Ecuador not renewing pact with US

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7 May 2007

Ecuador not renewing pact with US

QUITO, Ecuador (AP) — Ecuador’s new leftist president has decided not to renew a bilateral investment treaty with the United States, the country’s foreign minister said Monday, just days before a senior U.S. official is due to visit.

Maria Fernanda Espinosa said President Rafael Correa, a U.S.-trained economist, will not renew the agreement that expires this week, but is ’totally open’ to discussing ’an alternative that mutually guarantees the investments of each country.’

The announcement came less than a week before U.S. Deputy Secretary of State John Negroponte is scheduled to visit the country.

The treaty, signed in 1993, is meant to encourage and protect investments.

Ecuador ’has not formally notified’ U.S. authorities about terminating the agreement, a spokesman at the U.S. Embassy in Quito told The Associated Press.

’We were surprised to hear about this in the media,’ Michael Greenwald said. ’There had been no formal notification of an intent to terminate or even of any concerns about the treaty.’

Last year, Occidental Petroleum Corp. cited the treaty when it sought $1 billion in damages over Ecuador’s cancellation of the California-based company’s oil-production contract. The arbitration claim before the World Bank’s International Center for Settlement of Investment Disputes in Washington has not been resolved.

Espinosa said Sunday the treaty ’has really caused many problems for our country’ and ’does not respect national interests,’ although she did not elaborate.

Some Ecuadorean executives worry that Correa’s decision will cause the U.S. to deny Ecuador another extension of the Andean Trade Promotion and Drug Eradication Act, a package of trade benefits offered in exchange for cooperation in counter-drug activities. The act expired Dec. 31, but was extended for six months.

source: AP