Apr 27, 1998

ECUADOR: US AGAIN THREATENS SANCTIONS OVER PATENTS

Quito, Apr 23 (IPS/Mario Gonzalez) - The United States has once again threatened Ecuador with trade sanctions over its failure to comply with agreements on intellectual property rights. But that does not seem to worry the single-chamber Congress in Quito.

The Ecuadorean parliament has taken its time - five years - to discuss a law on patents and intellectual property rights, in spite of constant threats of sanctions from the United States, its main trading partner.

On Apr 30, the US Department of Commerce will issue a report on the situation in Ecuador and other countries which have been threatened with sanctions for non-compliance or violation of trade agreements.

Analysts here say the report will come down hard on Ecuador and recommend that the US government immediately hike tariffs, a move that would cost Ecuador around $400 million a year.

However, Ecuadorean Minister of Foreign Trade Benigno Sotomayor is optimistic, saying Washington is familiar with the strides Ecuador has made in terms of intellectual property rights -- "a complex matter that cannot be resolved in a single day."

Recently, Ecuadorean Foreign Minister Jose Ayala is understood to have met the US Secretary of State Madeleine Albright during last weekend's second Summit of the Americas in Santiago, Chile, to discuss the trade frictions and possibility of commercial sanctions. Ecuador asked for more time to allow parliament to approve the law on patents and intellectual property rights, a request that Washington is reportedly considering.

In 1993, the conservative government of Sixto Duran Ballen (1992-96) signed an agreement on patents and intellectual roperty with the US government of Bill Clinton. But the accord never went into effect, because it was not ratified by the Ecuadorean parliament.

Distribution rights, medicines patented by large US pharmaceutical companies but manufactured here as generic drugs, biodiversity and the rights of indigenous people, were the sensitive issues that led the agreement to be shelved in parliament.

"The discussion on accords on patents and intellectual property rights has become more and more complicated, not only due to agreements with the United States, but also because of World Trade Organisation and Andean Community norms," Alejandra Ona, a specialist in commercial law, told IPS.

A free trade area between the countries of the Andean Community - Bolivia, Colombia, Ecuador and Venezuela, with the exception of Peru - went into effect in 1993, "which gave a boost to the bloc's negotiations on agreements on intellectual property rights," said Ona.

Two years later, when Ecuador became part of the WTO, the government agreed to immediately adopt the world body's regulations.

Analysts say that Ecuador's bilateral agreement with the United States is more stringent and binding on Quito. "The bilateral accord with the United States is stricter than WTO and Andean Community provisions, which means Congress was right in not ratifying it," according to economic analyst Washington Herrera who writes with the Quito daily 'El Comercio'. 

Ecuador was the only South American country that "rashly signed a bilateral accord which grants too much protection to patents, because it accepts retro-activity for US patents, counter to Ecuadorian legislation," said Herrera. Jamaica, Trinidad and Tobago and Nicaragua are the only other countries in the region which have signed similar agreements with the United States.

While Washington's threat of commercial sanctions have hung over Ecuador for the past five years, remarks by US Ambassador to Quito, Leslie Alexander, early this year made that possibility more real.

Alexander warned that his government would remove certain Ecuadorean export products from the Andean System of Commercial Preferences, designed to reduce coca and drug production in the five countries of the Andean Community by granting export benefits and opportunities to local farmers.

In early February, US trade authorities filed a complaint with the WTO that Ecuador had failed to comply with the organisation's statutes. In Sotomayor's view, the complaint was not designed to get WTO sanctions against Ecuador, but to bring up the problem of patents and IPRs in the world body.

Under pressure from the United States, the Ecuadorean government promised to push the draft law currently being discussed - which would bring the bilateral agreement with the United States into line with WTO and Andean Community statutes on patents and intellectual property rights - through parliament.

So far, Congress has studied 60% of the 370-clause draft law. The bill, which passed a first reading in February, is pending a second vote, which could take several months due to the general elections next months.