CITIZENS OR MUMMIES

An inhabitant is one who lives in a house, neighbourhood or country but doesn’t participate in its environment. Most of the time they turn into a mummy because they don’t care what happens around. However, being a citizen is enjoying political rights, get involved, participates, and tries to change the environment, all this and more for the love they feel for the place they live in. When the country is full of citizens a compromise is produced which achieves changes, because they demand accountability, prevent harassment, require strong institutions and laws for everyone. They are clear that democracy doesn’t only mean that its ruler has come to power by winning at the polls, but to lead with the Constitution in one hand and Freedom in the other; that’s why we saw in Honduras that prevented citizens hindered being taken towards communism. Nowadays, because we haven’t become citizens, we are co partnerships of the high percentage of unemployment, because our silence has allowed it. The class struggle, confrontation, the attack towards cities which depend on trade and industry, the harassment against the entrepreneur sector, especially to small and medium business. By not participating, we have agreed that the government is dedicated to pushing the economies of other countries instead of solving our exporter’s problems despite the crisis they can take our products to different destinations. Even worse than the above mentioned, what was done is raise tariffs to lower people’s purchasing power and on the other hand eliminate posts of work. On political issues they have set unnecessary safeguards to Colombia, even more that nowadays that country has completely revaluated its currency, which is an advantage for Ecuadorian exportations. Is it perhaps possible that Ecuador’s capital has been transferred to Caracas? What about the Ecuadorians reaction? Well thanks, they turned into mummies. Once more I emphasize the need to become citizens to be able to achieve a civil society with a strong public opinion to force the one which is in Carondelet to take us out from the carrousel and instead of paying attention to Bolivia, Venezuela or Nicaragua and continuing with the confrontation, obtain a country agreement between the government, private business and workers to design the best way to allowing rapidly the generation of opportunities leading us towards prosperity. It is depressing to watch only a 6% of the population (the Indians) organized with clear strategies, fighting for their rights, and sometimes not coinciding with the interests of the rest of the Ecuadorians. This is striking because a country should be governed not only for one race, region or belief but for the benefit of all. That is the meeting point which can be achieved when we become true citizens of Ecuador, which by consolidating a solid public opinion, demands the rights of all, accountability, censors any dictatorship and forces any true democracy.

Ing Joyce Higgins de Ginatta Guayaquil, October, 2009

LATIN AMERICA IN THE WORLD’s ECONOMY

OPPORTUNITIES AND THREATS

From September 3rd to 5th, the Consejo Empresarial de America Latina

(CEAL) organized in El Salvador the XX International Plenary Assembly,

whose objective was to focus the global regional reactions to confront

the current economic-financing international situation, as well as the

related to education.

Photos: left

The FIE was present in this great event, because its President was invited to participate as a lecturer inside the managerial panel, “Business Environment in Latin America”, in which also participated Marcel Granier, Ricardo Poma among others. Photo right Without doubt, because of the current situation, the analysis of the topic was difficult. In this photo we can see Alberto Padilla, host of CNN’s Economy and Finance with Joyce de Ginatta. Photo 3 We can see Joyce de Ginatta with Ricardo Maduro, former President of Honduras. Photo 4 Exchanging opinions with Ricardo Martinelli, Panama’s President.

Ten deadly sins of democracy

Photo 1

On September 29th, Joyce de Ginatta was invited to the Tecnoligico Espiritu Santo (TES) to give a conference called “The ten deadly sins of democracy” to students from the campus of higher education. Photo 2 From left to right we see: Dr. Jorge Ortega Trujillo, President of the Board of TES; Ing Joyce de Ginatta, President of the FIE; and Lawyer Aldo Maino Isaias, Vice-President of TES.

What we lose when we lose the freedom of expression? The Roads of Freedom Foundation (Salinas Group) of Mexico, organized the International Forum “What we lose when we lose freedom of expression?” which

gathered outstanding personalities and was held on October 21st in the auditorium of the Pan-American University of Mexico. Photo 1 From left to right: Jose Luis Ortiz Director of the UP’s School of Communication; Jesus Silva-Herzog Marquez, ITAM’s Professor and collaborator of TVAzteca y Reforma; Sergio Sarmiento, President of Caminos de la Libertad; Jorge Fernandez Menendez, Collaborator of Image, Excelsior and Channel 40; Leo Zuckerman, CIDE’s Professor, collaborator of Excelsior and Televisa Image; and Guillermo Tenorio Cueto, Master of the Faculty of Law in the UP. Photo 2 Rodolfo Silva Chamorro, Nicaragua Nacional Deputy. Photo 3 Ricardo Salinas Pliego, President of Salinas Group Photo 4 Marcel Granier, General Director of RCTV of Venezuela Photo 5 Sergio Sarmiento, outstanding journalist of Azteca Radio and T.V. Photo 6 Joyce de Ginatta, President of FiE.

DEADLY SINS

AGAINST DEMOCRACY AND DEVELOPMENT

“The men indifferent to the misfortunes of the nation, even if privately industrious assistants are unaware of the misery and corruption of the people”

Eloy Alfaro Message to the Nation in 1895

President of Ecuador

The deadly sins which eliminate employment: First deadly sin: The neo populism, demagogy and the passive elites. Second deadly sin: Closing the country towards the world with high tariffs, hindering the competition and the consumer’s benefit. Third deadly sin: Don’t look out the window to see the countries embedded in the world, blocking and harassing any investment that has been on the market possession. Fourth deadly sin: To think that the taxes increase, generates work and attract investments, which is the opposite of reality. Fifth deadly sin: Revive price controls that go against the production and the consumer. Sixth deadly sin: Insist thinking that devaluations generate competitiveness when in fact they wash inefficiencies. Seventh deadly sin: An obese state with low quality expenses and no accountability. Eighth deadly sin: Divorce between the government, businessmen and workers. While in the communist China it’s declared that the businessmen are heroes because they generate work posts, in Ecuador they are hated. Ninth deadly sin: A run over private property and institutions has become a certainty to the legal security and is almost in process of extinction Tenth deadly sin: To ignore that democracy isn’t only the fact of winning the elections, but governing in a real estate of right, with the Constitution in one hand, and the torch of freedom in the other. To obtain a real sustainable development we must change....

1. The neo populism and demagogy for free business and competition. 2. Passive elites for active elites worried about the countries’ destiny. 3. The discretionary for the strengthening to governing 4. Governmental policies for Estate policies. 5. Harassment of private property for strengthening the right to private property. 6. We have to change a country of sponsors for due processes and legal security. 7. A closed country to an open one towards free commerce. 8. Arbitrariness for accountability. 9. Juridical trash for a few and just laws. 10. Fiscal profligacy for austerity. 11. We have to change an obese Estate for a small, modern and efficient one. 12. An under financed budget for a Zero Base budget 13. Working Code for Employment Code. 14. The public-private confrontation for public-private cooperation. 15. The agricultural inefficiency for modernizing productivity increase. 16. Centralism for Autonomies. 17. Trash and vulnerable currency for a Strong Currency, in the case of America:

the dollar Written by: Joyce de Ginatta

Why does dollarization mark the difference?

Dr. Manuel Hinds Former El Salvador’s Secretary of the Treasury It has been said that when the currency suffers devaluation, the exports grow. If this would have been the case, Ecuador should have established a world’s sensational record between 1999 and 2000, period in which devaluation became uncontrollable in this country; and so in almost all Latin America, because it’s the region in which the currency has been devaluated the most and therefore exports had to be increased. However, the most successful countries in this topic have been Germany and China, precisely because its currency’s strength. It is so and without doubt, that commercial transactions are linked to the currency. What is the difference that dollarization makes in terms of the crisis? It’s worth to begin stating that the dollar offers monetary stability, when having the monetary value which people want to have. When people think about value In Latin America, they think in dollars, because it is the easiest and agile way to compare prices, salaries, etc. This produces several positive effects in a crisis, and three of them are:

1. The dollarized economies tend to have lower interest rates and longer maturities, thereby promoting investment.

2. In a dollarized economy the burden of the debt in dollars over the economy only depends in the acquisition of the debt itself, while in a no dollarized it may increase because the currency devaluates.

3. Dollars provide stability for depositors in the banking system. When there is recession.... There is a reduction in investment. The crisis starts because there is a collapse in investment that results in unemployment, leading to lower consuming demand, both of which lead to decreased production. In this problem, solving the interest rates is critic, and therefore the developed and developing countries try to lower the mentioned rates. Of course the dollarized countries have lower rates. The effect in interest rates In investing.... The interest rate is the most important cost in investing but also determines the value of the ones already done. When interest rates rise, the investing costs also rise lowering the value of the investments already made. Both effects reduce the investing attractive. Here is an example of the effect on the investment of the interest rate at the present price of an asset which will be worth $100 within a year. Insert Graphic No. 1

In consuming.... Consumers owe over their purchases of homes, cars and other consumer durables, very few people can buy such goods for cash. As the interest rate rises, the available income lowers to consume other things, and it is like a wage reduction. The interest rates tend to be lower in dollarized countries, because people think in dollars and use them; while in those countries where this doesn’t happen, people use their local currency but think in dollars. Graphic 2 The effect of these differences in the debtor is dramatic...the more interest rates rises less is left for other things. There is an evil attitude because the interest rates have increased because of the crisis in countries which aren’t dollarized, being Brazil the most serious. Please insert graphic 3 The average rate in Latin America, excluding Brazil, is of 25%, which is a marked difference among the dollarized countries and also for those which aren’t. There are countries which have opted to increasing the public investment to compensate the depressed private investment. However, increasing the public expenses is less efficient than maintaining low the interest rates because the private investment is bigger than the public; therefore it’s more efficient to stimulate it to increase the activities. But besides anchoring public investments is inefficient because they reduce the total output immediately or in the future. If the taxes are immediately anchored, the increase of government spending is financed by its decrease and the private investment. However, if in the future they anchor by borrowing, the government will have to raise taxes or stop spending on other necessary things to pay such loans. The public investment isn’t committed to the community and enables the growth of the country. However, the interest rates affect the government’s investing capacity, because the higher they get, there will be less government investment to counteract the crisis because more money will be used to pay the interests. The effect of devaluations in the external debt Please place graphic 4

In this graphic you can observe the currencies devaluation in Brazil, Argentina, Chile, Colombia and Mexico. The depressing thing is that in each one of these countries, the foreign debt is in dollars, which expands the weight of the debt, because in the measure in which the currency is being devaluated the debt increases. In consequence, there will be less money to reactivate the economy and the process becomes depressive. Trust in the banking system In many countries, people are taking out their money for fear that their domestic currency to depreciate regarding to the dollar, causing tension in the banking system which in turn can lead to crisis. The next graphic clearly shows the effect of dollarization in a banking system. In the vertical axe you can see the deposits in dollars, which were collapsing because the continuous devaluation of the Sucre. However, after the dollarization was being declared they began to be increased in an accelerated way, because there was trust. Please insert graphic 5 In other Latin American countries and Ecuador, before the dollar became official, this had already begun. We must not fall into the trap of believing that the currency is set by the government, but instead, the people are the ones who determine it and the government try to adjust to this.

Leadership and competitiveness is the key to boost

Latin America

Johana Vera Z.*

Thanks to the sponsorship of Latin-American Board of Georgetown University, every year several young people from different Latin American countries get a scholarship for the program called Global Competitiveness Leadership which takes place in Washington D.C. for a period of four months. The experience of coexistence and stay in the political capital of the world, plus the opportunity to take classes at one of the most prestigious Universities of USA, makes this program crucial to the development of a new generation of leaders, which are aware of reality and the needs for each one of their countries. The seminar is aimed to young people up to 30 years, who are chosen through arduous selection process in each of their countries. In Ecuador, the program is sponsored by the Bank of Guayaquil, who after a coordinated process through Price Waterhouse Coopers, seven young people are chosen to travel in the country’s representation. This year I had the opportunity to be part of the third generation of scholarship for the program Leadership and Competitiveness in Georgetown, and I have to recognize that it has been one of the most enriching experiences of my life. The fact of being chosen to be part of one of the seven selected for the scholarship, already was a significant victory, considering that in the 2008 process there were more than 100 young people nominated at national level. Although, the decision to leave the country for a few months involves critical decisions, I must admit that I was fortunate having the support of the directors of the company I work for, who without any restriction gave me the on leave permit to attend this important event. To my return, and thanks to the acquired experience, I have been considered to take on new challenges within the company. The objective of GCL is to sensitize participants on the need of leadership and competitiveness as prerequisites for the region to be included in the global agenda, as well as to turn us into agents for change who promote development and the level of participation in Latin America in the international context. Its main goal is creating a new generation of leaders with a competitiveness perspective in a globalized environment. The program is structured in three dimensions: political, social and business. In each module classes are dictated with leadership tools for different fields of action. In the first phase an introduction to American culture and the political, economical and social tendencies in the world are given, as well as the regions’ location in aspects such as competitiveness and development.

The module of political leadership includes topics such as: democratic principles, strategies of political communication, relations among political power, economic power and civil society, international relations, effects of corruption over democracy and competitiveness, analytic tools of political economy, commerce and economic development. The social module includes topics about: civil society and democratic participation, social nets and communication. The business module includes topics about: technology and innovation, competitiveness, quality and global logistics, foundations of chain supply management, finances and international marketing, tools for negotiation and project management. Classes with the methodology of group dynamics and case studies are taught by professors of Georgetown University as well as by professors of other universities, and lecturers of other countries. The classes are complemented with visits to multilateral organisms and institutions such as: IDB, Pentagon, Capitol, State Department, Supreme Court and Embassies; also with think tanks such as: CATO Institute and Atlas Economic Foundation among others. It also includes lectures with diplomats, former presidents, businessmen and writers. At the end of all modules, the students must do projects which generate a multiplier effect in their countries. In our generation, the projects were focused to strengthen the program; there were also proposals ranging from efforts in the area of education to the formation of new political and business leaders. Within projects of the GCL’s third generation Class (Iberoamerican Competitiveness Leadership Association) was born, the same as through a formal structure aims to integrate all generations, encourage networking and the diffusion of social initiatives, policies or business among the program’s participants. Personally, the commitment in this important program has leaded me to take on challenges beyond the professional sphere. Currently, along with other young people, we are consolidating The Foundation Emprender, which has the purpose of being the promoter among the entrepreneurial spirit among young people of the province of Manabí, and pretends to canalize all the efforts in the field of entrepreneurship to be held in Ecuador when joining the (Global Entrepreneurship Week) next month in November. The third generation slogan of the GCL program “turn around Iberoamerica” reflects the level of compromise which we have acquired after four months of living together in one of the most important cities of the world, getting to know the main problems and challenges for our region which is threat by the high levels of poverty and violence. All the previous added to the lack of education of the people and the institutional weakness have been the breeding ground for the spread of populist leaders, who think they are Messiah and redeemer but have only succeeded in slowing

the development of their countries and the opportunity to improving life quality of its citizens. Beyond the high academic credentials, the importance of the seminar about Leadership and Global Competitiveness lies in the effect it has on its participants, after sharing the reality of our region’s countries, identify problems, threats and challenges, many of which are similar and caused by the same factors. The compromise for those who assist to the program, is turning into agents for change, to obtain promoting the inclusion of our countries in the path to competitiveness and development, which are targeted to nations which are taking its citizens out of the circle of misery.

Chemical Engineer, Member of the Technical Staff of Ales Industries S.A.

Vice president of the foundation Emprender.

Dollarization: a viable and sustainable model over time

Econ. Abelardo Pachano Former President Of the Monetary Board

The current economic model is viable and we are able to sustain it without having threats which are unmanageable. It must be recognized that dollarization is only a means to achieve a number of objectives, but not a purpose. It’s part of one of the outlines of economic policy which is applied worldwide, it isn’t the only one or the most popular, but it is an economic model taken by small countries. In the development of economic theory and in search of goals to try to maximize the benefits to be an economic policy has three major instruments/objectives which cannot be achieved simultaneously: 1). Maintaining an active monetary policy that allows estates to regulate economic cycles. 2). the maintenance of a stable exchange rate policy. 3). the defence towards the opening of capital markets. The world’s countries have been forced to choose two of the three instruments to be able to develop their economic policies. The developed countries preferred to give up the exchange rate stability with the purpose of maintaining their capital market open and be given active monetary policies. Precisely one of the existing discussions and questions around the causation of the current crisis goes to the sign of fulfilment of roles that the Federal Reserve System had to end to avoid the appearing of distortions in the general behaviour of the markets under the authority of the regulation of the United States monetary policy system. The United States, Europe and the main Asian countries chose to abandon the exchange rate stability, just basing on discrete monetary support. In the cases such as Ecuador, Argentina, Panama and El Salvador, they gave up the monetary policy with the purpose to prioritize the exchange rate stability and the existence of their local currency. In this sense, these countries’ economic policy has a lack of an instrument which allows them to attenuate the processes deriving from economic cycles. This crisis, which appeared years after a great prosperity, brought us to reality and made us see that the real world is imperfect and that perfect economic policies only exist in texts. That when the policymakers meet sacrificing the consistency of economic policies as a result of political negotiations, the only thing which is achieved is to prepare society to face a situation of well-being destruction, whose processes are painful for the lower social class, not for the high and wealthy ones. It is clear that in this type of processes and in the definition of economic models, the main thing is confidence; without it, there isn’t an economic model in the world which can work. If in 2008, the developed countries had to take measures as the ones applied by Latin American countries one or two decades before, it was precisely for the consumers’ attitude, of the community members to deserting the economic reality

and search the protection to their own patrimonies. In that sense, the concept of confidence is linked to the perception of consistency of the models which are being applied. Under that point of view, it is clear that we have resigned to exercise our monetary policy and have established a system which has an extremely rigid rule, as the exchange rate is; likewise that we have an opening towards capital markets imposed by Ecuador around 60 years ago. It’s obvious that in times of economic recession the country should have had the necessary compensation funds to be able to regulating the economy. Pitifully, this didn’t happen and the level of unprotect ion with the Ecuadorian vulnerable economy kept increasing. Problems and threats of the Ecuadorian economy Under the circumstances, the first item that is worth reflecting on the feasibility of our interpersonal relationships, especially in the field of foreign trade, is how long will the recovery process of the international crisis last. It’s has already been two years from the time the process started, and there is the intention of extending it for two additional years and a little more in some regions. Currently, our main market (North America) is working hard. The manufacturing entities have an investment which hasn’t been used, an unproductive capacity of approximately 35%. Obviously the recovery of its use will go through a long process searching for re institutionalization and viability of many of the productive sectors which currently have not been evicted from state intervention, which are apparently temporary. The second important element to be considered in all the adjustment decisions, especially the fiscal ones, is the world’s inflation. It seems that the threat of inflation is still very low and some analysts believe that the most severe threat is the presence of a process of price depression. At this time the United States doesn’t have inflation, some European countries are going through similar circumstances, while Japan already lived one decade of a depressive stage and knows how painful it is to recover viability and economic activity when a phenomenon of this kind appears. The third element is about competence, efficiency and competitiveness. As Ecuador is a country which resigned from the exchange rate and as the global economy has shrunken, the third threat for Ecuador’s dollarization is the use of the exchange rates by countries which are our competitors. In Latin America the great majority of countries have used the exchange rate type as a measure to defend the damages caused by the international crisis. In these circumstances the most severe problem which could be seen is that given the way in which the assessment has been applied in the exchange rate, this hasn’t have a compensatory phenomenon to future inflation in these societies. In other words, the idea is using the exchange rate type as a mechanism of competitive advantage at medium and long term (as Brazil had it sometime). If this happens, the Ecuadorian production will have foreign producers working in much more favourable conditions. The countries which use or have been using the exchange rate type with the result of a real devaluation in their currencies are simultaneously obtaining a reduction in the production costs of their goods by the

way of using manpower. In such a way there is a specific reduction in the cost of wages in the manufacturing of goods. In this sense, the competition, efficiency and competitiveness go hand in hand with the reduction of the world’s market and with the disappearance of the inflation differential or keeping that inflation which are the opposite to a dollarization model. The fourth element is the concept of market economy. A dollarized economy is the one which requires being sustained over the principle of continuous improvement of its levels of efficiency and productivity. A dollarized economy is more demanding towards its productive systems to maintain its capacity for competitiveness in foreign markets. The entire above can only be achieved when the market regulations are respected by the economic policy, this is, when economic agents know that they aren’t more efficient or cannot stand in the time; when they know that there is an Estate with a policy that is predictable and sustained over time and is ready to prevent irregularities that may occur in a system or incompatibility with a market system but doesn’t interfere with its regulations. It’s a pity that in our case the concept of freedom, from the Ecuadorian political perspective, is a principle which has enormous questioning. The democratic regimes which believe in societies that preserve the basic principles of freedom, they also preserve the basic principles of operation of an economic system based on incentives and not impositions. The dollarization works over the principle of the incentive and not over the principle of imposition. It draws on the potentialities that exist on the basis of finding options, to doing business, create projects and enrich a community. Dollarization, having renounced to the use of monetary politics, rests over the concept of trust and incentives with more deepness than any other regime rests in the economic. That’s why the control of prices and restrictions towards the private initiative, are in opposite of a dollarization model. The prices restrictions, instead of generating more wealth and solve problems of the community’s needs and their opportunities in the foreign markets, create shortage, speculation but not natural or sustained wealth. So that in Ecuador, dollarization is sustainable in the medium and long term it’s necessary to respect and recognize their limitations and strengths; otherwise it couldn’t be able to be sustained indefinitely. The output of the Sucre (1999) and the incorporation of the dollar (2000) was an extremely painful event for the country in all the aspects (economic, political and social). We were coming out of an asset that had no demand in the country and looked for one which had some degree of attractiveness; we left a local currency which had

lost credibility and confidence to adopt a currency which assured the elimination of the discretionary nature of Ecuador’s monetary policy. Therefore the best way to defend and take precautions for dollarization is acting with responsibility and being consistent. If the case should arise, to go out of dollarization, the country must turn into a confident and credible one; ensure that contracts and agreements are implemented without impositions. In modern economy nothing should be imposed, and the incentives are searched; when the markets are imposed, they are distorted. As a reflexion, the tax of 1% to capital flight in Ecuador, is a clear demonstration that with a decision of this nature you don’t obtain that the capital flies out of the country but merely limited peoples’ expectations making them think that the Estate was trying to close and hinder the relations and freedom which Ecuadorians have in the transactions of their patrimony inside or outside the country. Half of the Ecuadorian exportations are from the private sector. If our exportations have been around a little more than twenty million dollars, it means that half of it is the product of the effort of different local activities. That amount of money is a GDP’s 20% and implies the work of more than a million workers which depend of Ecuadorian exportations. While a great part of Latin American countries have seen private exportations drop, In Ecuador we haven’t been able to see the above mentioned. It could be that we have been inefficient and haven’t achieved to turn our portfolio of primary exportations products to manufacture. With the incorporation of new consumers to the world, in this crisis in which a contraction of worlds’ consume was produced, the consuming of food goods was maintained, including the products which we sell. It’s not possible to know if this situation will be kept through time and I believe that the topic about threaten which I previously mentioned is something serious and severe and hasn’t been visualized in the country’s economic indicators. However, if the moment should come in which the Ecuadorian private entities cannot be sustained in international markets or if our competitors are producing in better conditions or if there is a change in the market’s conduct of the products we sell, the viability conditions of the Ecuadorian economy will be absolutely different. The impact of the exporting sectors in the political wealth is much stronger. In none of the crisis which Ecuador has had, effects have occurred as a result of a deep fiscal deficit, but as a consequence of an external not financed external deficit. The Ecuadorian economic policy has been entering in a financial foreign process of strangulation. You have to give a solution to the fiscal deficit, which has to be reduced at all costs, because as the government itself has made its line of non-compliance with international obligations, it shall not have access to resources. Therefore it is necessary to appeal to local or internal sources (which are very limited) or will have to reduce spending. The external financing depends on the way in which our private activities are conducted, specially the exportations. If we are able to close the external breach, will come with it the problem of the viability of dollarization.

After the perfect storm: Lessons of Mexico and the total crisis

Dr. Roberto Salinas Leon President Mexico Business Forum Mexico is suffering a crisis which goes beyond the bad luck and its origin is abroad. Without doubt, the luck has been terrible, but this external factor has been combined with the worst internal elements generating a total storm. This bears big lessons for other countries in the region, such as Ecuador, in the measure in which each one looks for to reconstructing its future. The high dependence toward the United States, inside the cycle of North American business has strengthened the negative consequences of the crisis. This is the occasional price to be paid for the huge benefits which integration has cast. The strong drop of exports at the northern border of Rio Bravo (which represents almost 90% of the whole of exports) plus the drastic reduction of the migrants’ remittances, as well as the foreign investment and tourism drop and the pesos’ devaluation, regarding to the dollar, have become inexorable signs that Mexico requires a paradigm shift in their way of thinking. The integration wasn’t the great magic wand that would guarantee entry into the first world. The inner house, still, is in need of deep structural reform. Therefore, not all has been bad luck. The apathy of the political class to problems, along with the privileged plutocracy reigning in the anti-business culture, is key obstacles to consolidate the development and get out of this time of crisis. Now, more than ever, the labour law needs to be flexible; now, more than ever, is when energy must be opened to the investment; now more than ever, is when we think of as giving facilities to the investment. But this isn’t the way a political class focused solely on privileges or a business class focused more in bribing, intimidating and pressure to maintaining a control over the consumer. In the United States, the financial crisis has been kind of strange, a little bit “Hegelian”, and this is contrary-wise. The traditional variables in other markets have always been the exchange rate type and the external or foreign debt. So this has been the painful way to learn of many of the countries in the Latin American region. But, this isn’t the case of the North American economy, because their currency is their dollar. We observe an inverted crisis: a strong recession, but with a strong exchange rate; real interest rates completely dropped, not in the traditional clouds; the inflation, which are also the lowest in their history, and a consume level which still doesn’t suffer painful adjustments in the family expenditures.

It’s a very strange situation in the history of international crisis. But we know that the size of the exerted “stimulation” will have a consequence in the future; if the story is repeated, there will be inflationary pressures, as well as in the interest rates, because of the size of the expansion of the means of payment, as well as the size of the fiscal deficit. Another surrealist aspect of the crisis is that, at the end of the day, the determining factor which will allow the North American economy to get out of the deep hole which they are going through won’t be the morphine monetary dose they have received, but the flexibility of their economic institutions. But undoubtedly, the new populist chorus will speak of the triumph of spending more than there is as the key for growth in post-modernity. This creates a false expectation. Here too, worthy of our surreal culture we look at things backward. Inflationary pressures not seen for six years however lower the interest, even when there is nothing in the letter of the central mandate beyond protecting the purchasing power of the currency. It’s important to remember and go back to the words of Nobel Prize in Economy, Douglas North, who stated that institutions generate certainty on their way forward. Instead of destroying what has been done well and replace them for false remedies to the crisis, now is the time to take the bull by the horns. The Mexican economy has lived one of the most dramatic episodes of negative external shocks which our memory can remember. It’s true that each crisis is an opportunity; and the opportunity now, for Mexico, Ecuador and Latin America, is consolidating the desirable flexibility, both to cushion the negative effects of the world’s crisis as to identify new opportunities. It should be required that the public policies have the necessary creativeness to identifying the special interests opposed to the necessary structural changes, as well as the aggressiveness and boost flexibility and avoid ideological labels, sensationalist political speeches and furthermore, the revival of old populist recipes such as the return to abusing of public spending to grow or the commercial protectionism as a means of internal development, or nationalization of assets telling that it will promote the “national” activities. These recipes are precisely what hinder the growth and the generation of new wealth, because they only imply a massive transference of sources from one place of the society to other one being the consumer the only victim. It’s true that the future is unpredictable and full of risks, but this precisely casts further (although unknown) opportunities. Not the wisest government of the universe can predict what the future will offer. Therefore, the model for modern economic policy must start from uncertainty. Regulations and strategies which allow to adapting to all

the changes, the expected and also the unexpected, which the future can offer, and not as claimed by the vanity of the social engineer, rules that seek to control and freeze the various aspects that the future may bring. Therefore, a great lesson which this crisis can give us is recognizing the importance of uncertainty in economic life. In spite of the intellectual advances in economic models, and statistical correlations, these only serve to completely capture a small portion of a complex network of everyday actions. Therefore, the formation of public actions, economic policy, depends less of a pre conceived model, than of the humble attitude of knowing how to handle risks, of constant dynamism. Maybe it’s time to think about the competition between currencies and let common sense of housewives, the vendors, the taxi drivers, the micro entrepreneurs, millions and millions of daily agents, discriminate among the alternatives, and give us freedom to choose reliable units of accounts that can buy more with less money and in less time.

“I thank Fernando Cota for his support in drafting and editing this essay”. RSI.

The XXI century socialism and Argentina

Gerardo Bongiovanni President of Foundation Libertad

It’s already known the thesis which distinguishes Latin American governments into three main groups: the centre-right governments (at the rate of Calderon in Mexico, Uribe in Colombia and Martinelli in Panama); the moderate socialists or the “herbivorous” in the words of Alvaro Vargas Llosa (the Brazil of Lula, Bachelet’s Chile or Uruguay of Tabare Vasquez); and finally the hard left, “carnivorous” Bolivarian and acceding to this monstrosity called the XXI century socialism. Venezuela with the colourful Commander Chavez heads up this group with Ecuador, Bolivia and Nicaragua to which perhaps Cuba should be added. I do say perhaps, because the Cuban dictatorship (the oldest in the world with North Korea) is in fact a totalitarian regime that stifles its unfortunate inhabitants into poverty and repression, and not even remotely intend to maintain or externalize the democratic facade with which even, for example, Chavez insists. It is also known that Argentina is difficult to locate in this scene. Beyond the outstanding efforts of the Kirshner’s for showing the “virtues” of the new model closer to Chavez and its essence, it is certain that large parts of the country have resisted it. The government was defeated by the agricultural sector on July, 2008, in a key vote in the Congress in which the attempt to increasing the agricultural exportation taxes was rejected heretofore confiscatory limits. In the same way, likewise the ruling party was defeated in crucial legislative elections on June 28th and Nestor Kirshner himself after applying every conceivable chicanery election was also defeated in the powerful province of Buenos Aires. The government’s popularity, and the Kirshner couple, stands around 20%, with little indexes of recuperation, and everything indicates that despite the power that comes with spurious and corrupt handling of public funds, is in a negative stage for the kirshnerism which will be leaving at 2011. Go back to statist while the world liberalizes? As the former president of the Spanish Government, Jose Maria Aznar, returned from a visit to Latin America, saying not long ago in Buenos Aires that the XXI Centuries socialism is presented as something modern, is nothing new however. On the contrary it is the repetition of the old socialism recipes which were popular at the middle of XX century. The difference, quoted Aznar, is that nowadays it is a boring film, because we already know the end. Indeed the proposal of this “Bolivarian” socialism is the reiteration of proven worldwide failures. And we don’t talk about social democracy, a little intrusive variant within liberal democracies. We concretely refer to this model which pretends that the

Estate replaces the private sector, regulates the whole economy; the opposition press muzzled, and finally introduces an autocratic government under the alleged search of the welfare of the poor. It’s very hard to understand why some Latin American countries, opt for this path, while the world –all the world- consistently moves forward in the process to economic liberalization. Look at what has happened in the last two decades in China, India or the Asian South East; also in East Europe, or in the conservative and “socialist” European Union, in which the opening processes to liberalization have been remarkable. Also many countries in our sub continent-still governed – by those “herbivorous” socialisms have given consistent steps with democratization, openness and liberalization of their economies. Chile, the great paradox Perhaps the most striking example of this paradox is Chile. There is no doubt that Chile represents the closest thing to a Latin American miracle. It maintained for many years high growth rates (in the decade 88-98 to 8%; and the following around 4/5%), and reduced poverty dramatically, improved strongly the quality of its institutions, opened its economy to the world, generated a competitive employer and efficient screening and tackled social problems with maturity and good results. All the known indexes (economic, social and institutional) and of diverse origin, locate this Trans Andean country at the top in Latin America, and in some cases (as the Doing Business of the Worlds Bank) in the best places at international level. Now, with what economic system did Chile achieved to grow so much? Was it something similar to that proposed Bolivarian socialism from the official channels of Commandant Chavez and his people? Was it nationalizing companies, closing the economy to foreign trade, regulating the private or muzzling the press, how Chile managed generating sustained growth and reducing poverty from 45 to 15%? Not so. Conversely, if we examine the two World Economic Freedom indexes (of Heritage Foundation-Wall Street Journal and the Fraser Institute-Cato) we will face a truly compelling and enlightening truth: Chile is the most liberal country in matters of economy in the whole continent, the one which opened most the economy towards the world (nowadays has dozens of agreements of free commerce which commercially puts it near to almost all the world), it was the one to interfere less in the private economy and the one which generated better institutional conditions to developing the private sector. Chile is the most economically free country of Latin America, still ruled and preserved wisely by socialists and in some aspects remarked and preserved that capitalist and liberalized system. It is the one which has generated in an ostensible way the best economic and social results of the region. Shouldn’t this finish the discussion about the convenience of having the socialism of XXI century?

What about Argentina? Latin Americans have demonstrated a great capacity of repeating errors and looking to solving them in the wrong places, such as the Military, populism, economic mercantilism and now again, the Bolivarian socialism. It’s like a boring movie because we already know the ending. My homeland, Argentina, is an expert in this folly of repeating mistakes. After starring one of the fastest growths recorded in the economic history –during the period 1880-1930- and reach the seventh place among the nations of the world for per capita GDP, the country was entangled in militarism, populism and the destruction of republican values. The recovery of democracy, after a bloody and senseless dictatorship brought winds of hope, but in recent times, -particularly during the period of the” Kirshners”- the process of institutional decline is deepening. PJ legislators and other parties voting one year for the privatization of a state enterprise and a year after for its nationalization, manipulation of justice, corruption, scandalous enrichment of the rulers, the wife governing after the husband (great Argentinean particularity), are some of the features of this negative process. And unfortunately, there are two key issues that could bring even closer to Argentina the Bolivarian and chavista model. _First of all, the enormous growth of public spending, which, according to private economists is at the highest level of the Argentinean history, hinders its growth. The paradox of all the above is that poverty also contributes to this situation (which is around 40%) and the deterioration of education and security. Something similar occurs in Venezuela (which is already known) contrary to what the stokers of the new socialism proclaim, here in our land more public spending and more estate seem to be synonymous of more poverty, insecurity and educational decline. _On the other hand, and at the best chavista style, after losing the battle against the agriculture and the June elections and in opposite of common sense –which would claim the search of consensus_ the kirshnerist government has decided to double the bet: it nationalized the private pension system and Aerolineas Argentinas company (which this year will lose 600 to 700 million dollars paid by taxpayers who will never get on an airplane); it renewed the special powers which allows managing huge funds without control; and now, upon everything, the government imposed a law to the media, under the pretext of getting rid of that monopolized sector and could give the administration enough power to muzzle the independent press. However, there must be optimism In spite of this panorama, we try to look the future with some optimism. Even if we will have difficult times, Argentina won’t fall into the hands of Chavista socialism because there are still institutional reserves –curiously, many of them within the Peronist movement itself- and on 2011, Kirshner and his wife will start being a bad memory. In

Latin America we can also feel winds of change: Chile, Brazil and perhaps Uruguay, will probably have more moderate governments which won’t allow by omission the influence of Chavez. The international conditions will continue being positive and globalization will also keep offering extraordinary opportunities for development. Some countries, such as Chile, are already succeeding. If each one of us assumes our commitment, other countries will do the same soon.

The silent spirit

Pastor Nelson Zavala

“And answering one of the multitudes said: teacher, I brought my son who has a mute spirit, which, wherever it takes you, shakes and he foams; and gnash its teeth, and dries; and I told your disciples that they should throw him out, and they couldn’t. Jesus asked his father: how long ago does this happen to him? And he said: since childhood. And when Jesus saw the crowd running together he reprehends the dirty spirit saying: dumb and deaf spirit, I command you; come out of him, and enter no more into him. Then the spirit, crying and shaking violently, left the one”. This Bible story, shows us how in the spiritual world, the demons can take control of human senses, so far as to let it mute and also deaf. Only the glorious power of God, manifested in Jesus Christ, was able to free this boy of such an awful spirit. Nowadays, 2.000 years after, the mute spirit comes back to the scene, trying to silence the media, taking and shaking them (with the threat of closing them) and drying them until they keep totally mute. What can we do? It gives the impression that as it happened to the disciples of Jesus, today it’s happening to the Ecuadorians: we cannot throw out the dumb spirit to keep silence the voice of self expression. It seems impossible to overcome its power. What will we do? The answer is the same as 2.000 years ago: Jesus, yes Jesus, only in his hands and God’s power to throw out the mute spirit and avoid that Ecuador is silenced and remains deaf to the truth. Since when is Ecuador going through this situation? It’s my wish that the Ecuadorian people pray to God, through our Lord and Saviour Jesus Christ, to let go this dumb spirit, born of the troubled heart of a revolution that each day more, denies God by their actions, leading us to an abyss of despair and to death. ¡May God Bless you!

The ingeniousness of food sovereignty

Agronomist Engineer Temistocles Hernandez

Insisting to become a sovereign country concerning to feeding is a great clumsiness. Those who are trying to do so, have no idea of how important this topic is, and so easy at the same time. Even if it’s true that you mustn’t be a scientific in agricultural, industrial, economy or nutrition matters, to be able to give any opinion, neither should be allowed to discuss, judge and decide about such an important matter to ignorant, abusive and irresponsible people, and so irresponsible to the point of taking the debates to political areas, whose views prevail visceral spaces attached to dogmas and doctrines that precisely turn into the greatest obstacle to find solutions. At this stage of global civilization and with so many means of communication and transport by land, water and air, to worry being sovereign in feeding matter, is losing time, money, efforts and neurons which could be used in something useful, necessary, primary and urgent, to get out of neo-socialist poverty which we are facing. If sovereignty is understood as self-reliance, independence and autonomy, then the food sovereignty is a “privilege” of people as backward and primitive communities. Of course the “not contacted tribes” as they are called, are the most sovereign in food market; they only eat what they find and harvest in their immediate environment. And as those groups of people don’t have affective or commercial relationships, nor ways or desires to communicating with other people, they do not receive anything from the outside or from their neighbours. In the measure in which people and individuals start being civilized, they also start “contacting and inter correlating among them, opening ties of friendship and sharing, and gradually, sovereignty is lost, not only in feeding but in many elements of life, habits and culture. There is nothing worthy to be sovereign in feeding, nor is it deplorable if not. What happens is that the richest countries of the world, precisely because they have the abundance privilege, are much more dependent than those with less or none capacity to choose and buy. In the United States for example, less than 3% of the population, work in agriculture, and if it wouldn’t be because of subsidies, they wouldn’t even reach a 2%. If rich northern countries with four seasons climate patterns, decided to be sovereign in feeding, they would have to stop using: Sugar cane, rice, coffee, cocoa, mangos, bananas and all tropical fruit and vegetables during the winter and early spring. While in equatorial Andean countries, such as Ecuador, we would be forced to forget about wheat bread, oats, lentils, machica, barley rice and beer; also about vegetables, eggs and poultry, and even the good pork meat, which couldn’t be produced in a sovereign way, because of climate topographical and productive units by size limitations, besides because of the lack of consumables, technology, and human resources.

The most consumed cereals by human beings are produced better and secure in climates with four seasons and in mechanized states. Cultivating them on smallholding hillside to harvest them by hand, or with a sickle, isn’t appropriate for anachronistic and wasteful. No sensible farmer would do it nowadays, except if he has time to do it, or has the need to deal with self-sufficiency and the need not to starving. Then, nowadays we can see Ecuador importing annually 700 thousand tons of wheat; this is, 97% of its demand, besides of many other basic products such as barley, corn, soya, oats, lentils and even chochos. Many naive often say: How is it that before we were able to be self-sufficient with grains, eggs and poultry? All this, was before in another reality: when Ecuador’s population was around three million inhabitants and three quarts of them were rural agricultural. In those times many urban people didn’t buy grain or poultry, nor cheese and butter, because their parents or grandparents gave them as a gift. In those times, a hen was eaten on Sundays or festive days by wealthy people. Nowadays we are more than eight million urban, and much more demanding than before, both in quality as in quantity; in food, clothing, housing, health, education, fun and luxuries. Nowadays even the poorest is able to eat poultry daily and demands turkey for Christmas and New Year’s Eve. The smallholders already lost their interest in agriculture and migrated to urban centres or other countries. When they return, it’s only to resting or having vacation. They also could be thinking in opening other businesses of any kind, excepting the agricultural. Regarding to the vegetable and fruit production, we are in extreme dependant. The seeds we use of radishes, onion, lettuce, melons, tomatoes, green beans, broccoli, carrots and others, in that order, are hybrid and of course imported. The hybrid seeds lose their reproductive capacity if they are sowed in second generation; this means that we have to continue importing to replace them forever after every sowing until we produce our own. And of course we could do it. We have excellent technicians which are trained to undertake these tasks and even obtain transgenic seeds. The huge urban populations which constantly grow demand each time more food; that is, more output per unit area or man, and this can be achieved through the applications of special and specialized technologies for each crop or animal species. In that case, agriculture can’t continue being an elemental occupation under the responsibility of irresponsible, incompetent and disabled people to learn. A single farmer, if he does not have basic inputs (certified seeds, agrochemicals), good technology and machinery, can hardly produce enough food for four people. However with good technology and machinery food in enough quality and quantity can be generated to support 80 people (20 times more). This shows us that farmer productivity has been increasing in a significant way thanks to technological improvements (Scientific American, September 1982, page 77). Measuring performance with other parameters, it’s estimated that a traditional farmer produces about 10 calories for every human expended calory. While a farmer in Iowa, USA, using the most available advanced technology, is able to produce 6 thousand calories

for each human extended calorie (600 times more). This feat is accomplished by using large amounts of energy from fossil fuels to produce inputs and activate the machinery. Under these circumstances, I reaffirm once more, because it’s notorious, that even the most visible politicians and political analysts, experts on economy, leaders of the communication, the leaders of social movements, academics and even those bureaucrats specialized in this area, are not well informed and are not aware of the collapse of the agricultural sector and the untimely mass defection of the peasantry, which is precisely the result of the wild agricultural policy, which for the last five decades, have been put forward and carried into practice for propaganda purposes only. This explains why in the Constituent Assembly, mandates were issued not only contrary to the logic of food security, but even ridiculous compared to real needs and contemporary scientific advances. It also reveals why in debating, the opinion of specialist about this topic wasn’t heard. In a radio program I offered a reward to who could give me the study which was used to advise the Constituent Assembly respecting to agricultural development and food sovereignty. And this request was done even if I knew that no agricultural professional, as bad as he could be, might have suggested such nonsense. I was and am sure that all the above was made by architects which think knowing about everything, environmentalists and naive social leaders which even imagine that DNA genes could be introduced to chromosomes through the mouth (by eating). And I wasn’t mistaken when thinking that nobody who knew about the topic was consulted. Everything about security and food sovereignty was under the responsibility of two weird people. Both of them know nothing about the topic, and one of them uses indigenous clothing to make believe that he is tr

Project for a new Customs law

Lcdo. Roberto Calderon V.

This article expresses what the customs authority wants to achieve with the deep changes to the new project of the Customs Organic Law. The Project expositions memorandum add: “The current law doesn’t allow the actions of the process being the appropriate ones. Fundamental changes are required to generate agility, control, optimize the service and increase the social benefit, for which Customs must turn into a facilitator and become flexible and balanced in the sanctioning aspect”. Ways to achieve the mentioned changes: Import Customs Proceedings.- Customs formalities and customs clearance of nationalization must be short and quick but well controlled. The manual proceedings become electronic, and therefore:

The Customs Agent with advanced, modern and updated technology may be submitted in advance of the arrival of the means of transportation through Customs Declaration without attaching any document unless so required by Customs.

The Customs Agent by being a Notary Customs will detain in custody the “documentation of support” from the declarations.

The Customs Declaration will be presented through an informatics system, which will be established for that effect. Apparently the SICE (Sistema Interactivo de Comercio Exterior) (Interactive System for Foreign Commerce), has shortcomings.

The filling dates of presentation of the declaration will be the date of the accepted electronic transmission. This is a new method which makes the process quick, eliminating the possibility of discretionary.

The risk profiling system determines the mode of releasing, if the case is for example, tax risk-free goods, run by operators with good grade, the appraisal would be electronic –green light- eliminating documentary and physical examination of the goods and continue paying taxes and release or removal of merchandise.

If so, the nationalization formalities will take only few hours. The disadvantages that can occur: This process will have effect ONE YEAR AFTER THE LAW IS APPROVED; this is how a transitory law demands. In this lapse of time many changes will occur in the OMA’s frame (Organizacion Mundial Aduanera) (Worlds’ Customs Organization), to list one: the Andean Customs Code, could become valid in 2011, which is a comprehensive standard that devotes two chapters to the exports and its facilities, coastal traffic operation and to special regimes.

It is expressed in several items, the need of specific regulations which will be proposed to the Customs’ General Director, once in charge, besides being an uncertain Law, the General Regulation which will serve for the application of this draft that could be rolled out in late, and might cause consequences. To be efficient and provide facilities, Customs must and has to control the merchandise, transportation, and people and in general all the foreign commercial operators, and therefore they appeal to Resolution 574 of the ANC, which identifies the three control methods: Previous, Concurrent and Post. The concurrent control allows the importer through a Customs agent –in case of an error- to be able to amend, by filling a disclosure statement to correct errors in customs declaration involving greater revenue collection. ¡Ease the declaring with the principle of good faith! In the post control, after merchandise withdrawal from the Primary Zone (from Customs), it’s allowed that the passive subject presents a substitute declaration to amend the errors of the customs declarations in consuming regime, when they imply a bigger collection. The substitute declaration would be valid and accepted by the informatics system the same way as it is in the customs declaration. This is a positive Possibility. Just as it’s using the ANC’s regulations in the main, it is desirable to implement Resolution 846 on Customs Control, to match procedures. The Free Zone is no longer classified as a Special Status and becomes a Customs Destination, which with the principle of extraterritoriality allows the entry of goods tax free. It will be under the control of the Customs Managerial Control. Customs Destination. - Treatment applicable to the Goods which are under customs authority in accordance with the law. This new Ecuadorian figure is foreseen in the legal regulations of the sub region’s countries.-as it is in the majority of the countries which belong to the CMO (Commerce World’s Organization) - and allows being more flexible with the Goods destinations avoiding being abandoned or confiscated. The tax base for import duties and taxes is CFR (Cost and Freight) instead of CIF (Cost, Insurance and Freight) for imports and the FAS (Free alongside Ship) instead of FOB (Free on Board) for exports, for which import and export costs will be cheaper. For the calculation of taxes, the values denominated in foreign currencies will be converted to the currency of legal usage, the exchange rate prevailing at the date of lodgement of customs declaration. Currently it’s showed that they will be “converted in USA dollars”, however there is speculation of a new currency.

INCOTERMS

Exporter Cargo Customs Importer Terminal EXW FCA (c) Reingex FAS Documents Risk FOB Cost CFR CIF DES DEQ DDU DDr Glossary The Incoterms (English acronym of International Commercial Terms, are regulations about the delivery conditions of the merchandise. They are used to divide the costs of foreign commercial transactions, defining the responsibilities among the buyer and the seller, and reflex the current practice in international transport of goods. EXW (Ex Works): In factory (determined place) FCA (Free Carrier): Free transporter (determined place) FAS (Free Alongside Ship): Free alongside ship (given load port) FOB (Free on Board): Free on board (given load port). CFR (Cost and Freight): Cost and freight (given port).

CIF (Cost, Insurance and Freight): Cost, insurance and freight (given port). DES (Delivered Ex Ship): Deliveries on Ship (determined port). DEQ (Delivered Ex Quay): Delivery at Pier (given port). DDU (Delivered Duty Unpaid): Not Paid Delivery Rights (determined destination without port expenses). DDP (Delivered Duty Paid): Deliveries with paid rights (given destination with paid port expenses).

Wikipedia

It has been mentioned that in Customs there are abandoned goods for more than ten million dollars and cannot be auctioned or allocated to others for lack of judicial flexibility, which is correct so a reform of procedures will be done. The unfortunate thing is that there is the desire to award gratuitously in favour of Organisms of the Public Sector, including Customs, and further on, promote social welfare in Institutions of Social Assistance. This provision is contrary to the thinking of increasing the social benefit of the dispossessed. The penalties applicable to contraventions ranging from a minimum wage to 300% of customs value of not declared goods or the difference between the stated values and the found and valued by Customs officer. The product of the fines for transgressing, will income to the Ecuadorian Customs Budget, which is inadmissible. A new subject of the tax liability is born: the authorized Economic Operator, the foreign trade operator authorized by customs to access facilities in the clearance of goods and other customs facilities. According to other countries experiences, this figure facilitates importers and exporters who keep a minimum volume of operations, don’t report violations and fulfil certain requirements. What is important is that this subject must be managed by the Customs agents, to be also able to comply with the provisions of the Customs Agent Regulation. The tax liability extinguishes in case of loss or complete destruction of goods, occurred before its arrival, during their temporary storage or deposit, provided they occur by accident or force majeure. Not be considered a fortuitous event or force majeure, for the abduction, robbery or theft of goods. Therefore, those which have been victims of robbery during their goods transportation outside the primary zone are forced to cancel the customs taxes. The verdict about the Capacity Consultations will be linked to the Customs Administration: regarding the consultant, at present, “the opinion is of general application and binding”. Consequently, there won’t longer be able to inquiries from similar or identical cases filed by others. The Law regarding to Customs Offenses uses in several articulated assumptions, mechanisms as opposed to the Constitution. They pretend attributing to Customs, powers opposed to constitutional principles, which is what people that know about this topic say.

The intention of changes in Customs processes will always be given, and will have small differences, because customs all over the world are controlled with systems, processes, operations, controls, etc. It’s common to see that the inconvenients are in the details. Let’s try to follow what the Transnational Regulations order and the results will be the expected.

Graduate in Foreign Commerce. Customs Agent

Director of Grupo de Logística Integral Calderón.

Companies: Rocafuerte S.A. Calvima Cia. Ltda., Comexport S.A.,

Central File and Metromodal S.A.

Family linked to Customs since 75 years, four generations managing Forei

Shaping the Entrepreneurial Spirit

Ing. María del Rocío Vallejo Fiallos *

Most of Ecuador’s Business Structure is composed by Family Businesses that were born thanks to the Development of Ideas of Entrepreneurs. If this is a fact in Ecuador, in times in which the challenges were smaller, and the word Entrepreneurial, didn’t have name or formation; let’s imagine nowadays when the world claims for new ideas and there is a business context which drives the enterprise as a solution to such problems as poverty. The enterprise goes beyond personal enrichment, on the contrary, through the creation of PYMES and Micro businesses gives the opportunity to strengthening the business component in the country and somehow, collaborates in a social and responsible way for its development. Ecuador should create new Social, Commercial and Technological Entrepreneurs, and strengthen the existing knowing that being different is something difficult. More than once they must have said themselves that the world is fine and the ones mistaken are the others; but this particular way of thinking or simply wish something new, is what will allow achieving the unreachable, and reaching beyond many of the ones you know. Some recommendations to be considered include:

Strengthening themselves, in times of sadness and uncertainty to ward off the winds of defeat.

Capture in paper those brilliant ideas that arise in the most unexpected moments.

Not reject the opportunities.

Get prepared both in an academic as in a professional way.

Be aware that the environment changes and they must be prepared to adapting to these new challenges.

To carry out their projects, and not leave them in ideas or words on paper.

To dedicate time to their created business and control each step of its development.

To recognize if they are wrong and seek the best possible solutions.

Back to start until they feel they already have that for which they have struggled so much.

To live convinced that they would go over the same path if they had to. The Family Business isn’t only a fact in Ecuador, but all over Latin America and the world; the difference is that in developed countries in the measure in which the businesses grow, that Family Structure changes and turns into a Corporate Structure. This is the challenge we must confront: the “Metamorphosis of the Corporate Governance of Family-Government to Corporate Governance.

Among the challenges that Business Metamorphosis includes are: the structural design, the manual of procedures, decision making, direction and succession. There are some practical suggestions for each one of these challenges, such as:

CHALLENGES: Structural Design SUGGESTIONS: The actions must be distributed among the Family Council according to a participation based in clear and pre established criterion; the high, medium and low controls, must be occupied by persons who meet the profile according to the office design, this is, without family preferences. Manual of Procedures SUGGESTIONS: The family is the foundation of society, in spite of which, there must be a separation between the Family Protocol and the Corporate Procedures; in simple things such as discussing about work matters at work, settle schedules, separate the expenses, setting goals, evaluate results, apply sanctions and recognitions as all the members in the company. Decision Making SUGGESTIONS: Decisions must be objective and not subjective, and have to be taken according to the established in the Manual or Procedures; it’s also suggested to keep track of the result of each decision and in this way, you assure the continuous improvement of the company and the family’s harmony. Direction SUGGESTIONS: The strategic planning is essential in any business environment; and regarding to the Family Business it must be clear, as Professor John Davis quotes, that the families grow faster than the companies and also their economic expectations. Therefore we recommend you keep the lines of abstract vision that allows the glimpse of the new opportunities offered by the market constantly and so develop new business ideas that involve even the new members of the Family Council.

Succession SUGGESTIONS: Family Culture must be separated from the Corporate Culture and specially to maintain a balance so that any of the two affect each other. In the other hand, children should be inculcated with entrepreneurial attitudes and skills and plant in them the responsibility. However, in the other hand, they shouldn’t have the pressure of responsibilities that go beyond their ages, or trying to create clones or refinements of the business founder. In reference of the above mentioned, it’s important to note that the fact of being in the Succession Chain represents a psychological pressure from the first minute of their life, so the key is to give members of the Succession Chain a non traditional training to enable them to maximize their skill, discover themselves, feel they are part of the Family Council and create their own Enterprise. Finally, we must promote Entrepreneurial Culture for which we have a strong desire for a better country providing opportunities for all without conditions binding us to achieve common goals.*

Engineer in International Management Director of Entrepreneurs School School of Business Specialty Catholic University of Santiago de Guayaquil

Doubly Green

Ing. Jose Javier Guarderas General Manager

Sambito, Total Environmental Solutions As I said before, environmental awareness, acting on behalf of nature and eco-efficient work also offers economic returns. That is to say, “doubly green”. This is why this article could also be titled “Carbon diet” or “buy green “. Until recent times, we didn’t have an easy way to measure the impacts which our actions could have upon our planet. Until recent times it was difficult to find an economic relation to individual impact which we cause over the environment; therefore it was difficult to know if by changing our habits it would generate more expenses or savings. Nowadays we are capable to measure the impact through an ecological trace or the carbon’s trace; we are able to measure the amount of CO2 which is fired into the atmosphere because of our daily decisions and can act directly to compensate, mitigate or start solving the problem. Almost all the activities we make such as driving a car, cooking, cleaning homes, importing goods, move a merchandise, offer a service, pay a bill or go on vacation will increase our impact towards environment. Some decisions have more impact than others. How to achieve a lesser impact, and hence a lower ecological track or sign? One of the ways is thinking carefully about what we purchase, be more deliberating when using what we have and make efficient purchases. All the above mentioned, thinking when buying the car we drive the computer we type or a cell we use, in its process of production, use or replacement, causes impact. A hybrid vehicle, for example the PRIUS from Toyota, impacts less than a car moved using 100% gasoline. Did you know that by building a portable computer there are needed so many raw materials with the equivalent of the weight of two elephants? Did you know that 90% of the Congo’s gorillas have died due to the extraction of Colton mineral used for the manufacture of Mobil phones, and that 2.5 million people have died because of wars due to the extraction of that same mineral? A PC with recycled components generates less ecological trace in its manufacture than a PC with all new components. And often we change the PC or a cellular for fashion rather than for need....The question is: how knowing which products, services or brands fulfil the environmental standards? Each time more there is less information regarding to this topic. For example we in SAMBITO, have developed a PURCHASING GUIDE which names brands and products in base to the fulfilments of thirteen criterions which qualify them as eco-efficient. Which are those criterions? If their origins are: natural, renewable, durable, recycled content, if it’s recyclable and/or reusable, if it’s bio degradable, if it’s energy saving, if it’s water

saver, if it’s national product, if it protects the ozone layer, if it minimizes the global warming, if it isn’t toxic for the environment, not harmful for human’s health, and if it has a environmental certification. Buying consumables for homes and offices according to this guide means to make “ecological purchases“besides that it isn’t more expensive. As Gustavo Manrique, president of SAMBITO says, in the introduction of the GUIDE. “Our contemporary lifestyle is depleting the planet’s resources. Our format of energy generation and consumption is contaminating nature and the air we breathe. Exploiting raw materials for industries, is killing the gorillas from the Congo, the trees of the Amazon and the fish of the seas”. It is more expensive not having where to live. Don’t you agree with me? But to stop producing, generating or consuming isn’t the way. The option is being efficient when purchasing, consumption and the wasting. Did you know that the manufacture industry, the transportation, and food and beverages manufacture, and the homes ecological effect generate 36% of the greenhouse gases? There are changes you can make in your daily work routine, to feel better about the impact you and co-workers impact on the environment. Did you know that in the United States eight million Tons of paper copies are used per year, which is the equivalent to 188 million trees? You must reduce the office residuals, recycle computers, print on both sides of the paper –and even better- don’t print, until you start purchasing green and you will reduce the planet’s impacts and generate savings. Think about and act. ¡Be doubly green!*

Richard II

Richard II, the famous play by William Shakespeare, tells the dispute between a king and a revolutionary, whose ways of being radically clash, at the expense of order and society. The drama involves a lesson giving an overview of leadership limits, as well as the unintended consequences arising from the regime’s usurpation in the political realm, in the legal framework, in the family, civil relations, in the domestic garden, in the institutional ecology. Richard II appears to be a tyrant, who exercises his will to the margin or above the law. However, he underestimates his role as a legitimate ruler. His incompetence is born of the innocent vanity that he and he alone, is the incarnation of political will. But his indifference in solving disputes, to the preservation of the social contract, makes him being unable to govern. Richard II hesitates; wonders if he is really the king, while his heart is supposed to be a blank check to do whatever. He doesn’t understand the limits of his political exercise, nor the contract that underlies the relationship between civil society and the ruling polis. When a territorial dispute arises among the civil he prefers to ignore the problem, instead of confronting it. In the end, in an arbitrary way, he expropriates the land of the most respected in the kingdom as the famous Ghent. The tragedy is less than an individual drama and more as the destiny of an aimlessly country, without an efficient leadership. Richard enjoys legitimacy, but fails in a lick in the performance of his duties. His counterpart, Henry Lancaster, unjustly expelled from his homeland, returns to revolutionize the order. Richard has virtues, is admired, is a good strategist, but hasn’t political legitimacy. Ghent, near death, sums up the tragedy of this clash of forces referring to the violation of this demy-paradise, the territorial Eden, kidnapped by weakness and rebellion. The kidnapping occurs at individual level, and again Richard doesn’t pay attention, he believes that all his wishes must turn into reality avoiding the law, the tradition and the family bond. This hubris feeds an extravagant number of advisers, who never tell the truth, and make him always believe their own lies. They are the gardeners of a rotten country with which their flattering, their servitude rituals, have fragmented the garden’s roots, generating turbulence, corruption and distrust. Richard’s individualism is born from his silly vanity, seeing the world as its own, and always turning around him. He believes that everything is wonderful and when this doesn’t happen, when he falls, assumes the position of a martyr child. While Henry has legitimate cause to seek restitution of his rights, he doesn’t have to be a revolutionary hero. His arrogance does not respect the order, the law, and the regime’s tradition. Without doubt, he achieves defeating Richard, but the political body reminds soulless, without heart or head, in a scenario of “social Darwinism” * where winning is a function of muscle, of the one which stronger hits. Richard avoids deciding and confronting the real world, looking instead for false flattering of the corrupt and dishonest. All the previous reflects a lack of leadership, but doesn’t justify to

revolutionize the political kingdom. Both, Richard and Henry, have a lack of humility and practical wisdom that leaders need to address the problems which could arise in the civil order. Leadership, seen this way, isn’t a reforming mechanism. A leader must respect the institutions and let be. The right to governing doesn’t imply any support before accountability. That’s the tyrant’s origin, the “Zorro” which cunningly knows when to promise, when to excuse, when to accuse, how to abuse the scarce sources of the garden, from the deepest root to the most appreciated woods. This is the Tragedy of Richard II, a tragedy derived from vanity, from the idiot who doesn’t see, the perfect idiot to believe it, and the rest of us who tolerate it.*