Ecuador was the unexpected recipient of U.S. trade preferences last week when Congress approved free trade agreements for Colombia, Panama and South Korea. Ecuador´s trade preference was granted through July 2013, in a rider to the legislation, based on the Andean Nations Trade Preferences Act.
The extension of the trade preferences was good news for the Ecuador which had seen the costs of exports to the U.S. increase from 7% to 12% when the old preferences expired in January. The measure benefits such industries as flowers, leather and textile goods, seafood and agricultural crops such as bananas.
Under President Rafael Correa, Ecuador has refused to sign a free trade agreement with the U.S., claiming it would harm small farmers and businesses. The U.S., however, says that Ecuador has been cooperative in combating illegal drug activity and, according to a spokesman for the State Department, this was the primary reason that an extension.
CUENCA MOVIE WILL COMPETE IN ROME FILM FESTIVAL
En el Nombre de la Hija, a movie by Cuenca director Tania Hermida, will be presented at the Rome International Film Festival on October 28.
The movie, which premiered in Cuenca in September, was produced in Cuenca and Quito with a predominantly Cuenca cast, will compete with films from around the world.
En el Nombre de la Hija has already received an unofficial rave review from Gianluca Giannelli, president of the festival selection committee. “This one takes your breath away,” he said.
Hermida´s last film, in 2006, Que tan Lejos received dozens of international awards.
TAX MAN CLOSES DOWN DOZENS OF LOCAL BUSINESSES
More than 40 Cuenca businesses were closed by Ecuadorian tax authories during the second week of October, according the SRI tax authorities. Fifiteen restaurants in El Centro were shuttered, plastered with large red and black “Clausurado” signs.
Tax authorities claim that the closings, which range from seven days to three weeks dependingon the violation, are the result of failure to pay taxes, poor record keeping or licensing violations.
The SRI says the majority of establishments closed would reopen within a week.
TAX ON OVERSEAS MONEY TRANSFERS MAY RISE TO 5%
President Rafael Correa has sent a proposal to the National Assembly that would increase the tax on money sent out of Ecuador through banks to 5% from the current 2%.
"The tax on foreign currency outflow would be increased to 5%, but will be offset by new tax credits to protect businesses," according to finance minister Carlos Carrasco. Carrasco said the increase was necessary to stop the outflow of money. "We use the U.S. dollar and are not able to print more of it once it leaves the country."
The announcement was met with criticism from business leaders who claim the additional tax will discourage foreign investment. Javier Armedaris, spokesman for exporters in Manabi Province, said the tax is a response the government's high level of spending. "What needs to happen is that the government needs to tighten its belt, not impose new taxes.”
The government said that it would continue to allow individual travelers to take up to $9,200 out of the country without being taxed.
DISTRIBUTORS SAY GAS SHORTAGE IS GETTING WORSE
The shortage of LP cooking gas is getting worse, say several Cuenca distributors, although the government says the situation will improve soon.
Teresa Sigüenza, owner of a First of May distributor hung out a “no gas” sign Friday and said she will not be able to supply her customers if supplies do not increase. She said her usual allotment of 120 tanks per week has been cut to 100. “People think I am holding back but I have no more tanks to send out.”
Distributors blame the shortage on shipments from Guayaquil but the government says the problem is illegal sales in Peru and Colombia, where gas prices are as much as 10 times higher.
The government also say that businesses are using the cheaper domestic gas instead of the industrial gas that comes in larger tanks, in violation of the law. Ecuador subsidizes gas for domestic use but not for business use.