72543 v1 World Trade Indicators 2009/10 Plurinational State of Bolivia Trade Brief Trade Policy industries (ongoing since May 2006), among others. Other than the hydrocarbon and mining industries, The Plurinational State of Bolivia’s MFN Tariff Trade foreign investment faces few legal restraints.3 Restrictiveness Index (TTRI)1 for overall trade has However, the new Constitution (approved by risen slightly in the past two years to reach 8.4 percent referendum in January 2009) includes additional in 2007. Judged by this, Bolivia’s trade regime is restrictions to investment, particularly foreign slightly less open than the average Latin America and investment, in strategic sectors (public services, Caribbean (LAC) country (with a TTRI of 7.8 percent) extractives industries). but as open as the average lower-middle-income country. The country ranks 86th among 125 countries In response to rising food prices, in February 2008, (where 1st is least restrictive). Agricultural protection Bolivia temporary suspended import tariffs on rice, (with a TTRI of 10 percent) is slightly higher than wheat, wheat flour, maize, vegetable oils, beef, chicken protection for non-agricultural goods (with a TTRI of and live animals, meat, and sugar. It also increased the 8.2 percent). Up to April 2008, Bolivia had a three-tier implicit subsidies for bread and wheat flour import tariff structure with capital goods taxed at 0 production. To secure domestic supplies, the and 5 percent and other imports taxed at 10 percent. government prohibited exports of cereals, soybean, The simple average of the MFN applied tariff rate has sunflower oils, and meat products, and put in place remained relatively stable in the past several years at restrictions on vegetable oil exports.4 As world trade 8.3 percent, slightly lower than the LAC region slowed in the second half of 2008 and international average. Following a decree in November 2007,2 the food prices declined, since October 2008, the Bolivian tariff structure was revised to a five-tier structure, government has progressively lifted these bans. In May allowing goods to be taxed at 15 percent and 20 2009, it increased import tariffs for products to 35 percent as well. Thus, the maximum tariff (excluding percent for 324 tariff lines, including clothing, textiles, alcohol and tobacco), which Bolivia had maintained at and furniture.5 a very low 10 percent, rose to 20 percent. The trade policy space as measured by the distance between bound and applied tariffs (the overhang) was 31.6 External Environment percent in 2008, slightly higher than the average for its According to the latest Market Access TTRI6 regional neighbors. Regarding the extent of its (including preferential tariffs), on which it is ranked commitment to trade liberalization in services, Bolivia 11th (out of 125 countries), Bolivia’s exports face ranked 98th out of 148 countries according to the extremely low tariffs (0.7 percent) when compared to GATS Commitment Index. The government has been its LAC and lower-middle-income country significantly increasing its role in the economy, as comparators (2.0 percent and 2.3 percent, reflected by the nationalization of the respectively). The weighted average of the rest of the telecommunications (May 2008) and hydrocarbon world tariff faced by Bolivia’s exports was 0.4 percent in 2008. Unless otherwise indicated, all data are as of August 2009 Bolivia is part of the free trade area with Colombia, and are drawn from the World Trade Indicators 2009/10 Ecuador, and Peru under the Andean Community of Database. The database, Country Trade Briefs and Nations (CAN), and is also a member of the Latin American Integration Association (ALADI). The Trade-at-a-Glance Tables, are available at Andean Trade Partnership and Drug Eradication http://www.worldbank.org/wti. Agreement (ATPDEA), which granted some If using information from this brief, please provide the preferential access to the U.S. market, expired in following source citation: World Bank. 2010. December 2008 and was not renewed in June 2009 ―Plurinational State of Bolivia Trade Brief.‖ World Trade due to Bolivia’s failure to cooperate with the United Indicators 2009/10: Country Trade Briefs. Washington, DC: States in its fight against drug trafficking.7 As a World Bank. Available at member of the CAN, Bolivia was originally engaged in http://www.worldbank.org/wti. the negotiation of an economic association agreement World Trade Indicators 2009/10 Bolivia Trade Brief with the EU, but in mid-2008 Bolivia withdrew from by 28.7 and 10.1 percent respectively. Total foreign free trade talks with the EU.8 A similar situation arose direct investment inflows increased marginally to 3.1 with previous attempts to negotiate a CAN-U.S. FTA percent of GDP in 2008, compared to 2.8 percent of and a CAN-Canada FTA. Instead since 2006, Bolivia GDP in 2007. is part of the Bolivarian Alternative for the Americas (ALBA), an alternative regional integration initiative launched by República Bolivariana de Venezuela. Notes During 2008, the real effective exchange rate of the 1. TTRI calculates the equivalent uniform tariff that boliviano appreciated by 12.6 percent, reducing the would keep domestic welfare constant. It is weighted by competitiveness of exporters. import shares and import demand elasticity. 2. Evo Morales Ayma, Constitutional President of the Behind the Border Constraints Republic, November 21, 2007. 3. United States Trade Representative, 2009. In terms of the conduciveness of its institutional 4. FAO, 2009. environment to business, Bolivia ranked 161st out of 5. WTO, July 2009; and Evo Morales Ayma, 183 countries in the 2010 Ease of Doing Business Constitutional President of the Republic. May 13, 2009. index, reflecting a cumbersome business environment. 6. MA-TTRI calculates the equivalent uniform tariff of A landlocked country reliant on transit transport, trading partners that would keep their level of imports Bolivia scores below average on the Logistics constant. It is weighted by import values and import Performance Index, a measure of the ease of trade demand elasticities of trading partners. facilitation, which rates Bolivia at 2.31 on a scale from 7. Puentes Quincenal, July 2009. 1 to 5 with 5 being the highest performance. This is 8. SICE, 2009. compared with 2.57 for the LAC region and 2.47 for 9. National Statistics Institute, 2008. countries in the lower-middle-income group. It ranked 10. All quarterly data is from IMF, 2009. 70th in the world and 9th in the LAC region (with Chile leading the regional group). The area in which it performed the best was timeliness of shipments and it References needs most improvement in customs procedures. Buxton, Nick. 19 June 2008. ―Bolivia intent on commercial suicide?‖ Bilaterals.org. 8 July 2009. Trade Outcomes . Bolivia’s real growth (in constant 2000 U.S. dollars) in Economist, The. July 16, 2009. ―Bolivia’s Divisive total trade of goods and services reached a high 15.3 President; the Permanent Campaign.‖ July 17, 2009. percent in 2008, from 4.1 percent in 2007. Total . imports of goods and services grew by 15 percent. In Evo Morales Ayma, Constitutional President of the 2009, real exports and imports are expected to shrink. Republic. November 21, 2007. Decreto Supremo No Natural gas represents over 50 percent of Bolivia’s 29349 (Supreme Decree No 29349). total exports, mostly sold to Brazil and Argentina. ———. May 13, 2009. Decreto Supremo No 0125 (Supreme Mineral exports are sent to the Republic of Korea, Decree No 0125). Japan, and Peru.9 In nominal terms, goods exports Food and Agriculture Association of the United Nations grew by an estimated 22.7 percent in 2008. This is (FAO). 2009. ―Policy Measures Taken by despite a 20.3 percent decline in the fourth quarter of Governments to Reduce the Impact of Soaring 2008 year-on-year in U.S. dollar terms.10 Exports of tin Prices (As of 15 December 2008).‖ United Nations, and zinc, two of the largest mineral exports—which New York. 26 June 2009. . exports—declined by 39.4 and 36.3 percent in this last Foreign Trade Information Service (SICE). 2009. quarter, respectively. Soybeans are another top export ―Andean Countries–European Union.‖ . Venezuela, Colombia, and Peru. Nominal import International Monetary Fund (IMF). August 2009. growth was an estimated 22.5 percent in 2008. In the International Financial Statistics (Country Tables). first half of 2009, both exports and imports contracted IMF. July 2009. . Bolivia Trade Brief World Trade Indicators 2009/10 Puentes Quincenal. March 2009. ―Bolivia mira hacia Alba- incrementaron en 54,1%.‖ 30 July 2009. . . United States Trade Representative. 2009. 2009 National ———. April 2009. ―Mientras la can intenta Trade Estimate Report on Foreign Trade Barriers . replantearse, Ecuador apela resolucion y amenaza Washington, DC. con irse.‖ Puentes Quincenal 6(7). 20 July 2009. World Trade Organization (WTO). July 15, 2009. . the Financial and Economic Crisis and Trade-Related ———. July 2009. ―Bolivia y EE.UU. Buscan reconciliar Developments.‖ WTO, Geneva. 6 August 2009. sus relaciones.‖ Puentes Quincenal 6(10). 20 July 2009. . tpr_13jul09_e.htm>. National Statistics Institute. May 2008. ―Press Release N.52: Las Exportaciones Bolivianas se