U.S. to suspend Bolivia trade benefits as tensions mount

WASHINGTON — The Bush administration is poised to suspend lucrative trade benefits to Bolivia in a move that could further worsen tensions between the U.S. and the impoverished South American country.

Administration officials say that Bolivia has failed to cooperate in drug control, which makes the country ineligible to export jewelry, textiles and other manufactured items duty-free to the U.S. under the Andean Trade Promotion and Drug Eradication Act.

Bolivian officials counter that the threatened action has nothing to do with drug enforcement but is in retaliation for Bolivian President Evo Morales' expulsion of the U.S. ambassador to Bolivia, Philip Goldberg, last month. The U.S. responded to that move by expelling the Bolivian ambassador to Washington.

More than $150 million in Bolivian exports entered the U.S. duty-free last year under the program, out of a total of $380 million in U.S.-bound exports, and cutting the benefits will cost some 20,000 jobs, Bolivian officials said.

President Bush announced the suspension last month, but the U.S. government had to wait out a legally required public comment period, which ends Friday. If Bush or his successor doesn't reverse the suspension by June 30, only an act of Congress can restore Bolivia's trade preferences. Colombia, Ecuador and Peru also receive the benefits.

"We told the Bolivian government that we weren't getting the cooperation," said Secretary of State Condoleezza Rice last week at a news conference in Mexico. "We talked about actions that could be taken to show that cooperation, and unfortunately, those actions were not taken, and now we will have to suspend Bolivia's participation."

U.S. officials point to Bolivia's recent refusal to allow Drug Enforcement Administration planes from flying over the country and Morales' frequent criticisms of U.S. drug policy as proof of Bolivia's refusal to fight cocaine production.

Bolivia is the world's third biggest producer of cocaine, behind Colombia and Peru, and its president is a former grower of coca leaf, the main ingredient in cocaine.

Eric Farnsworth, vice president of the Washington-based business group the Council of the Americas, said Morales' hostility toward the U.S. and his expulsion of Goldberg ultimately pushed the Bush administration to act.

"It's hard to maintain economic advantages for a country when they kick you in the shins," Farnsworth said. "At some point you have to say enough is enough."

The trade promotion act asks that countries receiving the benefits meet certain criteria showing they are fighting drug production. In September, President Bush listed Bolivia, Venezuela and Myanmar as countries failing to do their part in the anti-drug fight and later started the process for suspending Bolivia's trade benefits.

Bolivian officials say they're fighting cocaine production while allowing the cultivation of coca leaf, which is widely chewed to stave off hunger pangs and altitude sickness in Bolivia.

Erika Duenas, acting head of the Bolivian embassy in Washington, pointed to United Nations figures showing that Bolivian cocaine production increased only by 5 percent from 2006 to 2007, while production in U.S. ally Colombia jumped by 27 percent in the same period.

Duenas said some Bolivian businesses are already reaching out to buyers in Mexico and Venezuela to make up for the lost U.S. trade.

"We see the decertification as more political than based on a real technical criteria of the anti-drug fight," Duenas said. "There have in fact been powerful actions like coca eradication, seizure of drugs and other ways to fight against drugs in Bolivia."

Last week, Morales sent Luis Arce, the finance minister, Felipe Caceres, the country's top anti-drug official, and other Bolivian policymakers to testify before the U.S. Trade Representative Office. Rice made her comments that same day.

Tensions between Bolivia and the U.S. have deteriorated during the past two months as Morales accused Goldberg and other U.S. officials of supporting opposition leaders who staged violent anti-government protests in the country's eastern flatlands.

Citing a picture taken of Goldberg meeting such leaders, Morales declared the ambassador persona non grata, and sent him home. The Bush administration then expelled Bolivian ambassador Gustavo Guzman.

Venezuelan President Hugo Chavez, a close Morales ally, sided with Morales by expelling the U.S. ambassador to Venezuela, prompting the U.S. to kick out Venezuela's ambassador.

Poor Bolivians and not politicians will pay the price for this political rift, said Jose Ribero, general manager of Bolivia's National Chamber of Exporters. Ribero estimated another 30,000 truck drivers and other support workers will be indirectly affected by the action on top of the 20,000 workers who produce the goods for export.

"The actions of others are affecting people who don't have anything to do with politics," Ribero said. "I'm confident the friendship between the American and Bolivian people remains strong, and the American people don't want to hurt Bolivians."


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