Andean Trade Preference Act Expired on February 12th: Washington and La Paz Knew that There Was Much Work to Be Done

News on the expiration of the Andean Trade Preference Act (ATPA) was surprisingly absent from the national media in recent weeks. The trade agreement, which was first enacted in December 1991, offered preferential duty treatment to goods and commodities exported from Andean region countries. The purpose of the ATPA was to encourage economic growth in the participating countries and divert dependence on the illegal drug trade which had been prevalent in Peru, Colombia, Ecuador, and Bolivia. The U.S. Congress passed a number of extensions of the agreement for varying periods of time, and in recent years favored short-term renewals. The last extension of the ATPA was a six-week renewal passed on December 22, 2010, which recently expired on February 12, 2011. The House Ways and Means Committee met on February 8 and 14, 2011 to consider a bill extending the ATPA through June of this year, though no new agreement has been assembled.

Initial ATPA participants included Colombia, Peru, Bolivia, and Ecuador. Bolivia’s status was revoked under President Bush in December 2008 after the country was deemed uncooperative with anti-narcotics measures laid out by the State Department. Bolivia’s decertification under the ATPA was extremely controversial to many who monitor the Bolivian drug trade. According to Kathryn Ledebur of the Andean Information Network, the Bush administration’s decision was based on “erroneous and inflated data” regarding the magnitude of Bolivia’s coca cultivation. Bolivian officials had high hopes that their country’s ATPA status would reinstated with Obama’s arrival in the White House. To La Paz’s disappointment, Obama maintained Bolivia’s suspension in the renewal agreement signed in 2009.

U.S.-Bolivian relations deteriorated rapidly in the months preceding Bolivia’s ATPA suspension. In September 2008, Bolivian President Evo Morales expelled U.S. Ambassador Philip Goldberg, based on accusations that the ambassador had openly met with anti-Morales opposition leaders in the eastern states of Bolivia. Days later, U.S. officials responded by expelling the Bolivian ambassador in Washington. In November 2008, Morales expelled three dozen DEA officials from Bolivia, and shortly after, the Bush administration suspended Bolivia’s ATPA status on December 15, 2008.

This souring of bilateral relations and the subsequent consequence of lost Bolivian exports to the U.S. were regrettable, especially considering the strides Morales had made in restricting coca cultivation through a new program of “social control.” Under the social control policy, growers self-regulate licit coca cultivation in coordination with anti-narcotics officials (a certain amount of coca cultivation is permitted in Bolivia and is intended for licit uses that date back centuries in Bolivian culture). Although coca cultivation has vacillated under Morales, overall levels of cultivation are substantially lower than in past years when leadership followed U.S. guidelines of forced eradication. It is worth noting that Bolivia is the smallest coca cultivator of the three primary producer countries in the Andean region—accounting for just 18.5 percent of all coca production, behind Peru (33.5 percent) and Colombia (48.3 percent).

This begs the following question: was the U.S.’s hasty suspension of Bolivia’s ATPA status rooted in dissatisfaction over La Paz’s leftward political shift since Morales assumed power in 2006? Or was the suspension simply a reprisal for the ejection of Ambassador Goldberg? Colombia, the region’s largest coca producer, has been a more cooperative partner to the U.S. in its War on Drugs, and therefore enjoyed smoother relations despite less-than-stunning improvements in reducing coca cultivation. It would seem as though Washington has been unfairly harsh with its Bolivian counterparts, and mischaracterized the Morales government as patently uncooperative.

Considering the long and historic battle fought by the Movement Toward Socialism party (MAS) to gain political leadership and give a voice to a disenfranchised indigenous populace, a certain degree of defensiveness on Morales’ part is understandable. While his removal of Ambassador Goldberg may have been a more confrontational move than was ultimately wise, it’s fair to say that communication between various U.S. officials (including Ambassador Goldberg and DEA agents) and heads of violent opposition groups in the eastern states encroached on Bolivian sovereignty and Morales’ legitimacy as a leader. Morales has not refused assistance or other input from the U.S., and has maintained that Bolivia wants “the United States’ important presence, but a diplomatic presence, not [one of] interference.”

It is now time for U.S. leadership to relinquish some of the sovereignty it is accustomed to exercising abroad with respect to counternarcotics, and take a more cooperative stance with the Bolivian government’s attempts to control coca. Economic sanctions against Bolivia, such as the ATPA suspension, cost the country millions of dollars in preferential trade benefits and only elevate the likelihood that refugees of Bolivia’s weak economy will find subsistence in illicit coca cultivation and trade. Reducing Bolivia’s large informal coca economy will be achieved mainly through boosting legitimate development, and not through an overwhelming focus on eradication.

The ATPA’s future has grown steadily more uncertain—Peru was left out of the last extension due to its free trade agreement with the U.S., while Colombia’s renewal under the ATPA may be irrelevant should a similar agreement with the U.S. be approved. This leaves Ecuador and Bolivia as the remaining participants. Pablo Menacho, Chargé d’Affaires at the Bolivian Embassy in Washington, indicated that Bolivia has not been in active negotiations with U.S. officials regarding the agreement since Obama upheld Bolivia’s ATPA suspension in 2009. He went on to say that the bulk of U.S.-Bolivian dialogue currently surrounds renegotiating diplomatic ties between the two countries since the 2009 fraying of relations.

The primary factor stalling talks on the ATPA renewal appears to be political gridlock. House Democrats have refused to approve an ATPA extension until Republicans back renewal of the Trade Adjustment Assistance (TAA) program which offers compensation and job training to U.S. workers harmed by foreign competition. House Republicans have refused to vote on TAA renewal until the Obama administration makes further progress on the pending free trade agreements (FTAs) with Colombia and Panama. Many Democrats in Congress have cautioned against a hasty approval of the Colombian and Panamanian agreements due to concerns over human rights and fiscal transparency in Colombia and Panama respectively. It seems the current impasse will persist until the Obama administration makes further progress on the FTAs with Colombia and Panama. Unfortunately, Bolivia and Ecuador are destined to be collateral damage in the process.

While the prospect of improved U.S.-Bolivian relations is heartening, talks on reinstating trade benefits for Bolivia should not be neglected until FTAs with larger economies in Latin America are solidified. The core goal of the ATPA deserves to be recalled—to aid participant countries in diversifying their legitimate economies. Not renewing Bolivia under the ATPA may seem to have a negligible impact on the U.S. economy in the short-term, yet the long-term impact will be that coca cultivation persists as a tempting means of survival for many Bolivians—something that neither the U.S. nor Bolivia ultimately want.