N ADDITION to creating a beneficial tax-free and business friendly environment in Guayaquil, Mayor Nebot and the city of Guayaquil are in favor of the impending free trade agreement (FTA) between Ecuador and the United States. The mayor has stated that the agreement must be signed in a responsible manner and in full knowledge that the most important thing is that the gains outweigh the disadvantages and costs. Consequently, Guayaquil hosted the fifth round of the negotiation talks in 2004 and many of the city’s industrial groups have been significant lobbyers for the agreement and have had a considerable influence in shaping Ecuador’s FTA policies.

The FTA talks began in 2004 between Colombia, Peru, Ecuador and the United States, with Bolivia as an observer. Negotiations with Peru on the comprehensive bilateral trade agreement were concluded at the end of 2005. Just a few months later, the U.S. reached an almost identical agreement with Colombia despite ongoing fears there for agricultural sectors – the areas most affected by the agreement – due to subsidized U.S. farm products. The U.S.-Ecuador agreement is now in its final stages, although at the time of writing negotiations have been temporarily stalled due to a disagreement over a recent change in Ecuador’s hydrocarbon law that obliges oil companies operating in the country, among which are a number of U.S.-based companies, to give a larger percentage of their profits to the government.

The dispute is also centered around U.S. firm Occidental Petroleum Corporation (Oxy), whose drilling rights were terminated by Ecuadorian President Alfredo Palacios on May 16 of this year. Oxy Petroleum, which has been operating in Ecuador for 20 years, is involved in a legal suit with the Ecuadorian government for selling 40 percent of its shares to Canadian EnCana in 2004 without government consent and for breaking another 30 national regulations. The dispute has temporarily put the breaks on the talks with Washington.

Guayaquil, however, as Ecuador’s economic heartland and as base to the majority of the country’s businesses is ardently pro-FTA, as is the Ecuadorian government, and the city’s commercial base will continue to push aggressively for the agreement to move forward. Much work has already been accomplished. The two countries have already hammered out the majority of the details, and negotiators have reached agreement on most agricultural issues. The only outstanding themes to be addressed concern the more sensitive Ecuadorian products such as rice, milk, meat, corn and tuna fish.