Investment Climate Statements for 2016 - Ecuador

Executive Summary

Ecuador is a country straddling the equator on South America’s west coast between Colombia and Peru. From 2006 to 2014 the Ecuadorian economy grew an average of over four percent per year. Growth decreased to 0.3 percent in 2015 due in part to the drop in the price of petroleum and the appreciating dollar, which Ecuador uses as its national currency. Ecuador is relatively open to foreign investment in most sectors; however, foreign direct investment (FDI) inflows are very low in comparison to other Latin American countries. The government has taken some steps recently to attract investment including passing a public-private partnership law, changing tax and regulatory policies for mining, and signing investment contracts with multinational petroleum companies. Ecuador also agreed on terms of payment of an international arbitration award to a U.S. petroleum company and, in December 2015, repaid a global bond on time for the first time in its history.

Economic, commercial, and investment policies are sometimes contradictory and are subject to frequent changes. The legal uncertainty resulting from frequent policy changes increases the risks and costs of doing business. Systemic weaknesses in the judicial system and its susceptibility to political or economic pressures are issues for U.S. companies investing in or trading with Ecuador. The existing U.S.-Ecuador Bilateral Investment Treaty (BIT) provides guarantees for national treatment; unrestricted remittances and transfers; prompt, adequate, and effective compensation for expropriation; and the resolution of investment disputes through international arbitration.

In April 2016, Ecuador partially extended tariff surcharges it introduced in March 2015. The surcharges of 15, 25, and 40 percent apply to roughly 2,200 products and phase-out was extended from June 2016 to June 2017.

Foreign investors may remit 100 percent of net profits and capital, subject to a capital exit tax currently set at five percent. Ecuadorian law requires private companies to distribute 15 percent of pre-tax profits to employees each year.

In April 2016, the United States Trade Representative moved Ecuador from Priority Watch List to Watch List to in its annual Special 301 Report on intellectual property. This decision was in recognition of Ecuador’s passage of an amendment reinstating criminal procedures and penalties for intellectual property violations.

Table 1

Measure	Year	Index or Rank	Website Address
TI Corruption Perceptions index	2014	110 of 175	transparency.org/cpi2014/results
World Bank’s Doing Business Report “Ease of Doing Business”	2015	117 of 189	doingbusiness.org/rankings
Global Innovation Index	2015	Data Not Available	globalinnovationindex.org/ content/page/data-analysis
U.S. FDI in partner country ($M USD, stock positions)	2014	650	BEA/Host government
World Bank GNI per capita	2014	$6,090	data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Attitude toward Foreign Direct Investment

Ecuador is open to foreign investment (FDI) in most sectors. Although Ecuador has taken steps recently intended to attract FDI, its overall investment climate remains challenging as Ecuador’s economic, commercial, and investment policies are often subject to change. The regulatory framework has specifically targeted the banking and media sectors, negatively affecting these industries. Frequent changes in Ecuador’s import policies and tax code make business planning difficult.

In general, the legal complexity resulting from the inconsistent application and interpretation of existing laws complicates enforcement of contracts and increases the risks and costs of doing business in Ecuador. Business disputes with U.S. companies can become politicized, especially in sensitive areas such as the energy sector. Several high level investment disputes involving U.S. companies, mostly linked to the energy sector, are under international arbitration.

Other Investment Policy Reviews

In the past three years, Ecuador has not conducted an investment policy review with the Organization for Economic Cooperation and Development (OECD), World Trade Organization (WTO), or United Nations Conference on Trade and Development.

Laws/Regulations on Foreign Direct Investment

The Organic Law for Production Incentives and Tax Fraud Prevention, passed in December 2014, includes provisions to improve tax stability and lower the income tax rate in the mining sector.

The Superintendence of Companies, Securities, and Insurance offers information for registering businesses on its website at http://www.supercias.gob.ec/.

Business Registration

Ecuador’s business registration website is http://www.supercias.gob.ec/portalConstitucionElectronica/

A newly created company will at a minimum be required to register with the Superintendence of Companies, the municipal government, the Internal Revenue Service, and the Social Security Institute.

The Ecuadorian government defines a micro-sized enterprise as one having up to 10 employees, a small-sized enterprise as one having up to 50 employees, and a medium-sized enterprise as one having between 50 and 100 employees. The Ecuadorian government provides some tax incentives for micro, small, and medium-sized businesses.

Industrial Promotion

The Coordinating Ministry of Strategic Sectors publishes a catalogue of investments in strategic sectors on its website at http://www.sectoresestrategicos.gob.ec/.

The Coordinating Ministry for Production, Employment, and Competitiveness offers information on investing in Ecuador on its website at http://www.produccion.gob.ec/.

Limits on Foreign Control and Right to Private Ownership and Establishment

One hundred percent foreign equity ownership is allowed without the need for authorization or prior screening in sectors open to domestic private investment.

Articles 313 through 315 of the 2008 Constitution establish that the state is responsible for management of strategic sectors through state-owned or controlled companies. The sectors identified include: energy, telecommunications, non-renewable natural resources (includes petroleum, natural gas, and mining), transportation, hydrocarbon refining, water, biodiversity, and genetic patrimony. In the last few years, new state companies were formed in mining and pharmaceuticals.

For license and franchise transactions, no limits exist on royalties that may be remitted. All license and franchise agreements must be registered with the Ecuadorian Intellectual Property Institute (IEPI). In addition to registering with the Superintendence of Companies, Securities, and Insurance, foreign investors must register investments with Ecuador’s Central Bank for statistical purposes.

Selected Sectors:

Petroleum

Per the 2008 Constitution, all subsurface resources belong to the state. The petroleum sector is controlled by two state owned enterprises (SOEs). Ecuador has signed several contracts with multinational petroleum services companies since 2014. Most fuel prices are controlled and subsidized by the central government.

Mining

The Ecuadorian government has taken steps to reduce taxes in the mining sector in order to attract foreign direct investment. Presidential Decree 475, published in October 2014, altered the windfall tax calculation. The Organic Law for Production Incentives and Tax Fraud Prevention, passed in December 2014, included provisions to improve tax stability and lower the income tax rate in the mining sector. The Government of Ecuador also created a separate ministry of mines, which was previously within the Ministry of Non-Renewable Resources.

Electricity

The Organic Law for the Public Service of Electric Energy, which took effect in January 2015, permits some private sector participation and foreign investment in Ecuador’s electricity sector. Per the 2008 Constitution, the electricity sector is a public service and strategic sector.

Telecommunications

In February 2015, Ecuador’s National Assembly passed a telecommunications law that requires telecommunications companies to pay a percentage of revenue to the government. This requirement applies to providers of cellular and fixed line telephone service, internet service, and subscription television with more than 30 percent of market share. The payments range from 0.5 to 9 percent of revenue.

Media

The 2013 Communications Law prohibits partial or total ownership of media businesses by foreign companies or citizens that do not reside permanently in Ecuador. This provision applies to all media owners (radio, subscription video, audio, television, and printed press) with products that reach 30 percent or more of the population. Implementing regulations for the law softened this prohibition to allow citizens or companies from countries that have signed bilateral commercial or economic agreements with Ecuador to own media companies. The United States has no such agreement with Ecuador. The Communications Law also introduced a requirement that advertising disseminated in Ecuador must have 80 percent domestic content. It also requires that television and radio frequencies are distributed 33 percent to private media, 33 percent to public media, and 34 percent to community media.

The government controls a large share of radio, television, and other press holdings. Article 312 of the Constitution prohibits financial institutions, their shareholders, board members, and legal representatives from media ownership. In addition, the Organic Law for Regulation and Control of Market Power, enacted in October 2011, prohibits anyone possessing more than a six percent interest in a media company from investing in any other business sector.

Fishing

Foreign investment in domestic fishing operations is subject to approval by the National Fisheries Development Council. Extractive fishing by foreign companies is permitted provided that the catch is processed in Ecuador.

Privatization Program

Ecuador is not implementing a privatization program.

Screening of FDI

One hundred percent foreign investment in domestic companies is allowed without prior authorization or screening in sectors open to domestic private investment.

Competition Law

The Superintendence of Control of Market Power reviews transactions for competition-related concerns.

2. Conversion and Transfer Policies

Foreign Exchange

Ecuador adopted the U.S. dollar (USD) as the official currency in 2000. Foreign investors may remit 100 percent of net profits and capital, subject to a five-percent capital exit tax. There are no restrictions placed on foreign investors in transferring or repatriating funds associated with an investment.

Remittance Policies

Resolution 107-2015-F from Ecuador’s Monetary and Finance Board issued in July 2015 exempted some payments to foreign lenders from the capital exit tax. Among other requirements, the duration of the loan must be more than 360 days, the loan must be registered with the Central Bank, and the resources must be destined for specific purposes such as to fund small businesses or social housing.

The Financial Action Task Force (FATF) announced October 23, 2015 that it had removed Ecuador from the list of countries with strategic deficiencies in anti-money laundering and countering the financing of terrorism (AML/CFT) regimes.

3. Expropriation and Compensation

The Constitution establishes that the state is in charge of managing the use and access to land, while recognizing and guaranteeing the right to private property. It also provides for the redistribution of land if it has not in active use for more than two years.

The 2015 Telecommunications Law allows expropriation of private land in accordance with the rules and procedures of the law when necessary for the installation of network infrastructure.

Under Ecuador's Bilateral Investment Treaty (BIT) with the United States, expropriation can only be carried out for a public purpose, in a nondiscriminatory manner, and upon payment of prompt, adequate, and effective compensation.

4. Dispute Settlement

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Ecuador has a civil codified legal system. Systemic weakness in the judicial system and its susceptibility to political and economic pressures constitute challenges faced by U.S. companies investing in Ecuador. Enforcement of contract rights, equal treatment under the law, Intellectual Property protections, and unstable regulatory regimes are concerns.

Bankruptcy

Ecuador is ranked 148 out of 189 in the category of Ease of Resolving Insolvency in the 2016 World Bank's Doing Business Report.

With the goal of protecting consumers and preventing a real estate bubble, the National Assembly approved in June 2012 a law that allows homeowners to default on their first home and car loan without penalty if they forfeit the asset. The provisions do not apply to homes with a market value of more than USD 146,000 or vehicles worth more than USD 29,200.

Investment Disputes

A number of U.S. companies operating in Ecuador, most notably in the petroleum sector, have filed for international arbitration due to investment claims. The GOE has treated these disputes as a political issue, speaking negatively about investors involved in these cases.

In January 2016, the Government of Ecuador reached an understanding with Occidental Petroleum on the terms of payment for the amount payable to Occidental under a November 2015 ICSID arbitration award. The award related to Ecuador’s 2006 expropriation of the company’s concession for Block 15 petroleum field.

International Arbitration

U.S Investors guarantees under the U.S.-Ecuador BIT include the access to dispute mechanisms to resolve any investment claim arising out of the treaty. The treaty names the International Centre for the Settlement of Investment Disputes (ICSID) as the venue. Ecuador's 2008 constitution prohibits the ceding of sovereign jurisdiction in disputes with private companies before international tribunals. In March 2013, President Correa requested that Ecuador’s National Assembly terminate the U.S.-Ecuador BIT, arguing it was inconsistent with Ecuador’s 2008 Constitution. Efforts to terminate the BIT have not progressed and the treaty remains in place.

ICSID Convention and New York Convention

Ecuador was formerly a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Ecuador withdrew from the ICSID Convention in 2010. Ecuador is a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Duration of Dispute Resolution – Local Courts

The judicial system is subject to delays in the process and inconsistent rulings. Systemic weakness in the judicial system and its susceptibility to political and economic pressures constitute important problems faced by U.S. companies investing in or trading with Ecuador.

5. Performance Requirements and Investment Incentives

WTO/TRIMS

In 2014, the government negotiated over 900 import substitution agreements with companies. The companies were committed to reducing their imports and to start substituting imported goods with locally producing goods. In exchange, the government relaxed import regulations for those companies to import products that are restricted under quality and standards regulations enacted beginning in December 2013. These contracts have not been publicly released. Contacts report the government no longer requires these agreements from importers, but that the required reductions in imports remain in place.

Investment Incentives

In December 2015, Ecuador’s National Assembly approved a Public-Private Partnership law intended to attract investment. The law offers incentives including the reduction of the income tax, value added tax, and capital exit tax, for investors in certain projects. It designates Latin American arbitration bodies as the dispute resolution mechanism. The law became effective upon publication in the official registry on December 18, 2015.

The Organic Law of Production Incentives and Tax Fraud Prevention, which took effect on December 30, 2014, provides for tax incentives related to depreciation calculations and income tax rates, which could benefit some foreign investors.

In May 2011, Ecuador launched the Institute for Export and Investment Promotion (PRO ECUADOR), which focuses on export promotion.

Research and Development

There is no prohibition on foreign firms participating in government financed research and development programs.

Performance Requirements

Visa and residency requirements are relatively relaxed and do not inhibit foreign investment.

The government promotes a policy of import substitution and encourages the use of local content including by relaxing import regulations for companies that commit to reduce imports and increase purchases of locally produced goods.

Committee of Foreign Trade (COMEX) Resolution 011-2015, which took effect March 11, 2015, applied tariff surcharges from 5 to 45 percent on almost 3,000 tariff lines. In its notification to the World Trade Organization (WTO), Ecuador argued the tariff surcharges were necessary to protect Ecuador’s balance of payments in response to decreased oil prices and the appreciation of the U.S. dollar. In January 2016, Ecuador reduced the 45 percent tariff surcharge to 40 percent. In April 2016, Ecuador eliminated the tariff surcharge of 5 percent and extended the tariff surcharges of 15, 25, and 40 percent on roughly 2,200 products. The surcharges are now scheduled to be phased-out by June 2017.

Data Storage

There are no requirements for foreign IT providers to turn over source code or provide access to surveillance.

6. Protection of Property Rights

Real Property

Ecuador ranks 69 out of 189 in the 2016 World Bank’s Doing Business Report’s category for Ease of Registering Property.

Intellectual Property Rights

Enforcement against intellectual property infringement remains a problem in Ecuador.

Piracy of computer software and counterfeit activity in brand name apparel is widespread. Pirated CDs and DVDs are readily available on many streets and in shopping malls. Weak copyright enforcement remains a significant problem.

The Ecuadorian Intellectual Property Institute (IEPI) was established in January 1999 to handle patent, trademark, and copyright registrations. IEPI reports information on its activities on its website at http://www.propiedadintelectual.gob.ec/.

Resources for Rights Holders

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Embassy point of contact: ecuadorcommercial@state.gov.

Local attorneys list: http://ecuador.usembassy.gov/service/assistance.html

Camara de Comercio Ecuatoriano Americana (AmCham) Quito: http://www.amchamec.org/

Camara Ecuatoriano Americana de Comercio (AmCham) Guayaquil: http://www.amchamgye.org.ec/

7. Transparency of the Regulatory System

Ecuador’s 2011 Organic Law for Regulation and Control of Market Power in October includes mechanisms to prevent, control, and sanction market power abuses, restrictive market practices, economic concentration, and unfair competition. The regulatory body, the Superintendence of Control of Market Power, can fine companies found to be in violation of the law up to 12 percent of gross revenue.

8. Efficient Capital Markets and Portfolio Investment

The 2014 Law to Strengthen and Optimize Business Partnerships and Stock Markets created the Securities Market Regulation Board to oversee the stock markets.

Money and Banking System, Hostile Takeovers

The country’s largest banks are Banco Pichincha, with about USD 9 billion in assets, Banco Pacifico, with about USD 4.6 billion, Banco Guayaquil, with about USD 3.6 billion, and Banco Produbanco, also with about USD 3.6 billion in assets.

Between 2012 and 2013, the financial sector was the target of numerous new restrictions. By 2012, most banks had sold off their brokerage firms, mutual funds, and insurance companies to comply with constitutional changes following a May 2010 referendum. The amendment to Article 312 of the Constitution required banks and their senior managers and shareholders with more than six percent equity in financial entities to divest entirely from any interest in all non-financial companies by July 2012. These provisions were incorporated into the Anti-Monopoly Law passed in September 2011.

The Organic Monetary and Financial Code, published in the official registry September 12, 2014, created a five-person Monetary and Financial Policy and Regulation Board of presidential appointees to regulate the banking sector. The law gives the Monetary and Financial Policy and Regulation Board the ability to prioritize certain sectors for lending from private banks. The law also created an electronic currency to be administered by Ecuador’s Central Bank and backed by its assets.

Ecuador’s Central Bank was established in 1927. Since Ecuador’s dollarization in 2000, the Central Bank is no longer the lender of last resort.

The Central Bank issued Regulation 29 in July 2012, requiring all financial transfers (inflows and outflows) to be channeled through the Central Bank’s accounts. In principle, the regulation increases monetary authorities’ oversight and prevents banks from netting their inflows and outflows to avoid paying the five-percent capital exit tax.

9. Competition from State-Owned Enterprises

The 2009 Organic Law of Public Enterprises regulates state-owned enterprises (SOEs). SOEs are most active in areas designated by the 2008 Constitution as strategic sectors, especially non-renewable natural resources, telecommunications, and transportation.

SOEs follow a special procurement regime with greater flexibility and limited oversight. The Law of Public Enterprises requires SOEs to follow generally accepted accounting principles; however, SOEs are not required to follow the same accounting practices as the central government, nor do they have to participate in the electronic financial management system used in most of the public sector for budget and accounting management. SOEs are eligible for government guarantees, and face lower tax burdens than private companies.

There are at least 28 SOEs in Ecuador concentrated primarily in the petroleum, electricity, and telecommunications sectors. The government also owns an airline, a railroad company, a cement company, and a university. Two SOEs, Petroamazonas and Petroecuador, control the petroleum sector.

Ecuador is not party to the Government Procurement Agreement (GPA) within the framework of the World Trade Organization (WTO).

OECD Guidelines on Corporate Governance of SOEs

Third-party analysts generally assess that SOEs maintain some degree of independence from the government. Ecuadorian courts generally favor SOEs and court processes are often nontransparent.

Sovereign Wealth Funds

The Government of Ecuador does not maintain a Sovereign Wealth Fund (SWF).

10. Responsible Business Conduct

Article 66 of the 2008 Constitution guarantees the right to pursue economic activities in a manner that is socially and environmentally responsible. NGOs such as the Institute of Corporate Social Responsibility and the Ecuadorian Consortium for Social Responsibility promote responsible business conduct. Many Ecuadorian companies have programs to further responsible business conduct within their organizations.

11. Political Violence

Ecuador does not have a tradition of frequent violence as a result of demonstrations or political instability. Student, labor union, and indigenous protests against government policies have been a regular feature of political life in Ecuador. While disruptive, especially to transportation, violence is usually limited and localized. Popular protests in 1997, 2000, and 2005 contributed to the removal of three elected presidents before the end of their terms. Large-scale but peaceful demonstrations against the Correa government occurred in June 2015.

Some indigenous communities opposed to development have blocked access to petroleum and mining companies.

12. Corruption

Corruption is a serious problem in Ecuador. Ecuador ranked 110 out of 175 countries surveyed for Transparency International's 2014 Corruption Perceptions Index and received a score of 33 out of 100.

Ecuador has laws and regulations to combat official corruption, but they are inadequately enforced. Illicit payments for official favors and theft of public funds reportedly take place frequently. Dispute settlement procedures are complicated by the lack of transparency and inefficiency in the judicial system.

Offering or accepting a bribe is illegal and punishable by imprisonment for up to five years. The Controller General is responsible for the oversight of public funds and there are frequent investigations and occasional prosecutions for irregularities.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Ecuador ratified the UN Anticorruption Convention in September 2005. Ecuador is not a signatory to the OECD Convention on Combating Bribery. The 2008 Constitution created the Transparency and Social Control branch of government, tasked with preventing and combating corruption, among other things. In December 2008, President Correa issued a decree that created the National Secretariat for Transparency to investigate and denounce acts of corruption in the public sector. Both entities can conduct investigations into alleged acts of corruption. Responsibility for prosecution remains with the Office of the Prosecutor General.

Resources to Report Corruption

Through the Function of Transparency and Social Control, alleged acts of corruption can be reported by dialing 159 within Ecuador. The Council for Citizen Participation and Social Control also maintains a web portal for reporting alleged acts of corruption: http://www.cpccs.gob.ec.

13. Bilateral Investment Agreements

In 1993, the United States and Ecuador signed a BIT, which entered into force in 1997. This treaty provides for national treatment; unrestricted remittances and transfers; prompt, adequate, and effective compensation for expropriation; and access to international arbitration to resolve any investment dispute. In March 2013, President Correa requested that Ecuador’s National Assembly terminate the U.S.-Ecuador BIT, arguing it was inconsistent with Ecuador’s 2008 Constitution. Efforts to terminate the BIT have not progressed and the treaty remains in place.

Bilateral Taxation Treaties

Ecuador does not have a bilateral taxation treaty with the United States.

14. OPIC and Other Investment Insurance Programs

Ecuador has had an Investment Guarantee Agreement with the Overseas Private Investment Corporation. Ecuador is also a signatory to the Multilateral Investment Guarantee Agreement.

15. Labor

Semi-skilled and unskilled workers are relatively abundant at low wages. The supply of available workers increased in 2015 due to layoffs in sectors affected by the downturn in Ecuador’s economy. The National Wages Council and Ministry of Labor Relations set minimum compensation levels for private sector employees annually. The minimum basic salary for 2016 is USD 366 per month. Mandatory bonuses and other contributions pushed total compensation to over USD 400 per month.

Ecuador’s Production Code requires that workers be paid a dignified wage, defined as an amount that would enable a family of four with 1.6 wage earners to be able to afford the basic necessities. The cost and the products that are considered basic necessities are determined by Ecuador’s Statistics Institute (INEC). In March 2016, the cost of basic necessities was USD 680.70, while the official family wage level is at USD 683.20. As of December 2015, INEC estimated Ecuador’s unemployment rate at 4.77 percent and inadequate employment at 48.09 percent.

Ecuador’s National Assembly passed a labor reform law in March 2016 intended to promote youth employment, support unemployed workers, and introduce greater labor flexibility for companies suffering from reduced revenue. The law established a new unemployment insurance program, a subsidized youth employment scheme, temporary reductions in workers’ hours for financially-strapped companies, and nine months of unpaid maternity or paternity leave.

The Law for Labor Justice and Recognition of Work in the Home, which included several changes related to labor and social security, took effect in April 2015. The law eliminated the requirement that the government contribute 40 percent of pension obligations to Ecuador’s Institute of Social Security (IESS). The requirement was replaced with a government guarantee that it will provide funding to IESS in the case that IESS does not have the resources from employee and employer contributions to make the payments. The law also lowered the yearly percentage increase in pension payments to match inflation. The law limited the yearly bonus paid to employees, which is equal to 15 percent of companies’ profits and is required by law, to 24 times the minimum wage. Any surplus profits are to be handed over to IESS. The law also limits the tax deduction for salaries companies are allowed to pay top executives to a multiple of the lowest salary paid to a company employee. The multiple will be set considering the size of the company, income, number of employees, sector, and other factors. The law also mandates that employees’ thirteenth and fourteenth month bonuses, which are required by law, be paid in installments throughout the year instead of in lump sums. Employees have the option to opt out of this change and continue to receive the payments in lump sums. The law eliminated fixed-term employee contracts and replaced them with indefinite contracts, which shortens the allowable trial period for employees to 90 days. The law also allowed participation in social security pensions for non-paid work at home.

Trained financial professionals and engineers can be difficult to attract and many graduates require additional training to reach international standards. Little post-graduate education exists in Ecuador, and scientists and medical professionals are nearly all foreign-trained. Masters-level degrees are widely offered, but relatively few are competitive with international quality levels. Upper-level Ecuadorian business managers have frequently been educated abroad and often in the United States.

The Labor Code provides for a 40-hour work week, 15 calendar days of annual paid vacation, restrictions and sanctions for those who employ child labor, general protection of worker health and safety, minimum wages and bonuses, maternity leave, and employer-provided benefits.

The 2008 Constitution bans child labor, requires hiring workers with disabilities, and prohibits strikes in most of the public sector. Unpaid internships are not permitted in Ecuador.

Most workers in the private sector and at SOEs have the constitutional right to form trade unions and local law allows for unionization of any company with more than 30 employees. Private employers are required to engage in collective bargaining with recognized unions. The Labor Code provides for resolution of conflicts through a tripartite arbitration and conciliation board process. The Code also prohibits discrimination against union members and requires that employers provide space for union activities.

Workers fired for organizing a labor union are entitled to limited financial indemnification, but the law does not mandate reinstatement. The Public Service Law enacted in October 2010 prohibits the vast majority of public sector workers from joining unions, exercising collective bargaining rights, or paralyzing public services in general. The Constitution lists health; environmental sanitation; education; justice; fire brigade; social security; electrical energy; drinking water and sewerage; hydrocarbon production; processing, transport, and distribution of fuel; public transport; and post and telecommunications as strategic sectors. Public workers who are not under the Public Service Law may join a union and bargain collectively since they are governed by the provisions under the Labor Code.

16. Foreign Trade Zones/Free Ports/Trade Facilitation

The 2010 Production Code authorized the creation of Special Economic Development Zones (ZEDEs) that are subject to reduced taxes and tariffs. The government considers the extent to which projects promote technology transfer, innovation, and industrial diversification when granting ZEDE status.

17. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Host country data is from the Central Bank of Ecuador. The Central Bank publishes FDI calculated as net flows only.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

	Host Country Statistical source		USG or international statistical source		USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data	Year	Amount	Year	Amount
Host Country Gross Domestic Product (GDP) ($M USD)	2015	100.9	2014	100.9	www.worldbank.org/en/country
Foreign Direct Investment	Host Country Statistical source		USG or international statistical source		USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions)	n/a	n/a	2014	650	BEA data available at http://bea.gov/international/direct_investment_ multinational_companies_comprehensive_data.htm
Host country’s FDI in the United States ($M USD, stock positions)	n/a	n/a	2014	64	BEA data available at http://bea.gov/international/direct_investment_ multinational_companies_comprehensive_data.htm
Total inbound stock of FDI as % host GDP	n/a	n/a	2014	.64%	N/A

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment			Outward Direct Investment
Total Inward	1,060	100%	Total Outward	n/a	n/a%
The United States	186	18%
Peru	170	16%
China	94	9%
Chile	78	7%
The Netherlands	77	7%
"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio investment data are not available for Ecuador.

18. Contact for More Information

Please contact Embassy Quito at ecuadorcommercial@state.gov

ecoi.net description:: Annual report on investment climate, incl. information on legal and regulatory system, political violence, corruption, labour and economic issues, etc. (as of March 2016)
Country:: Ecuador
Source:: USDOS – US Department of State (Author)
Original link:: http://www.state.gov/e/eb/rls/othr/ics/2016/wha/254527.htm
Document type:: Periodical Report
Language:: English
Published:: 5 July 2016
Document ID:: 1297795 (former ID 332558)