U.S. extends duty-free trade preferences to Ecuador but says it wants to see improvement in investment climate

U.S. President Barack Obama said Tuesday that Ecuador would continue to enjoy trade preferences, while extending Bolivia's suspension from the program.

In reviewing the countries' eligibility for the two countries' Andean Trade Promotion and Drug Eradication Act, Obama declined to determine either that Bolivia had satisfied the requirements of the act or that Ecuador failed to meet the requirements, according to the U.S. Trade Representative's office.

Thus, the suspension of Bolivia initiated by President George W. Bush last November remains in effect, while Ecuador will be able to continue getting duty-free treatment to most of its exports to the U.S. through the end of the year. The extension of the trade agreement was a harsh setback for several U.S. lobbying groups, including one representing oil giant Exxon, seeking removal of Ecuador from the preferences list. Exxon is facing a multi-billion law suit for environmental damage in Ecuador's jungle due to exploration in the 1970s.

While the decision on Bolivia was expected, U.S. business groups had hoped that Ecuador would also be taken off the program due to what they consider an unfavorable investment climate in the country. The report extending Ecuador's preference did, however, note that there is "considerable room for improvement in the country's trade and investment policies." 

Both Bolivian President Evo Morales and Ecuadorian President Rafael Correa are allies of Venezuelan President Hugo Chavez, a constant critic of U.S. policies in the region. The Andean trade preferences have been in place since the end of 1991 to help four South American countries, also including Colombia and Peru, combat drug trafficking. The benefits have been renewed every year.  

Credit: Tom Barkley, Dow Jones Newswires