Snowden Poses Trade Risks for Ecuador

5:44 AM, Jun 27, 2013   |    comments
(AP)
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Girish Gupta, Special for USA TODAY

PIFO, Ecuador - At a flower farm around 19 miles outside Quito, sales manager Juan Pablo Ponce shows off both the produce and logistics required to package bouquets, 80% of which are exported to the United States.

"We try to keep on working hard, doing what we do best," says Ponce, who has worked at the Valleflor site for seven years. "That's all we can do."

While Ecuador's government makes its decision on whether to grant U.S. fugitive whistleblower Edward Snowden asylum, colleagues of Ponce here who export flowers to the U.S. are concerned that fallout from the political decision may harm their business, especially with the Andean Trade Promotion and Drug Eradication Act (ATPDEA) pact up for renewal next month.

Senator Robert Menendez, head of the Senate Foreign Relations Committee, promised Wednesday that he would block renewal of the pact should Snowden be granted asylum.

"Our government will not reward countries for bad behavior," he said in a statement, following other lawmakers who have spent years saying that the pact should be allowed to lapse, partly down to the country's links with Iran.

Ecuador's President Rafael Correa has lambasted the threats as "blackmail." He must balance the anti-American plank of his government, allied with former Venezuelan President Hugo Chávez, with trade deals that have boosted the country's oil-fueled economy.

The ATPDEA agreement was initially signed by President George H.W. Bush in December 1991, allowing the countries involved to sell goods to the U.S. without paying import duties. It was designed to boost trade between the U.S. and Bolivia, Colombia, Ecuador and Peru.

The idea was to incentivize alternatives to cocaine production here. Colombia and Peru now have their own free trade agreements with the U.S. while Bolivia was kicked out in 2008. The U.S. said that it had failed to "cooperate with U.S. counternarcotics efforts."

More than 50% of Ecuador's exports go to the U.S., according to Cristian Espinosa, executive director of the Quito-based Ecuadorian-American Chamber of Commerce.

"The U.S. is our main trading partner," said Espinosa. "We've been trying for years to make this relationship richer and deeper. When we see political events that might hinder our work, we of course are ... concerned. We hope that these political events do not affect trade because both countries benefit a lot from bilateral trade."

Espinosa urged Correa to understand that a political decision, such as one on Snowden, could impact his own sector as well as business in Ecuador more generally.

The main export product is oil, $5.4 billion worth of which was exported to the U.S. last year under the terms of the pact.

While Ecuador will not struggle to find other buyers for its oil, the $166 million it sold to the U.S. in cut flowers during the same period may suffer. Fruits, vegetables and tuna are also covered by the agreement. In total, the exports were worth $9.5 billion last year, according to the U.S. government.

"U.S.-Ecuador relations are not in great shape today but would deteriorate even more should Ecuador grant Snowden asylum," said Michael Shifter, president of the Washington-based Inter-American Dialogue thinktank. "Ecuador's economy would feel the hit, especially the flower sector."

Around a quarter of a million people depend on the sector, with 100,000 directly employed by it. Some 280 of them work with Ponce on his farm outside Quito.

Correa has long followed in the footsteps of the Castros in Cuba and the late Hugo Chávez in Venezuela as a harsh critic and adversary of Washington.

Riordan Roett, director of the Latin American Studies Program at John Hopkins University in Washington, said that should Correa allow Snowden asylum, he would be "destroying trade options for the Ecuadorian people for the sake of his own ego."

Ecuador's policy toward the U.S. has been unpredictable at times.

In 2009, Ecuador shut down the U.S.' Manta military base, on Ecuador's Pacific coast, and two years later, the U.S. ambassador was kicked out of Quito after a damaging WikiLeaks cable. Washington retaliated, though ambassadorial-level links were re-established in May 2012.

At the same time, Ecuador has worked hard to maintain the trade accord up for renewal next month. The Ecuadorian embassy in Washington set up the "Keep Trade Going" campaign, featuring testimonials from companies which have benefited from duty-free trade with Ecuador.

"A duty on Ecuadorian roses would effectively price Ecuadorian roses out of the United States marketplace," reads one from Royal Flowers.

Should the ATPDEA not be renewed at the end of next month, Ecuadorian authorities are hoping to fall back on the so-called Generalized System of Preferences, which allows for duty-free imports on certain goods by the U.S.

Correa and his advisers must calculate whether they will gain more political capital by taking in a U.S. fugitive - from leftist and anti-imperialist supporters - at the expense of Ecuador's economy.

"We're confident in a prudent decision by the Ecuadorian government," said Juan Reece, a leader at Expoflores, a trade body for the flower industry."


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