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State Department Terminates BIT with Ecuador

The U.S. Department of State recently announced the termination of a bilateral investment treaty (BIT) between the U.S. and Ecuador. This announcement was a follow-up to Ecuador’s notice given on May 18, 2017, that it was terminating its BIT with the U.S., with the effective date to take place one year later. The termination of this BIT directly affects E-2 treaty visas for natives of Ecuador. Meanwhile, all existing immigrants with E-2 treaty visas will remain classified as such until May 18, 2028. These termination procedures and dates are unique to each treaty.

E-2 treaty visas allow individuals from certain countries with whom the U.S. has a treaty of commerce and navigation to come to the U.S. to develop and direct the operations of a U.S. business enterprise in which they have invested a substantial amount of capital. Given the termination of this BIT, Ecuadorian nationals only will be able to come to the U.S. on an E-2 treaty visa if they established or acquired the requisite investments prior to the May 18, 2017 treaty termination date.

State Department Terminates BIT with Ecuador

Ecuador became the fifth country to terminate all of its BITs last year. While there has been much speculation for the reasons behind the terminations, no clear consensus as to the reason has occurred. The only assumption is that Ecuador found that the BITs brought them more costs and liability than the financial gains expected from the foreign investments. Some observers also have indicated that the BITs made Ecuador more vulnerable to exploitation by foreign investors, referencing the fact a U.S. oil company earned over $2.3 billion from Ecuador following an arbitration in an investor-state tribunal.

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