President Bush suspends Bolivia's trade preferences under ATPDEA

Latin America and the Caribbean

Last week, both the House and Senate voted to extend the Andean Trade Promotion and Drug Eradication Act (ATPDEA) for Bolivia, Colombia, Ecuador, and Peru. (ATPDEA is a trade preference system by which these four countries are granted duty-free access to a wide range of exports, with the goal of promoting economic development and providing alternatives to the production of cocaine.) While the House version granted a one-year extension to all four countries, the version of the bill passed by the Senate granted a one-year extension to Colombia and Peru and a six-month extension to Ecuador and Bolivia. A final, reconciled bill awaits approval. For Bolivia, however, the outcome of Congress' decision on the matter may not make a difference. On Friday, September 26, President Bush enacted his presidential powers as outlined under the terms of the law, requesting that Bolivia's designation as a beneficiary country under ATPDEA be suspended. Under the terms of the agreement, the President may withdraw or suspend the designation of a country as a beneficiary country if the country is not satisfying the eligibility criteria. According to the United States Trade Representative (USTR), the White House's decision is based on the designation of Bolivia, on September 15, 2008, as a country that has failed demonstrably to cooperate with counternarcotics efforts. As outlined in a USTR press release,

the recent expulsion of U.S. Agency for International Development personnel and the removal of U.S. Drug Enforcement Administration officials from the main areas of Bolivia's illegal coca production, a marked increase in cocaine production, the government's failure to close illegal coca markets, and publicly stated policies that increase government-sanctioned coca cultivation, have placed in doubt the Bolivian government's commitment to cooperate in the fight against drug trafficking.

President Bush's decision has received criticism from OAS Secretary General José Miguel Insulza, who said that the suspension of trade preferences by the United States "will gravely harm many small Bolivian industries that survive on exportations of their products to the United States, and could leave more than 50,000 Bolivian workers without jobs." Other sources, such as Bolivia's La Razón and Los Tiempos, cite a loss of anywhere between 5,000 - 80,000 jobs. According to U.S. Trade Representative Susan Schwab, the United States "regret[s] that the proposed suspension that is prompted by the Bolivian government's actions could affect hard-working Bolivians.... Once imposed, the suspension could be lifted as soon as the Bolivian government improves its performance under the ATPA and ATPDEA criteria" (i.e. proves that it is cooperating with the United States' counternarcotics efforts). However, Bolivian President Evo Morales has said that "dignity is more important and we cannot give in or back down," giving the impression that Bolivia's counternarcotics efforts will not change to fall in line with the policies of the United States, despite warnings by the Bolivian Institute of International Trade (IBCE) that this could be "terrible . . . for the manufacturing sector." Not only could President Bush's decision to suspend trade preferences with Bolivia lead to the unemployment of 2% of the country's total workforce, but it is also unknown if it will lead to a change in the way Bolivia conducts its counternarcotics strategy. As outlined on this blog before, Bolivia's counternarcotics results have not differed much from that of two governments friendly to the United States, Peru and Colombia, and the U.S. decision to "decertify" Bolivia came at a time of worsening diplomatic relations between Bolivia and the United States. In accordance with the ATPDEA agreement, a public hearing must be held on the proposed action to suspend trade preferences to Bolivia, which will take place on October 23rd. However, as it looks right now, Bolivia will be removed from the list of ATPDEA designated countries at least through the end of the Bush administration in January 2009.