September 04, 2007

Bolivia's Commercial Relations

MABB © ®

Vicepresident, Garcia Linera is traveling to the US to tell the Bush administration and Congress that Bolivia wants 'only' a commercial relationship, and that the issue of drug trafficking and coca plantation should not come in between. He also wants to ask the US Congress for an extension of ATPDEA.

The question is, whether the US government will take him seriously, since US policy towards Bolivia is anchored in the drug eradication in exchange of commercial relations principle.

Both countries have great interest in continuing with some kind of relationship. On the one hand the US just cannot afford to antagonize one more South American country. The US is basically forced to engage, as opposed to disengage. Moreover, it is of US interest to keep some kind of control over the Coca production, and of course, it cannot leave its backyard unattended.

For Bolivia, it is also of significant importance to continue the relationship with the US. Much of Bolivia's financing comes from the big brother in the north. In terms of exports, the US has always been important for Bolivia. In the graph below, which you can click to see it bigger, you can see Bolivian exports from 1990 to 2006 (left column 1990, right column 2006). The US has been a significant buyer for Bolivian exports, compared to Venezuela, which got some relevance beginning 2001. This table was taken from the Boletín Externo No. 36 of the Bolivian Central Bank.

To illustrate and complement the point further, I take this next table, from the same document, which shows the nominal value of Bolivian exports in 2006 of traditional products. Excluding mineral and natural gas exports. As you can see, the US has bought a wide range of products, except soy bean oil. Other countries do not buy such a wide range of products, though are significant buyers nonetheless.

My intention here is not to qualify whether the US is better than Venezuela as a commercial partner. I am simply pointing out to the importance of the US for the Bolivian export sector. The Bolivian government should be careful on negotiating and, moreover, dealing with the US government. Statements such as the one from Garcia himself and Quintana.