Chevron urges U.S. to revoke Ecuador trade

Will likely face hurdle for Obama support

Tom LoBianco
Washington Times, Thursday, February 5, 2009

Chevron executives are renewing efforts to have Ecuador's preferential trade status with the U.S. revoked next month, although the oil company is unlikely to find a sympathetic ear with President Obama.

Chevron and its subsidiary Texaco have been locked in a legal battle in the South American country since 1993 when about 50 Ecuadorean Indian residents of Lago Agro sued Texaco, maintaining that American oil exploration and extraction had created an "Amazonian Chernobyl." Chevron executives expect an Ecuadorean court to file soon a judgment against them in the class-action suit on behalf of tens of thousands of Indians.

The company says the judgment, which could reach up to $27 billion and which Chevron says has been whipped up by populist President Rafael Correa, should give the U.S. grounds to cancel Ecuador's benefits under the Andean Trade Preferences Act.

"The only remedy is for the preferences to be suspended," Chevron spokesman Kent Robertson told The Washington Times on Wednesday.

But Chevron faces a large hurdle in the form of Mr. Obama, who has previously supported Ecuador's trade privileges and is a schoolmate of the plaintiffs' top lawyer.

"While we are not prejudging the outcome of the case, we do believe the 30,000 indigenous residents deserve their day in court," Mr. Obama wrote in a 2006 letter to then-U.S. Trade Representative Rob Portman, co-written with Sen. Patrick J. Leahy, supporting Ecuador's trade status.

Spokespeople for the U.S. Trade Representative's Office and the White House did not return calls for comment.

The oil company also has been bombarded with negative stories surrounding the lawsuit and is the target of a new documentary produced in part by the plaintiffs in the lawsuit.

The U.S. Chamber of Commerce, which Chevron counts as an ally, said revoking Ecuador's trade status is unlikely.

"It is more than likely the U.S. will keep the trade preferences going, but we will have to wait and see what happens," said Christopher Wink, senior director for international policy for the U.S. Chamber of Commerce.

Steven Donziger, a trial lawyer who played basketball with Mr. Obama when the two were at Harvard Law School, has led the effort on behalf of 48 residents of Ecuador. Mr. Donziger also worked with the producers of a documentary about the battle, which premiered last month at the Sundance Film Festival.

The plaintiffs charge that Texaco dumped waste oil and oil-tainted water in unsafe and polluting ways; Chevron and Texaco say they disposed of their share of the waste safely and the damage was done by the disposal practices of Ecuador's state-run oil company.

Virtually every detail of the case is disputed -- Chevron says the plaintiffs sought to have the case tried in Ecuador because the courts there would be more sympathetic to the domestic plaintiffs.The plaintiffs, however, say Chevron sought to move the case to Ecuador several years ago to seek a favorable venue, believing the government at the time to be more pro-business than Mr. Correa.

Chevron said it's the target of a publicity campaign designed to force it to settle out of court for billions of dollars in damages.

"The tactic has been to essentially take Chevron's reputation hostage and ransom it back," Mr. Robertson said.

But Chevron has waged its own counterattack, hiring last year a high-powered lobbying team led by Wayne Berman, a fundraiser for Sen. John McCain, to lobby the Bush administration.

The plaintiffs countered with the services of Democratic power lobbyist Ben Barnes and secured a six-month extension of Ecuador's trade privileges, which expire next month.

"It's just incredible the damage they've done," Mr. Barnes said. "For an American corporation not to want to do the remediation is just unbelievable."

Chevron has looked to Sen. Charles E. Grassley, Iowa Republican, to champion its cause on Capitol Hill, Mr. Robertson said.

But Grassley spokeswoman Jill Gerber said that while her boss was "aware of Chevron's concerns," he was not "working with Chevron to achieve any particular outcome." She said Mr. Grassley would determine what to do when Mr. Obama reports on Ecuadorean trade issues in June.

• Amanda DeBard contributed to this report.