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Ecuador trade benefits a "sticky" issue: U.S. senator

By Doug Palmer

WASHINGTON (Reuters) - The U.S. Congress will probably approve a short extension of trade benefits for Ecuador that expire next month despite concerns about actions that country has taken, a senior senator said on Tuesday.

"Ecuador is sticky. It's difficult. It's not easy ... Ecuador is not helping itself. It's a word to the wise. If they want to continue, a lot of that is in their hands too," Senate Finance Committee Chairman Max Baucus said.

The comment came one day after U.S. trade officials expressed hope for continued engagement with Ecuador.

Ecuadorean President Rafael Correa has rattled investors by hiking taxes, defaulting on debt and expelling foreign firms over tax or legal wrangles.

In February, he expelled two U.S. diplomats, saying they meddled with local police affairs. He identified one of them as the local CIA chief.

Ecuador, Peru and Colombia currently receive duty-free access to the U.S. market under the Andean trade preference program which expires at the end of the year.

The program dates back to the early 1990s, but in recent years Congress has only approved short-term extensions as it mulls whether to revamp all U.S. preference programs and to approve a trade deal with Colombia.

Frustration over policies that Ecuador and Bolivia have pursued against foreign investors prompted Congress last year to approve just a six-month renewal of the program for both countries, and to give the White House the option of extending the benefits for an additional six months.

Shortly after that renewal, former President George W. Bush suspended Bolivia from the program because of its failure to cooperate in U.S. drug-fighting efforts.

President Barack Obama upheld the decision on Bolivia in June, while deciding to continue trade benefits for Ecuador through the end of this year.

WASHINGTON TALKS

U.S. and Ecuadorean trade officials held talks in Washington on Monday under a reactivated forum known as the US-Ecuador Trade and Investment Council.

"This type of engagement is critical to promoting mutual understanding and the pursuit of shared interests with the Ecuadorean government, and we hope it will continue," Everett Eissenstat, assistant U.S. trade representative for the Americas, said in a statement.

A bigger U.S. trade preference program, the Generalized System of Preferences (GSP), also expires on December 31.

It provides duty-free treatment for about 4,800 products from 131 developing countries and territories, including India, Brazil and others that some lawmakers think have grown too big for U.S. trade benefits.

Baucus said he thought both the Andean and the GSP programs would be extended for a short time so Congress could conduct a long-promised review of how they are structured.

The House of Representatives Ways and Means trade subcommittee has scheduled a hearing next week on the future of the GSP and Andean programs.

(Reporting by Doug Palmer; Editing by Cynthia Osterman)

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