Ecuadorian economic, commercial, and investment policies are subject to frequent changes, can increase the risks and costs of doing business in Ecuador, and may limit investment decisions. Overly burdensome and unpredictable bureaucratic processes pose a challenge for many firms. Corruption is a concern. Ecuador ranks 121st out of 180 countries on Transparency International’s 2024 Corruption Perception’s Index.
Regulations and standards are a major area of concern for U.S. businesses in Ecuador. National and municipal-level regulations can conflict with each other. Regulatory agencies are not required to publish proposed regulations before enactment, and rulemaking bodies are not required to solicit public comments on proposed regulations, although there has been some movement toward public consultative processes. Government ministries generally consult with relevant national actors when drafting regulations, but not always and not broadly. The National Assembly typically socializes proposed legislation and conducts public hearings with relevant stakeholders prior to voting on legislation. In several sectors, legislators have proposed European standards at the expense of U.S. standards.
Ecuador’s government procurement processes can be challenging for U.S. companies. Fiscal challenges limit the government’s ability to make significant purchases of products and services, with winning bidders potentially subject to payment delays. A lack of transparency in the public tender process have resulted in U.S. bidders being excluded from major projects such as infrastructure development and project management. For large-scale projects, Ecuador has traditionally struggled to structure tenders and public-private partnerships that are bankable, transparent, and competitive, which has discouraged private investment from responsible companies and attracted companies that fail to adhere to international standards of accountability and transparency. A traditional focus on low-cost over best-value procurement has resulted in the government choosing low-quality vendors that may drive up costs over the long-term. However, Ecuador’s National Assembly passed legislation in June 2025 to incorporate best value considerations in procurement.
Enforcement against intellectual property (IP) infringement in Ecuador remains challenging, though the Ecuadorian government has made good-faith efforts to improve IP protection and notable progress in combatting digital piracy, carrying out border measures in coordination with customs authorities, and identifying IP cases for criminal prosecutions. In 2016, the United States Trade Representative (USTR) moved Ecuador from the Priority Watch List to Watch List in its annual Special 301 Report, and Ecuador has remained on the Watch List since then. In 2020, Ecuador’s National Service of Intellectual Rights (SENADI) issued implementing regulations for the Code of Knowledge, Creativity, and Innovation Social Economy (Ingenuity Code) – the legislation that covers IP rights. The regulations do not fully address concerns raised by the U.S. government and various stakeholders on issues related to copyright exceptions and limitations, patentable subject matter, and geographical indications (GIs), including opposition procedures for proposed GIs, the treatment of common food names, and the protection of prior trademark rights.
Ecuador does not have a free trade agreement (FTA) or bilateral investment treaty (BIT) with the United States, putting it at a disadvantage with neighbors Colombia and Peru. Ecuador’s National Assembly voted in 2017 to terminate the country’s 12 BITs, including its BIT with the United States. The Government of Ecuador notified the U.S. government of its withdrawal from the BIT on May 18, 2017, effective May 18, 2018. Investments made prior to withdrawal are covered for 10 years, but the abrogated BIT covers no new investments in Ecuador.
Inflexible labor laws, a high minimum wage, and excessive costs for firing workers disincentivize formal employment, raise labor costs, and exacerbate inequality. As of December 2024, unemployment stood at a mere 2.7 percent. However, the informal sector accounts for 58 percent of employment, only 33 percent of the working-age population is fully employed, and 28 percent of the country (43 percent of the rural population) lives in poverty.
A shortage of electricity prompted prolonged outages in 2024. Businesses in Ecuador may face future outages and be required to rely on self-generated electricity.
Ecuador struggles to find a balance between the rights of local communities, environmental protection, and foreign investment, particularly with large-scale investments in the mining and energy sectors. Ecuador’s 2008 Constitution obligates the State to consult local communities (many of which are Indigenous) prior to initiating projects passing through their lands through a process that is free, informed, and culturally appropriate (known as FPIC). Separately, the Ecuadorian government requires environmental consultations as a preliminary step for the Ministry of Environment to issue environmental permits. Ecuador does not yet have formal processes to conduct environmental consultations (consulta ambiental) or Indigenous community consultations (consulta previa).
Per the Constitutional Court, the National Assembly needs to pass laws to legally define protocols for environmental consultations and FPIC. Until the National Assembly passes legislation, Ministerial Agreement 754, which establishes the steps to conduct environmental consultations, remains in force. Local or national referendums – such as the 2023 Yasuni referendum that halted petroleum exploitation in parts of the Amazon – may threaten investments and business operations for firms. The lack of legal clarity can create delays in infrastructure projects and has contributed to social unrest from Indigenous groups.