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C O N F I D E N T I A L SECTION 01 OF 03 LA PAZ 001264 
 
SIPDIS 
 
PLEASE PASS TO USTR; TREASURY 
 
E.O. 12958: DECL: 03/31/2018 
TAGS: ECON KTEX BL PINV PGOV PREL
SUBJECT: BOLIVIA & ATP-DEA: EXPORTING FRUSTRATION 
 
REF: A. LA PAZ 158 
     ¶B. LA PAZ 522 
     ¶C. LA PAZ 1180 
 
Classified By: ECOPOL Chief Mike Hammer for reasons 1.4(b) and (d.) 
 
¶1. (C) SUMMARY. The Andean Trade Preferences and Drug 
Eradication Act (ATP-DEA) was extended in February of 2008 
for another ten months for Bolivia, Peru, Ecuador and 
Colombia. Although the preferences are crucial to the 
textiles industry, the private sector is growing tired of the 
exhausting lobbying efforts for even short extensions. As 
business leaders press for the Bolivian government to 
negotiate a long-term commercial agreement (preferably a Free 
Trade Agreement (FTA)) the government promises to expand 
other export markets in an effort to pull away from the 
United States. The statistics, however, prove that Evo's 
recipe for trade policy is adding to further economic 
turmoil. END SUMMARY. 
 
 
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ATP-DEA: Short Term Solution to a Long Term Problem 
- - - - - - - - - - - - - - - - - - - - - - - - - - 
 
 
¶2. (SBU) After the Senate approved the extension of ATP-DEA 
until December 2008, the reaction in Bolivia was mixed. The 
immediate relief of receiving the trade preferences was 
evident, as was the immediate realization that they would 
only last another ten months. 
 
¶3. (C) ATP-DEA predominately affects the textiles industry, 
and Post's sources have long complained that the continued 
short-term extensions help their industry very little. 
Bolivian textiles heavy-weight Ametex told EmbOff that 
although ATP-DEA is crucial for their production, they 
believe a long-term agreement is most practical. Marco de la 
Rocha, General Manager at Ametex, says that not only do 
short-term extensions cut into profits, they hurt the 
development of the textiles industry as a whole. He says that 
developing "alternative markets" is extremely difficult and 
even more so with a ten-month ATP-DEA expiration date. 
 
¶4. (C) Ametex is not the only company feeling the pressure. 
Alpaca business owner Gerald Fisher told EmbOff that most of 
his U.S. clients place their orders six to eight months out. 
This means that Fisher is selling goods that may or may not 
include a 19% tariff when delivery arrives. The uncertainty 
has caused many of his U.S.-based clients to place orders 
with Peruvian companies. "They have told me directly that 
Peru is a less volatile place--both politically and 
commercially speaking," says Fisher. 
 
¶5. (C) "We could have been Peru" is a dominant theme in the 
speeches of economists, politicians and business leaders 
alike. With the prospect of a Free Trade Agreement (FTA) 
being implemented in Peru, many industries are criticizing 
the Government of Bolivia for losing the opportunity for a 
long-term agreement with the United States. In a speech given 
to local business leaders, former government economist Juan 
Antonio Morales emphasized that an FTA with the U.S. would be 
a good start to stabilizing the Bolivian economy, currently 
plagued by low foreign direct investment and high inflation 
rates. 
 
- - - - - - - - - - - - - - 
New Minister, Same Morales 
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LA PAZ 00001264  002 OF 003 
 
 
¶6. (C) Despite the private sector pleas for an FTA, the 
Bolivian government expresses little (or no) enthusiasm for a 
viable trade agreement with the U.S. (ref A,B.) In the 
beginning of February, only one week after DCM met with her, 
Minister of Production and Micro-Enterprise Celia Sosa was 
replaced by Javier Hurtado. Hurtado, already a contact of the 
Embassy through the Millennium Challenge Account, at first 
seemed more open to talks with the U.S. However, after 
further discussion, it became clear that the current 
difficult state of U.S.-Bolivian bilateral relations allows 
little space for commercial dialogue. Post has continuously 
been promised a concrete "long term trade agreement" proposal 
as a follow-up to Vice President Garcia Linera's 2006 broadly 
worded "eliminate poverty" paper. In a June 3 meeting, Vice 
Minister of Trade and Exports Huascar Ajata told EconOff that 
they have revised the original long term trade proposal and 
hope to present it to Post in the coming weeks. He also 
mentioned an upcoming public push for ATP-DEA extension. 
 
- - - - - - - - - - - - - - - - - - - - - 
Textiles: Hanging By a Thread Without U.S. 
- - - - - - - - - - - - - - - - - - - - - 
 
¶7. (C) One focus of Bolivian trade talk has been the 
expansion of export markets. Evo and his government continue 
to claim that while ATP-DEA is important, Bolivia will keep 
its textiles numbers up through other South American nations, 
the European Union (EU) and Japan, all key trading partners. 
However, Post's analysis of the export data indicates that 
all of the markets combined does not equal the U.S. buying 
power. 
 
¶8. (U) THE UNITED STATES. In 2007, the U.S. imported 12.6 
million kilograms of textile goods for a total price of $19.1 
million dollars. The total for all other Bolivian textile 
markets was $22 million in 2007. It should be noted that both 
volume and value of U.S. textile imports from Bolivia have 
decreased over the past four years, with a nearly 40% drop in 
value between 2006 and 2007 alone. The numbers suggest that 
while there is a significant market for textiles in the 
United States, buyers are unlikely to continue to import from 
Bolivia if they must pay a 19% tariff. 
 
¶9. (U) KEY SOUTH AMERICAN PLAYERS. Brazil is a key importer 
of Bolivian textiles, though the numbers are significantly 
lower than the U.S. market. Growth rates for Brazil have 
averaged around 50% but its volume in 2007 was still only 
660,000 kilograms for a value of $4 million dollars. Another 
major import market for Bolivia is Chile. Its total imported 
good volume was only 880,000 kilograms with a value of $3.4 
million dollars. The average 10% growth rate for Chile over 
the past four years suggest only a slight increase in demand 
for textiles. South America as a whole only offered up $16 
million in imports, but it is a ten million dollar jump in 
only two years. (NOTE: Much of this can be contributed to 
inflated figures from Venezuela, see next para. END NOTE.) 
 
¶10. (C) THE PEOPLE'S TRADE AGREEMENT (ALBA.) Not 
surprisingly, the textiles industry will not be saved by the 
trade alliance between Venezuela, Cuba and Bolivia. 
Venezuela's "miraculous" growth of over 6000% for 2007 was 
significantly inflated by a foreign exchange scheme and is 
being investigated (ref C.) Cuba imports little to no textile 
goods. The ALBA countries may help Bolivia in terms of 
political alliances but it is not helping with trade. 
 
¶11. (U) THE EUROPEAN UNION (EU.) The EU announced that they 
intend to finalize a trade agreement with the Andean nations 
by 2009. Major markets for Bolivian goods are the UK, Italy 
and Germany, each importing over $1 million dollars of goods 
 
LA PAZ 00001264  003 OF 003 
 
 
in 2007. The combined total of Bolivian textile exports to 
the EU, however was only $3.6 million, one-fifth of the value 
of U.S. imports. 
 
¶12. (C) ASIA. Japan has long been a trade partner for 
Bolivia, importing a variety of textile goods. Its growth 
patterns, however, show a slow down in imports. Contacts at 
the Japanese embassy say that despite a March 2007 Evo visit 
to Japan, the Japanese are shifting towards imports from 
other Asian nations, particularly in textiles. South Korea 
has increased its imports of Bolivian textiles, but only 
reaching 15,000 kilograms for a value of $290,000 in 2007. 
One player that has made a prominent jump is Hong Kong, 
surpassing Japanese demand for Bolivian goods, but still only 
barely breaking $1 million dollars in value over the past 
three years combined. 
 
- - - - 
COMMENT 
- - - - 
 
¶13. (C) Although the government claims it wants a long-term 
commercial agreement with the U.S., it will likely not expand 
beyond ATP-DEA. Evo will continue to claim that his other 
trade plans would offset a drop in trade with the U.S., but 
the data clearly shows this is not the case, particularly in 
textiles. Although no companies have moved to date, both the 
Peruvian and Chilean governments have actively recruited 
Bolivian textile company owners to set up shop in their 
countries. Evo's policies, not taking into account business 
interests, are taking a toll on both U.S. and other foreign 
companies, leading to more frustration and less trade. END 
COMMENT. 
GOLDBERG