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Viewing cable 06LAPAZ3291, ATPDEA: NOT SO IMPORTANT AFTER ALL?

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Reference ID Created Released Classification Origin
06LAPAZ3291 2006-12-05 21:03 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy La Paz
VZCZCXYZ0000
RR RUEHWEB

DE RUEHLP #3291/01 3392103
ZNR UUUUU ZZH
R 052103Z DEC 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1556
INFO RUEHAC/AMEMBASSY ASUNCION 6352
RUEHBO/AMEMBASSY BOGOTA 3676
RUEHBR/AMEMBASSY BRASILIA 7542
RUEHBU/AMEMBASSY BUENOS AIRES 4796
RUEHCV/AMEMBASSY CARACAS 2048
RUEHPE/AMEMBASSY LIMA 2121
RUEHME/AMEMBASSY MEXICO 1944
RUEHMN/AMEMBASSY MONTEVIDEO 4246
RUEHQT/AMEMBASSY QUITO 4685
RUEHSG/AMEMBASSY SANTIAGO 9270
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LA PAZ 003291 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/AND LPETRONI 
STATE PASS TO USTR FOR BHARMAN 
COMMERCE FOR JANGLIN 
TREASURY FOR SGOOCH 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: ATPDEA: NOT SO IMPORTANT AFTER ALL? 
 
 
------- 
SUMMARY 
------- 
 
1. (U) In a December 1 presentation, Vice President Garcia 
Linera minimized the importance of Andean Trade Promotion and 
Drug Eradication Act (ATPDEA) benefits for Bolivian 
exporters, noting that products relying exclusively on ATPDEA 
trade preferences represented only 13 percent of total 
exports to the United States in 2005 and suggesting that 
exporters provide fewer than 23,000 direct and indirect jobs. 
 Garcia Linera implied that ATPDEA may be less vital to 
Bolivia's economic health than many think -- after a 
concerted GOB push for the Act's renewal and just days before 
the Bolivian ministers of planning and finance expected to 
travel to Washington to build on the vice president's past 
lobbying efforts. 
 
----------------------------------- 
ATPDEA: NOT SO IMPORTANT AFTER ALL? 
----------------------------------- 
 
2. (U) (U) In a December 1 presentation, Vice President 
Alvaro Garcia Linera minimized the importance of Andean Trade 
Promotion and Drug Eradication Act (ATPDEA) benefits for 
Bolivian exporters.  He noted that products relying 
exclusively on ATPDEA trade preferences represented only 13 
percent of Bolivia's total exports to the United States in 
2005, or $40 million of total exports of $308 million, and 
suggested that export industries dependent on U.S. markets 
provide no more than 5,200 direct and 17,700 indirect jobs 
(far fewer than the hundreds of thousands cited in April 2006 
press reports and in articles since then).  According to the 
vice president, the GOB derived employment figures from firms 
representing approximately 90 percent of total exports to the 
United States; if the figures are accurate, he implied, the 
number of jobs directly related to ATPDEA is even smaller. 
Garcia Linera recognized that ATPDEA trade preferences are 
vital to certain industries, such as textiles and apparel, 
but suggested that the Act's benefits play a relatively minor 
role in total trade volume. 
 
---------------------- 
THREE FUTURE SCENARIOS 
---------------------- 
 
3. (U) Garcia Linera outlined three future scenarios.  In the 
first, under which ATPDEA trade preferences expire on 
December 31, certain exports, including textiles and apparel, 
would face tariffs ranging from 16.5 to 19.7 percent.  Of the 
416 items exported to the United States in 2005, the vice 
president noted, only 125 relied exclusively on ATPDEA 
benefits; these would be the only products affected by the 
expiration of ATPDEA trade preferences, and these totaled 
only $40 million.  Garcia Linera argued that Bolivian 
exporters could remain competitive even with new tariffs, 
thanks in part to the GOB's September 9 decision to establish 
a $12 million fund to cover exporters' estimated $8 million 
tariff bill (calculated as an average 20 percent tariff 
levied on $40 million of ATPDEA-dependent exports). 
 
4. (U) In the second scenario, a renewal of ATPDEA benefits 
through the end of 2007, Bolivian exports would grow by an 
estimated 19 percent, up from expected 2006 exports of 
approximately $377 million.  An estimated 13 percent of total 
exports to U.S. markets would continue to rely exclusively on 
ATPDEA trade preferences; Bolivian exporters would avoid 
immediate consequences but face continued uncertainty 
regarding the future of ATPDEA benefits. 
 
5. (U) In the third and final scenario, Bolivia would 
negotiate a long-term Fair Trade and Productive Cooperation 
Agreement, under which all Bolivian exports would enjoy 
duty-free entry to U.S. markets, in exchange for reduced-duty 
treatment of U.S. capital goods exports (as long as those 
exports did not threaten domestic production).  Garcia Linera 
said the GOB should consider the possibility of negotiating a 
reciprocal agreement with the United States, under which 
Bolivia would exchange its manufacturing and agricultural 
exports for U.S. capital goods exports.  This, he noted, 
would benefit both countries while recognizing existing 
"conditionalities" and Bolivia's special needs as a 
developing country.  Garcia Linera presented a long-term 
trade arrangement as one of several options but did not 
forcefully advocate for negotiation. 
 
------- 
COMMENT 
------- 
 
6. (SBU) Throughout his presentation, Garcia Linera implied 
that ATPDEA may be less vital to Bolivia's economic health 
than many think -- after a concerted GOB push for the Act's 
renewal and just days before the Bolivian ministers of 
planning and finance expected to travel to Washington to 
build on the vice president's past lobbying efforts.  The 
seminar provided an interesting preview of GOB attempts to 
spin the potential expiration of ATPDEA benefits and offered 
useful insight into the GOB's strategy for coping with the 
non-renewal of trade preferences.  Septel will report on the 
GOB's assessment of Bolivia's Peoples' Trade Agreement with 
Venezuela and Cuba. 
URS