July 1, 2009 / 12:16 AM / 10 years ago

UPDATE 2-Obama to continue trade benefits for Ecuador

(Adds detail on Bolivia)

By Doug Palmer

WASHINGTON, June 30 (Reuters) - President Barack Obama will extend long-time U.S. trade benefits for Ecuador, one of the poorest countries in South America, despite concerns by U.S. business groups over the leftist government’s policies.

“Ecuador will continue to receive duty-free treatment under ATPA (Andean Trade Preference Act) until the end of the year, when the program is currently slated to expire,” a White House official told Reuters on Tuesday.

U.S. business groups this month urged the Obama administration to consider ending the trade benefits for Ecuador, which they accuse of failing to adequately protect foreign investment.

Ecuador has had duty-free access to the U.S. market for most of its goods under an anti-drug program for the Andean region dating back to the early 1990s.

Frustration over policies that Ecuador and Bolivia have pursued against foreign investors prompted Congress last year to approve just a six-month renewal of the program for both countries, and to give the White House the option of extending the benefits for an additional six months.

Shortly after that renewal, President George W. Bush suspended Bolivia from the program because of its failure to cooperate in U.S. drug-fighting efforts.

In a report to Congress on Tuesday, Obama declined to lift Bolivia’s suspension. Current challenges included “explicit acceptance and encouragement of coca production at the highest levels of Bolivian government,” the report said.

Bolivian President Evo Morales, a former coca farmer, expelled U.S. anti-drug agents last year after accusing them of them of meddling in domestic affairs.

He has pledged to eradicate plants used in the cocaine trade but defended the chewing of coca leaves as well as their use in brewing teas and in religious ceremonies.

Tensions rose between the United States and Ecuador in February, when the Andean nation expelled two U.S. diplomats in a dispute over an aid program.

But this month Obama called Ecuador’s socialist President Rafael Correa to say he wanted better relations with the OPEC nation.

Correa, popular at home for standing up to foreign oil companies and debt holders, is part of a bloc of leftist leaders led by Venezuelan President Hugo Chavez, a harsh critic of U.S. policies in the region.

Besides oil, Ecuador’s main exports are bananas, shrimp, flowers and other farm goods.

The United States is Ecuador’s largest export market. Last year, higher oil prices propelled Ecuador’s exports to the United States to more than $9 billion. (Editing by Xavier Briand)

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