The Competitiveness Compass of 29 January 2025 highlighted the need for the EU to “[seek] new ways of deepening partnerships and [create] benefits for our businesses”, including through Sustainable Investment Facilitation Agreements (hereinafter, “SIFAs”). 1  The EU’s first SIFA with Angola entered into force on 1 September 2024. 2  On 12 June 2025, the Council of the European Union adopted a Decision authorising the opening of SIFA negotiations with Côte d'Ivoire. 3

At the 8th meeting of the Mechanism for Bilateral Political Consultations between the EU and Ecuador on 13 June 2024, Ecuador expressed its interest in negotiating a SIFA with the EU. Then, on 16 December 2024, the Minister of Foreign Affairs of Ecuador, Gabriela Sommerfield, addressed letters to the European Commissioner for Trade and Economic Security, Maroš Šefčovič, and to the High Representative of the Union for Foreign Affairs and Security Policy and Vice-President of the European Commission, Kaja Kallas, reiterating her country’s interest in negotiating a SIFA with the EU.

In 2023, the stock of EU foreign direct investment in Ecuador amounted to EUR 8.2 billion, up from EUR 7.1 billion in 2022. The EU has concluded a Multiparty Trade Agreement with Andean countries to which Ecuador is Party. This Trade Agreement includes provisions on services and investment, including commitments on market access and national treatment for EU investors. In this context, the SIFA would be an opportunity to deepen the investment relationship between the EU and Ecuador, and support EU investors in taking further advantage of opportunities created by the Trade Agreement by improving the regulatory framework and procedures for investments. This Agreement would seek to do so through commitments on investment facilitation, such as increased transparency and predictability for investment-related laws and regulations, simplification of investment authorisation procedures, and improving public-private dialogue through investor focal points and stakeholder involvement. The ultimate objective would be to foster a more transparent, efficient and predictable investment climate, and therefore support Ecuador in attracting foreign direct investment whilst upholding standards concerning the environment, labour rights, and climate. In doing so, this Agreement would promote sustainable development, economic growth, and job creation. In light of the above, the Commission recommends opening negotiations for a SIFA with Ecuador.

The objectives are consistent with other EU policies, notably the EU’s development policy.

The procedural legal basis for the proposed decision to authorise the opening of negotiations of the envisaged agreement is Article 218(3) and (4) of the Treaty on the Functioning of the European Union (TFEU).

Article 218(3) TFEU provides that, where the agreement envisaged does not relate exclusively or principally to the common foreign and security policy, the Commission shall submit recommendations to the Council. The Council shall adopt a decision authorising the opening of the negotiations and nominating the Union negotiator or the head of the Union’s negotiating team.

Article 218(4) TFEU provides that the Council may address negotiating directives to the negotiator and designate a special committee in consultation with which the negotiations must be conducted.

The Commission recommends to open negotiations between the European Union and the Republic of Ecuador for an international agreement relating to investment facilitation. The Commission is to be nominated as negotiator.

This act falls within the Common Commercial Policy and hence the substantive legal basis is 207(4) TFEU.

Given that the agreement envisaged exclusively covers maters other than the common foreign and security policy, the Commission must be designated as the negotiator pursuant to Article 218(3) TFEU.

This act falls within the Common Commercial Policy under Article 207 TFEU. It therefore falls within the exclusive competence of the Union in accordance with Article 3(1) TFEU.

The subject matter of the envisaged negotiations relate to the common commercial policy. According to Article 5(3) of the TEU, the subsidiarity principle does not apply in areas of exclusive EU competence. The common commercial policy is listed among the areas of exclusive competence of the Union in Article 3(1) of the TFEU. This policy includes the negotiation of trade and investment agreements pursuant to, inter alia, Article 207 TFEU.

The recommendation of the Commission is in line with the principle of proportionality, as the conclusion of an international agreement is the main instrument for assuming reciprocal rights and obligations with a subject of international law, such as a foreign country.

This recommendation for a Council decision is submitted in accordance with paragraphs 3 and 4 of Article 218 TFEU, which envisage the adoption by the Council of a decision authorising the opening of negotiations and nominating the Union negotiator. The Council may also address negotiating directives to the negotiator. There exists no other legal instrument that could be used in order to achieve the objective expressed in this recommendation.

Not applicable.

The Commission carried out a public consultation in 2021 as part of the ex post evaluation of the Multiparty Andean Community-EU Trade Agreement, which included stakeholders’ views on investment in the covered countries, including Ecuador. Moreover, the Commission regularly consults stakeholders inter alia in the Expert Group on Trade Agreements 10 and the Civil Society Dialogue. 11

This proposal relies on external expertise gathered in the context of a project carried out by the World Bank and commissioned by the European Commission. The report notably identified that investors 12 put forward, as critical factors affecting their investment decisions in developing countries, the lack of transparency and predictability in dealing with public agencies, the sudden change in the laws and regulations, and the delays in obtaining government permits and approvals. Those are the areas that would be covered by the proposed SIFA.

Investment facilitation commitments in the SIFA focus on the application of good governance principles and good regulatory practices, including transparency, predictability, and administrative efficiency, in a partner country’s investment framework (investment laws, regulations, and procedures). The impact of these investment facilitation measures relates largely to the implementation of the Agreement by a partner country and the long-term improvement in its investment environment. The overall impact is also affected by individual investments that such an improved investment framework may attract. The SIFA codifies practices that are already well-established within the EU.

In addition, the initiative benefits from several existing assessments carried out over the years, including a Sustainability Impact Assessment that covered EU-Andean Community trade (2009), a report assessing the economic impact of the Trade Agreement between the European Union and Ecuador (2016), and the ex post evaluation report of the EU-Andean Community Trade Agreement (2021).

This proposal seeks to recommend the adoption by the Council of a decision authorising the opening of negotiations for a SIFA with Ecuador. The proposal does not entail exchange of data, automation of processes, use of digital systems or the provision of public services. Consequently, the “digital by default” principle does not apply, as it does not introduce specific digital requirements.

The initiative fully respects the Charter of Fundamental Rights of the European Union.

The initiative does not have budgetary implications.

The negotiations of the SIFA are expected to be concluded in 2026.

Not applicable.