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Viewing cable 06LAPAZ598, SOY PRODUCERS CRITICIZE GOB'S FAILURE TO PROTECT

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Reference ID Created Released Classification Origin
06LAPAZ598 2006-03-07 19:26 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy La Paz
VZCZCXYZ0017
RR RUEHWEB

DE RUEHLP #0598/01 0661926
ZNR UUUUU ZZH
R 071926Z MAR 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 8325
INFO RUEHAC/AMEMBASSY ASUNCION 5649
RUEHBO/AMEMBASSY BOGOTA 2916
RUEHBR/AMEMBASSY BRASILIA 6787
RUEHBU/AMEMBASSY BUENOS AIRES 4020
RUEHCV/AMEMBASSY CARACAS 1354
RUEHPE/AMEMBASSY LIMA 1259
RUEHME/AMEMBASSY MEXICO 1664
RUEHMN/AMEMBASSY MONTEVIDEO 3602
RUEHQT/AMEMBASSY QUITO 3989
RUEHSG/AMEMBASSY SANTIAGO 8510
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
UNCLAS LA PAZ 000598 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/AND LPETRONI 
STATE PASS TO USTR FOR BHARMAN 
COMMERCE FOR JANGLIN 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR EINV ECON PGOV PREL SNAR USTR BL
SUBJECT: SOY PRODUCERS CRITICIZE GOB'S FAILURE TO PROTECT 
ANDEAN MARKETS 
 
REF: A. LA PAZ 438 
     B. 05 LA PAZ 3590 
     C. 05 LA PAZ 3483 
 
1. (U) Summary: Bolivian soy producers have criticized the 
GOB for failing to protect Andean markets, saying officials 
should have raised objections to provisions governing the 
treatment of U.S. exports of soy and its derivatives in free 
trade agreements with Colombia and Peru.  Producers say they 
stand to incur substantial losses if sales in neighboring 
countries are undercut by cheaper U.S. exports (ref A) and 
warn that the markets' disappearance and related job losses 
could weaken Bolivia's social, political, and economic 
stability.   While their assessment of the economic impact of 
lost markets appears valid, related claims that small farmers 
will abandon soy for coca are exaggerated.  End summary. 
 
2. (U) Bolivian soy producers, most based in the department 
of Santa Cruz, have harshly criticized the Evo Morales 
administration for failing to protect Andean markets, saying 
GOB officials should have raised strong objections with their 
Andean neighbors to provisions governing the treatment of 
U.S. exports of soy and its derivatives in recently signed 
free trade agreements with Colombia and Peru.  The head of 
the soy producers' association provocatively said that if 
Bolivia's soy industry falls, the Bolivian government will 
soon follow.  Under the agreements, U.S. exports of soybeans 
and meal will receive immediate duty-free treatment upon 
implementation, with exports of crude and refined soy oils to 
Colombia benefiting from ten- and five-year linear tariff 
phase-outs, respectively.  U.S. exports of crude soy oils to 
Peru, meanwhile, will receive immediate duty-free treatment 
upon implementation, with exports of refined oils benefiting 
from a ten-year linear tariff phase-out.  The treatment will 
make U.S. exports significantly more competitive than they 
were under Andean countries' previous 4-20 percent tariffs on 
third-country soy products. 
 
3. (U) Bolivian industry representatives say they stand to 
incur substantial losses if sales of soy and its derivatives 
in Colombia and neighboring countries are undercut by cheaper 
U.S. exports (ref A), noting that Colombia, Venezuela, and 
Peru account for approximately 90 percent of average annual 
soy exports of $300 million.  According to Bolivia's National 
Statistics Institute, exports of soy and its derivatives to 
Colombia totaled $120 million in 2005, or 40 percent of total 
soy exports.  Sales in Venezuela were slightly higher, at 
$122 million, while sales in Peru were significantly lower, 
at $31.4 million.  Colombia is the principal buyer of 
Bolivian exports of crude and refined soy oils and represents 
a significant market for soybeans and meal, accounting for 
approximately 67 percent of Bolivia's soy oil exports and 28 
percent of its beans and meal exports. 
 
4. (U) As one of Bolivia's principal export commodities, 
producers say, soy and its derivatives play a crucial role in 
the economy, accounting for approximately 15 percent of total 
estimated exports of $2.08 billion in 2005 and directly 
employing some 40,000 to 60,000 people, mostly in the 
department of Santa Cruz.  Industry representatives note that 
declining exports and related job losses could weaken 
Bolivia's social, political, and economic stability, 
frequently arguing that small farmers will turn to coca 
cultivation if soy is no longer profitable. 
 
5. (SBU) Comment: The GOB has not fared well in public 
debate, as the private sector has rightly pointed out that 
the Morales administration has done nothing to pursue a free 
trade agreement with the United States or secure additional 
export markets.  Vague assurances of opportunities in China 
and elsewhere have fallen flat.  Given the importance of soy 
and its derivatives for Bolivian exporters and the overall 
economy, producers' assessment of the economic impact of lost 
markets appears valid.  Some producers, especially small 
 
farmers, will be unable to compete, and jobs will disappear, 
leaving many individuals searching for alternatives.  There 
is little evidence, however, that producers will turn to coca 
cultivation as a result.  This claim, frequently made by 
industry representatives, seems more a ploy to try to 
moderate U.S. demands for preferential treatment of U.S. soy 
exports than anything else.  We would note that Bolivian 
producers will not be affected by new trade preferences until 
the agreements are implemented, which gives them a window in 
which to explore new markets.  End comment. 
GREENLEE