White House Says Ecuador Trade Talks Stall

The Bush administration said Tuesday it had broken off negotiations on a free trade agreement with Ecuador following the South American government's decision to annul an operating contract with Occidental Petroleum Corp.

"We are very disappointed at the decision of Ecuador, which appears to constitute a seizure of assets of a U.S. company," Neena Moorjani, a spokeswoman for the Office of the U.S. Trade Representative, said in a statement. "At this time no further (free trade agreement) discussions are scheduled."

On Monday, Ecuador canceled Occidental's operating contracts after a dispute that had stretched over a number of years. The government of Ecuador claimed that the oil company had broken the terms of its contract.

Ecuadorean President Alfredo Palacio sent troops to guard oil facilities, but officials said the cancellation of Occidental's operating contracts and the seizure of its assets did not mean Ecuador was nationalizing its oil industry.

Ecuador expressed concern about the U.S. action to break off trade talks.

The country's top government spokesman, Enrique Proano, told to the press that his country "laments deeply the declaration by the United States ... that a sovereign decision by Ecuador should have influenced the continuity of trade relations and especially negotiation" of the free trade pact.
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