Tag Archives: Ecuador

In Ecuador, the increase in the price of oil leads to the fact that the income of resources to the Ecuadorian State remains in positive terms. The media Teleamazonas asks about this to our senior associate, Rafael Serrano, an expert lawyer in Energy issues, who considers that the trend of the international oil price will be maintained. Therefore, he believes it is important to consider other costs.

According to the Minister of Energy, Juan Carlos Bermeo, this does not mean that everything is income for the country, “because the increase in the price of oil means, in parallel, the increase in the price of fuels and what is required to import fuels, whether gasoline or diesel, is a greater amount of resources”.

Rafael Serrano, when asked about this matter, answers that “this for the country, obviously, will generate greater benefits, greater income, because a lower value was budgeted, but we also have to consider the increase in production costs in many areas: transportation costs, among others, which will make certain products more expensive”.

As a consequence of the above, the Government plans, among its future projects, a process of delegation to the private sector of the Esmeraldas Refinery. This is aimed at reducing the amount of waste and producing Euro 5 grade fuels. For this, the opinion of our expert is based on the fact that “seeking the help of the private sector through public-private alliances” is, in his opinion, “a very good mechanism to develop the Esmeraldas Refinery and to see alternatives that can be developed within the country to produce these derivatives here in Ecuador and thus make them cheaper”.

A greater use of associated gas is also expected for its use in electricity generation and industry, “cleaner and at a much lower cost”, adds the Minister.

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The National Intellectual Rights Service (SENADI hereinafter) in Ecuador is in the news for the questionable decision made when registering a trademark. Our associate Katherine González has written about this specific case for WTR, an article that we summarize below.

 On 10 June 2020, Quirovara Tax Company SA applied for the mark DON BENJA (and logo) in Class 31, specifically “bananas and Musaceae.” On the other hand, Arbelaez Valencia Hermanos Coffee Roaster Mejía SA filed an Andean opposition based on the trademark DON BENJA, which covers the following goods of Class 31: “agricultural, horticultural, forestry products and grains not included in other classes; live animals; fresh fruits and vegetables; natural plant and flower seeds; animal feed; malt.”

 In November, SENADI began its unusual registrability study: rejected the Andean opposition, and granted, to everyone’s surprise, the registration of DON BENJA trademark for class 31, in favor of Quirovara company. In its resolution, SENADI:

• Accepted that the marks were similar;
• Accepted that the marks protected the same goods;
• Acting ex officio, and against the applicable Andean law, reviewed a webpage and used this information to determine the main economic activity of the opponent, ignoring the goods listed in the registration certificate that was the basis of the opposition; and
• Accused the opponent of trying to arbitrarily extend the protection of its trademark in relation to its commercial activity, again ignoring the basis of the opposition and the protection granted by the trademark.

Regarding the registrability of trademarks, Article 136 of Decision 486 of the Andean Community establishes as follows:

“Those signs whose use in commerce unduly affects a third party’s right may not be registered as trademarks, in particular where:

• They are identical or similar to a trademark previously applied for registration or registered by a third party, for the same products or services, or for products or services in respect of which the use of the trademark may cause a risk of confusion or association (…)“

SENADI´s resolution

“On 8 December 2021, SENADI issued a resolution stating that an adequate trademark comparison had not been carried out, and requested the highest administrative Authority, through an ex officio review procedure, to decide whether the applied-for mark should be granted. This request implies that the parties were denied appeal rights, as the appeal authority would already have issued a decision.” Katherine states.

Seven days later, SENADI annulled the office action as being “inadmissible”. It found that it contravened Article 76 of the Constitution. The next day, on December 16, 2021, through Resolution No SENADI-2021-RS-14973, accepted the voluntary cancellation of the trademark DON BENJA by Quirovara. The cancellation request had been filed only the day before. 

This situation is surprising, since, as mentioned by our associate, “Usually, the voluntary cancellation process takes between six and 12 months; however, in this case, this request was submitted and accepted within 24 hours.” She also adds that “It is noteworthy that the agent who filed the mark in dispute was the SENADI director deciding on the matter, who immediately resigned after the resolution became public.”

Conclusion

For González, this case highlights the urgent need for SENADI to:

• Train its officials so that all actions are carried out in accordance with national and Andean regulations;
• Strictly apply the legal norm requiring the processing of cases in a chronological order; and
• Fight strongly against corruption.

“If these recommendations are applied, it is expected that the negative impact on users will decrease considerably, the quality of SENADI’s decisions will improve, and its reputation will recover”, she concludes.

If you want to read the complete news (under registration), click here

The new article published by LexLatin, where you can read the interview to Andrea Moya, our partner and leader of the tax area of the firm, discusses investments in Ecuador: implications of the Law of Economic Development and Fiscal Sustainability.

Objective of the Law of Economic Development and Fiscal Sustainability

Moya explains that the main objective of this Law, which is the only project of the Lasso administration that is in force, is to provide the State with additional resources with which to reduce the fiscal deficit and organize public finances. She adds that “temporary wealth taxes were established, a tax regime was created to regularize assets abroad, the income tax that will affect the highest income earners was increased (…) and certain elements of the same tax were simplified. These elements include the elimination of tax incentives for investments in basic industries, prioritized sectors and public-private alliances that had been created in previous years”.

What are the main challenges of the Law of Economic Development and Fiscal Sustainability, considering that we still have to deal with the pandemic?

Our partner answers this question by placing special emphasis on the fact that “it is important to distinguish the medium- and long-term objectives proposed by the Law, such as the organization of public finances in the face of current issues such as the pandemic”. To this she adds that the reduction of the fiscal deficit, ”is expected to boost the economy with the creation of quality employment, which is the greatest need of Ecuador”.

What are the main regulatory changes in customs and foreign trade that are implemented with this Law?

For Moya, the key is the exclusion of the value of freight for the calculation of customs duties. This was done to reduce its impact on the cost of imported goods and to curb the effect of the significant increase in freight rates in the world market. In addition, this Law, “includes reforms to reduce the time of administrative processes in charge of the Customs Authority, implement technological systems for customs control and the implementation of advance consultations to provide security to the importer on the treatment that will be given to the goods.

In this same area, the Government is negotiating several trade agreements with the objective of facilitating access to international markets for exports.

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