Cablegate: Atpdea: Not so Important After All?
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RR RUEHWEB
DE RUEHLP #3291/01 3392103
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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
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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
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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?
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SUMMARY
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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.
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ATPDEA: NOT SO IMPORTANT AFTER ALL?
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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.
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THREE FUTURE SCENARIOS
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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.
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COMMENT
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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