The importance of the US unilateral trade preferences

In 1991 the USA decreed the Andean Trade Preference Act (ATPA) to combat drug production and trafficking in the Andean countries (Bolivia, Colombia, Ecuador and Peru). The ATPA expired in December of 2001, and then expanded under the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The ATPDEA, valid from August 2002 until December 2006, was also a unilateral US trade policy regulation that pursued the encouragement of alternative economic development in coca producing Andean countries. In December 2006, the US Congress granted a short extension until 30 June 2007. Only a few days before the previous extension ran out, the US Congress passed a new eight-month extension until 29 February 2008.

If the ATPDEA is not extended, then about 85% of the Bolivian exports to the USA will be subject to US import duties. Therefore, the prospects for Bolivian exports to the USA become critical as almost all of its exports would be taxed, creating enormous problems not only in monetary terms (about 54% of Bolivian total exports to the USA in 2005 entered under the ATPDEA) but also in terms of employment (about 42,000 jobs are associated with the exporting sector). In face of this situation three options are envisaged: 1) Bolivia trying to expand the ATPDEA (unlikely); 2) creation of a compensation programme that consists of a USD 8 million fund created by the Bolivian government to be used to compensate the Bolivian exporting sector in case the ATPDEA is not expanded (unsustainable); and 3) Bolivia considering a more ambitious trade agreement with the USA. The third option seems to keep peace with the economic dynamism that characterise the current wave of trade liberalisation.