archivos de los protestos globalesarchives of global protestsU.S. Freezes Ecuador FTA After Government Cancels Occidental Contract
Inside US Trade - 5/17/2006
U.S. Freezes Ecuador FTA After Government Cancels Occidental Contract
The U.S. free trade agreement with Ecuador has been put into a "deep freeze" by the United States in response to Ecuador's cancellation this week of an oil contract with U.S.-based Occidental Petroleum and seizure of the company's assets.
The FTA will continue to be on hold while the U.S. government seeks clarification on the action taken by the Ecuador government and whether it intends to compensate the company as required under the provisions of a bilateral investment treaty, according to a spokeswoman for the Office of the U.S. Trade Representative.
"We are very disappointed at the decision of Ecuador, which appears to constitute a seizure of the assets of a U.S. company," she said. "For a country to attract investment, and certainly to be a prospective FTA partner of the United States, it must obey the rule of law with respect to foreign investors. Free trade agreements are based on fundamental principles that both parties will respect the rule of law. At this time no further FTA discussions are scheduled."
On May 15, Ecuador's Minister of Energy Ivan Rodriguez cancelled the Occidental contract, saying the company was in breach of its contract.
The move came after Ecuador passed a hydrocarbon law in mid-April more than doubling the taxes on the profits of foreign oil companies, which are required to operate under contract with Ecuador's state oil company. At that time, the U.S. rebuffed efforts by Ecuador to restart the bilateral FTA negotiations in mid-May with the argument that it must settle current investment disputes, including the one with Occidental from 2004 and U.S. oil company complaints that the hydrocarbon law changed their contracts without negotiation (Inside U.S. Trade, April 28, p. 1).
The last round of FTA talks took place at the end of March.
16:51 16May2006 UPDATE 1-Ecuador move damages chances for trade deal -USTR
(Adds more quotes, details)
By Doug Palmer
WASHINGTON, May 16 (Reuters) - Ecuador has badly damaged its chances of reaching a free-trade agreement with the United States, U.S. officials said on Tuesday after Quito began seizing oil fields operated by U.S. company Occidental Petroleum <OXY.N>.
"We are very disappointed at the decision of Ecuador, which appears to constitute a seizure of the assets of a U.S. company," said Neena Moorjani, a spokeswoman for the U.S. Trade Representative's office.
"For a country to attract investment, and certainly to be a prospective FTA (free-trade agreement) partner of the United States, it must obey the rule of law with respect to foreign investors," Moorjani said.
"Free trade agreements are based on fundamental principles that both parties will respect the rule of law. At this time no further FTA discussions are scheduled."
The United States is pressing Ecuador to immediately clarify its actions, "including whether it intends to fully compensate the company as required under our bilateral investment treaty," Moorjani said.
Ecuadorean officials said they would complete the takeover of Occidental oil fields in less than 60 days.
State-owned oil company Petroecuador said it sent workers to the oil fields after Ecuador terminated its contract with Occidental in the latest blow to international investment in the Andean region.
An Ecuador presidential spokesman also said Quito planned to carry out an independent audit to determine whether Petroecuador or foreign operators would run the oil fields taken back from Occidental.
Occidental is Ecuador's largest investor and extracts 100,000 barrel of oil per day. Petroecuador said output would be maintained.
Ecuador's lead trade negotiator acknowledged in Quito the oil field seizures had blocked further free-trade talks with Washington.
The United States and Ecuador have been negotiating a free-trade agreement since May 2004. Washington recently finished negotiations with Colombia and Peru that began at the same time, but the talks with Ecuador were hung up on agriculture and investment issues even before Quito's latest move.
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