FAIR trade campaigners have welcomed Ecuador’s rejection of investor-state dispute settlements (ISDS) in a landmark referendum on Sunday.

The country’s President Daniel Noboa had been accused of slipping two unrelated questions into a referendum billed as a bid to boost national security and crack down on armed gangs.

Voters backed the nine questions on security, which allow Mr Noboa to deploy the army against gangs, lengthen prison sentences and make it easier to extradite offenders.

From having the second lowest homicide rate in Latin America under the now-exiled socialist leader Rafael Correa, Ecuador now has the highest, with a murder rate of 45 per 100,000 in 2023, a six-fold increase in six years. The spectacular rise in violence has been blamed on soaring poverty under the neoliberal regime of Lenin Moreno, a judicial collapse as his government launched massive purges of former Correa supporters from state institutions and on the emergence of new drug-trafficking gangs as older ones have been disarmed in neighbouring Colombia as part of the peace process.

Voters rejected a proposal to “recognise international arbitration as a method to solve investment, contractual or commercial disputes.” 

Mr Correa ended all investment agreements including ISDS clauses in 2017 — the notorious clauses allow companies to sue governments for lost profits, and have been used by fossil fuel corporations to punish governments which take action on climate change.

The Ecuadorean right have been attempting to get the constitutional ban on such clauses removed ever since. One hundred organisations globally had called on Ecuadorean voters to reject the return of ISDS, including Friends of the Earth, War on Want and Global Justice Now.