Ecuador rejects US free trade pact

The Associated Press December 10, 2006

Ecuador rejects U.S. free trade pact

LIMA, Peru

Ecuador’s President-elect Rafael Correa said Sunday that he will not sign a free trade agreement with the United States.

Talks between the U.S. and Ecuador derailed in May, after Ecuador canceled the operating contract of California-based Occidental Petroleum Corp.

Correa, who takes office Jan. 15, met with Peruvian President Alan Garcia in Lima following the second South American Community of Nations summit in Cochabamba, Bolivia.

Correa told Peru’s Radioprogramas radio that the U.S. agreement would be "tremendously harmful" to Ecuador.

The Andean country adopted the dollar as its currency in 2000 to halt hyperinflation. But Correa says that a trade agreement with the U.S. — like the ones Colombia and Peru have already signed — could create "incalculable" damage for Ecuador since the country cannot control its currency’s value.

"We don’t have a national currency, we have the dollar," he told Radioprogramas. "If as a result of the agreement, Peru and Colombia have a problem in the external sector, they reduce the currency’s value and correct the imbalance. Ecuador can’t do that and the consequences could be incalculable."

While critical of the decision to adopt the dollar, Correa, who takes office has reassured Ecuadoreans that he intends to maintain the dollar as Ecuador’s official currency for the next four years.

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source: BusinessWeek