September 30, 2008

Bolivia, the US and the ATPA

MABB © ®


The US President has to publish his decision of excluding Bolivia of the ATPA on the Federal Register. This is a bureaucratic procedure, not to be evaded! In the FR notice, published on October 1, the government lays out the procedure to be followed to exclude Bolivia. Once the intention has been expressed, the US trade rep has been put on notice, and the notice is published, there needs to be a public hearing to consider comments. This hearing is scheduled for October 23 and will receive comments by way of electronic mail, fax and spoken word.

Opposite to what I was thinking, the President has the discretion to include or exclude any country from the list of beneficiaries. This is, regardless of Congress approving the extension of the ATPA and ATPDEA.

Last week there was extreme alert on Bolivian circles due to the Bush administration's intention to take Bolivia out of the ATPA (Andean Trade Pact Act). There were repeated calls from the part of the Bolivian government directly to the US government to revise its decision and allow Bolivia to continue benefiting from the arrangement. The Bolivian Export Association, on its part, asked the question: Why don't we export more to Venezuela? It tried to answer this question in a national forum which took place in La Paz, last September 26. For the conclusions see the link. In addition, there was a series of reports in the press on how Bolivia did not have an alternative to the ATPA (see La Razon, La Prensa, Los Tiempos, etc.). Over all, the fear is, if the ATPA does not include Bolivia, the manufacturing branches of the economy, such as the textile industry, will loose its markets. With the ATPA, the products can access the US markets without any tariffs. Hard to beat.

However, the black future that was visible yesterday, is a bit brighter today. The reason is the decision of the House of Representatives to pass the extention of the ATPA for one more year, until December 31, 2009. As it is the procedure in the US Congress, the bill will now be considered by the Senate. This is the reason why some on Bolivia are not yet breathing freely. They say that because the Senate is controlled by the Republicans, Bolivia could still be taken out of the benefitiary list.

On the other hand, I tend to argue that the Senate will pass the extension, this time as well, for the same reasons Senator Lugar cites:

"Our trade preferences for Bolivia and Ecuador are important because both countries have elected leaders whose record and rhetoric cast serious doubt on their commitment to market-based economic policies. For this reason, it is important for the United States to maintain a strong relationship with the constructive forces in these countries. We want to encourage those who are working for economic liberalization and reforms that promote foreign investment and the creation of jobs. We want to support those who are pursuing policies that will improve social and economic development in health and education and advance the welfare for the less fortunate. It is in these countries where the effect of greater, and not lesser, engagement will yield the highest long term benefits.

The ability to benefit from trade preferences is difficult in an environment in which the rule of law is coming under severe attack. Both countries are facing challenges on this front, with weakened justice systems that struggle to uphold the law. In this regard, an environment that supports free economic exchange and accountable governance is weakened by the inability of these governments to implement the law.

Both Bolivia and Ecuador have much to gain by focusing on strengthening and depoliticizing the rule of law. Without an improvement on the legal front in these countries, the potential for these trade preferences to serve as development tools is limited.

It is my hope that 10 months from now, when we again address the issue of preferences for the Andean countries, we will be well into the implementation of FTAs with Peru and Colombia and at the same time witnessing an improved commitment in Ecuador and Bolivia to the reforms that are essential to getting the most out of trade preference legislation."

This quote, illustrates, in my opinion, how the US Congress generally feels when it comes to the US-Bolivia relations. There is a general feeling of wanting to engage rather than isolation.

FYI: ATPDEA amended the ATPA. USTR info on ATPA.