VZCZCXYZ0001
RR RUEHWEB

DE RUEHLP #3051/01 3172035
ZNR UUUUU ZZH
R 132035Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1262
INFO RUEHAC/AMEMBASSY ASUNCION 6269
RUEHBO/AMEMBASSY BOGOTA 3590
RUEHBR/AMEMBASSY BRASILIA 7451
RUEHBU/AMEMBASSY BUENOS AIRES 4712
RUEHCV/AMEMBASSY CARACAS 1962
RUEHPE/AMEMBASSY LIMA 2023
RUEHME/AMEMBASSY MEXICO 1879
RUEHMN/AMEMBASSY MONTEVIDEO 4160
RUEHQT/AMEMBASSY QUITO 4601
RUEHSG/AMEMBASSY SANTIAGO 9180
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC

UNCLAS LA PAZ 003051 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/AND LPETRONI 
COMMERCE FOR JANGLIN 
TREASURY FOR SGOOCH 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: IN COCHABAMBA, BUSINESS AS USUAL 
 
REF: LA PAZ 2626 
 
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SUMMARY 
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¶1. (U) Cochabamba business association representatives told 
Econoff November 9 that business continues as usual, despite 
ongoing political and economic uncertainty.  They noted that 
while they share a desire for economic stability and judicial 
security with their La Paz and Santa Cruz counterparts, they 
face unique concerns, among them the growing "exodus" of 
Bolivian workers to Spain (reftel).  They also called 
attention to the harmful impact of the potential expiration 
of the Andean Trade Promotion and Drug Eradication Act. 
 
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BUSINESS AS USUAL ... 
--------------------- 
 
¶2. (U) Representatives of Cochabamba's chambers of commerce, 
industry, and exporters told Econoff November 9 that business 
continues as usual, despite ongoing political and economic 
uncertainty.  Chamber of Commerce General Manager Richard 
Alvarez noted that while not necessarily thriving, businesses 
appear to have adapted to the uncertainty of the last few 
months; most expect to withstand rising tensions, and few are 
seriously considering drastic changes to operations. 
Businessmen generally feel they will survive current unrest, 
as they survived past political turmoil, and will continue to 
urge greater stability and respect for existing rules of the 
game; what they most want, Alvarez said, is to be left alone, 
free of GOB interference and drastic change. 
 
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... BUT NOT WITHOUT ITS PROBLEMS 
-------------------------------- 
 
¶3. (U) Chamber of Industry General Manager Marcelo Vargas 
noted that while Cochabamba businessmen share a desire for 
economic stability and judicial security with their La Paz 
and Santa Cruz counterparts, they face unique concerns, among 
them the growing "exodus" of Bolivian workers to Spain 
(reftel).  Vargas estimated that more than 2,500 skilled and 
unskilled laborers leave Bolivia every week; industry 
representatives say employees frequently stay just long 
enough to learn a trade before seeking better opportunities 
and higher wages abroad, where they believe their skills will 
be in high demand and jobs relatively easy to find.  Firms 
recognize that they might retain employees by raising 
salaries, but they also worry that higher labor costs will 
lower competitiveness, especially given stiff competition 
from low-priced imports from China and East Asia.  According 
to Vargas, firms have few means of coping with the outflow; 
they can only hope the stream will gradually diminish, 
possibly as rumors of Spain's consideration of tighter entry 
requirements for Bolivians prove unfounded. 
 
¶4. (U) Chamber of Exporters representative Boris Maroff 
reiterated Vargas' concerns, noting that many exporters 
suffer from a shortage of skilled labor - and foresee 
significant drops in exports if the Andean Trade Promotion 
and Drug Eradication Act (ATPDEA) expires later this year. 
Highlighting a 30 percent increase in Cochabamba exports 
since 2000, Maroff pointed out that firms rely heavily on 
ATPDEA trade preferences and have responded to the Act's 
incentives by exporting a more diversified range of products; 
exporters now send over 1,000 different goods abroad, mostly 
to the United States, and have increasingly moved beyond raw 
materials to processed goods.  Maroff argued that many 
exporters would find it difficult to compete without 
duty-free access to U.S. markets, cautioning that ATPDEA 
expiration would put their success at risk and force many 
businessmen to modify or close operations and potentially 
fire tens of thousands of employees. 
 
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COMMENT 
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¶5. (SBU) Cochabamba firms appear to have taken rising 
tensions in stride, and business continues despite ongoing 
uncertainty.  Many businessmen are understandably worried 
about the loss of skilled labor and the potential expiration 
of ATPDEA trade preferences, but most expect to adapt, as 
they have adapted in the past.  Even while they wish for 
clarity, they recognize that the chances of getting it are 
slim. 
GOLDBERG