WASHINGTON, July 1 (Reuters) - President Barack Obama has put Ecuador on notice that it could lose valuable U.S. trade benefits unless the Andean country improves its treatment of foreign investors, U.S. business groups said on Wednesday.
Although Obama decided on Tuesday to extend Ecuador’s trade benefits for six months, the concerns raised in a report he sent to Congress suggests the preferences may not be extended again, said Myron Brilliant, vice president for international affairs at the U.S. Chamber of Commerce.
“We welcome the increased -scrutiny of Ecuador’s eligibility going forward,” Brilliant said in a statement.
The Emergency Committee for American Trade, which lobbies on behalf of U.S. multinational firms, said Obama’s report reflected “the negative experiences of many U.S. companies that have operated in Ecuador over time.”
Without mentioning any company by name, Obama noted concerns about two outstanding investment disputes involving U.S. companies in Ecuador.
One appeared to refer to a case brought by 30,000 Ecuadorean plaintiffs against Chevron Corp (CVX.N), which bought Texaco in 2001.
The plaintiffs say Texaco polluted the jungle and damaged their health by dumping billions of gallons of contaminated water over more than two decades before leaving in the early 1990s.
“The company argues that the Ecuadorian government bears legal responsibility for any damage under the terms (of) a release agreement,” Obama noted in his report.
“The government contests that argument. Concerns have been raised that statements by top Ecuadorian officials in favor of the plaintiffs have politicized the proceedings. The U.S. government has encouraged Ecuadorian government officials to refrain from commenting on ongoing judicial cases,” Obama said.
Ecuador and other Andean nations have long had U.S. duty-free access for most of their goods under a drug fighting program that dates to 1991.
Last year, Congress extended the benefits for Colombia and Peru through Dec. 31, but set a mid-year review of Bolivia and Ecuador’s eligibility due to mounting complaints about the deteriorating treatment of U.S. investors.
Not long after that renewal, former President George W. Bush suspended Bolivia from the program, citing its poor cooperation in the U.S. war on drugs.
Obama upheld Bush’s decision on Bolivia in his report to Congress, but decided to renew Ecuador’s benefits through the end of the year.
Senator Charles Grassley, the top Republican on the Senate Finance Committee, said on Wednesday he would closely watch Ecuador and Bolivia’s behavior over the next six months in deciding whether to support renewed benefits in 2010. (Editing by Doina Chiacu)