EU and Ecuador conclude negotiations for Sustainable Investment Agreement

The European Commission has concluded negotiations with Ecuador on a Sustainable Investment Facilitation Agreement (SIFA). This SIFA, the first negotiated with a Latin American country, will be instrumental in promoting EU investments in Ecuador.

The deal will support the creation of a more transparent and efficient business environment in Ecuador by addressing challenges such as regulatory uncertainty and bureaucratic hurdles. Improvements in the investment climate will benefit both EU and local investors, and promote additional sustainable investment.

At a time of increasing uncertainties and geopolitical shifts, this Agreement shows that predictability and stability can be achieved through a shared commitment to international cooperation and the rules-based order. Ecuador business climate is improving as shown, for example, by faster procedures to proceed pending payments by public authorities.

The agreement also upholds environment and climate commitments, as well as respect for labour rights, making sure the facilitation of investments contributes to sustainability objectives and the achievement of the Sustainable Development Goals.

Improvements in the investment climate will help unlock investment in sectors with untapped potential, such as renewable energy. In addition to economy-wide investments provisions, the SIFA includes a first-of-its-kind Annex with specific provisions for investment in sustainable energy and raw materials. These are sectors of particular interest for EU investors and Ecuador.

The EU will also support Ecuador through an €8 million project on “Improving Ecuador’s investment climate and energy transition”, which aims, among other objectives, to address key bottlenecks to investment and help create a more predictable regulatory environment.

Better and Sustainable investments

The SIFA will make investment easier by:

• enhancing transparency and predictability, for example through stakeholder consultations and online publication of investment measures;
• simplifying investment authorisation procedures;
• improving dialogue between investors and the administration through focal points;
• helping small and medium-sized enterprises (SMEs) that face difficulties when investing abroad;
• cooperate on further enhancing investment relations between the EU and Ecuador.

It will also foster a more sustainable investment climate through:

• commitments not to weaken environment or labour laws with the aim of attracting investment;
• promoting sustainable development, including a commitment to effectively implement International Labour Organization standards and the Paris Agreement;
• promoting responsible business practices by investors, and strengthening cooperation on investment-related aspects of climate change and gender equality policies.

Next steps

The political conclusion marks the end of the negotiations for the EU-Ecuador SIFA. The Commission and Ecuador will now follow their respective procedures to work towards the formal signature and conclusion of the Agreement.

Background

The EU is Ecuador’s largest trade and investment partner, with the EU’s FDI stock reaching €8.2 billion in 2023. The sectors receiving the most EU foreign direct investment include construction, business services, transport, storage and communications, and manufacturing.

The SIFA builds on and complements the existing trade agreement between the EU and Ecuador, which has been applied since 2017. The Agreement also complements the cooperation between the EU and Ecuador under the Global Gateway.

More information: European Commission