workers in parastatal or medium to large sized industries, is organized. Except for some
public servants and workers in some parastatals, workers by law have the right to strike.
Sitdown strikes are allowed, but restrictions on solidarity strikes were imposed in 1991.
Ecuador does not have a high level of labor unrest. Most strike activity involves public
sector employees
Worker Rights
b. The Right to Organize and Bargain Collectively: Employers with more than 30
workers belonging to a union are required to engage in collective bargaining when
requested by the union. The labor code prohibits discrimination against unions,
requires that employers provide space for union activities, and provides for resolution
of conflicts through a tripartite arbitration and conciliation board process. Employers
are not permitted to dismiss permanent workers without the express permission of the
Ministry of Labor. Despite reforms in 1991, employers consider the labor code to be
unfavorable to their interests.

The in-bond (maquila) law permits the hiring of temporary workers in maquila
industries, effectively limiting unionization in the sector.

c. Prohibition of Forced or Compulsory Labor: Compulsory labor is prohibited by both

the constitution and the labor code and is not practiced
Worker Rights
d. Minimum Age for Employment of Children: Persons yournger than 14 years old are
prohibited by law from working except in special circumstances such as
apprenticeships. Those between the ages of 14 and 18 are required to have the
permission of their parent or guardian to work. In practice, many rural children begin
working as farm laborers at about 10 years of age, while poor urban children under
age 14 often work for their families in the informal sector.

e. Acceptable Conditions of Work: The labor code provides for a 40-hour work week,
two weeks annual vacation, a minimum wage, and other variable employer-provided
benefits such as uniforms and training opportunities. The minimum wage is set by the
Ministry of Labor every six months and can be adjusted by Congress. Mandated
bonuses bring total monthly compensation to about $140. The Ministry of Labor also
sets specific minimum wages by job and industry so that the vast majority of organized
workers in state industries and large private enterprises earn substantially more than
the general minimum wage.
Worker Rights
f. Rights in Sectors with U.S. Investment: The economic sectors with U.S. investment
include petroleum, chemicals and related products, and food and related products. U.S.
investors in these sectors are primarily large, multinational companies which abide by
the Ecuadorian labor code. In 1995 there were no strikes or serious labor problems in
any U.S. subsidiary. U.S. companies are subject to the same rules and regulations on
labor and employment practices governing basic worker rights as Ecuadorian
companies.

Protection of US Intellectual Property

Ecuador's protection of patent and trademark rights is based on Andean Pact
Decisions 344 and 345, while copyrights are covered by Decision 351. The
decisions provide 20-year patent terms (except for some pharmaceuticals),
protection for plant varieties, and control of parallel imports. Ecuador's
implementing regulations provide transitional or pipeline protection for
patents registered during 1994.
Protection of US Intellectual Property

Ecuador and the U.S. signed a bilateral Intellectual Property Rights Agreement
(IPRA) in October 1993 that guarantees full protection for copyrights,
trademarks, patents, satellite signals, computer software, integrated circuit
layout designs, and trade secrets. However, the Ecuadorian Congress has not
ratified the IPRA or enacted legislation to harmonize local law with the
agreement's requirements.

Enforcement of intellectual property rights remains a problem for Ecuador.

Copyright infringement occurs and there is widespread local trade in pirated
audio and video recordings, as well as computer software. Local registration of
unauthorized copies of well-known trademarks is a problem since the
government lacks the resources to monitor and control such registrations. If a
recent court decision is upheld, foreign trademark owners may be prevented
from terminating license arrangements with Ecuadorian companies. Some local
pharmaceutical companies produce or import patented drugs without licenses
and have sought to block improvements in IPR protection.
REPORTER

ERIC VAUGHN JOHN MARLOU

Export Subsidies General Policy Framework,
Policies, Structural Debt Management, Significant
Policies, Exchange Rate Barriers of US Intellectual

ANNA MARIE
Challenges, Ecuador,
Workers Rights,
Protection of US
Intellectual Policy
Thank you
We must accept finite disappointment, but we must never
lose infinite hope.

www.jpppt.com