A U.S. attempt to gain leverage against a country widely considered a potential destination for NSA leaker Edward Snowden inspired a burst of bravado from the Ecuadorean government on Thursday. The country’s communications minister announced that Ecuador was "unilaterally and irrevocably" renouncing a trade pact that gives it preferential treatment when exporting certain goods to the United States, saying it would not be subjected to "blackmail."
Two U.S. senators — Bob Menendez (D-NJ) and Sandy Levin (D-MI) — had earlier threatened not to pass the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which is scheduled to expire next month, if Snowden is granted asylum in Ecuador (the deal had already been facing an uphill battle anyway, with some legislators balking at Ecuador’s growing ties with Iran).
Not everyone in Ecuador is shrugging off the threat from Washington, however, with some experts worrying about whether the loss of the ATPDEA will affect the costs for exports ranging from ceramic tiles to quinoa, and jeopardize Ecuador’s participation in other preferential trade programs with the United States.
So just what would Ecuador be losing should this latest spat with the United States cost it its preferential trade deal?
The legislation, first passed in 1991 in an effort to discourage narcotics production in South America, allows for certain goods to be important from Ecuador with reduced tariffs. What is Ecuador sending over exactly? Over 800 products, but mostly oil, which accounted for about $5.4 billion of the country’s $9.3 billion in exports to the United States in 2012. Second to oil is cut flowers, coming in at $166 million, and then fresh and prepared fruits and vegetables, which made up $122 million worth of exports. The prepared and preserved tuna trade between Ecuador and the United States was worth about $80 million in 2012.
Trade between the United States and Ecuador won’t grind to a halt entirely if the act is revoked. But last year Nathalie Cely, Ecuador’s ambassador to the United States, said the country could lose at least 40,000 jobs if the preferences aren’t renewed.
Nonetheless, President Rafael Correa’s administration has plowed forward, even going so far as to offer to assist the United States with human rights training for the tidy sum of $23 million annually. Like Hugo Chávez before him, Correa seems to delight in tweaking los imperialistas: he famously expelled the U.S. ambassador to Ecuador in 2011 after taking offense over allegations made about him in leaked Wikileaks cables.
But Ecuador is no Venezuela. It has an economy one-fifth the size of the country Chávez once lead, and produces five times less oil. Since defaulting on part of its debt in 2008, Ecuador has become deeply dependent on loans from China — one of the few countries still willing to lend it money.
Ecuador "does not trade in principles, or submit to mercantile interests," Communications Minister Fernando Alvarez announced today. Satisfying words? Maybe. But Ecuador’s flower and broccoli farmers may not be feeling quite so excited about the national showmanship inspired by the Snowden affair.