US Proposes Suspending Trade Benefits For Bolivia

WASHINGTON -- U.S. President George W. Bush announced plans Friday to end trade preferences for Bolivia, further escalating tensions between the two countries.

Bush has proposed suspending Bolivia's participation in the Andean Trade Promotion and Drug Eradication Act, claiming the country isn't cooperating with efforts to counter drug-trafficking, U.S. Trade Representative Susan Schwab said in a statement.

The proposal will be posted in the Federal Register for public comment.

The move marks a further deterioration in ties between the Bush administration and Bolivian President Evo Morales, an ally of Venezuelan President Hugo Chavez.

Bolivia and Venezuela expelled their U.S. ambassadors earlier this month, claiming U.S. support for Morales's opposition. That followed a decision by the Bush administration to add Bolivia to the list of countries not fulfilling obligations to fight drug trafficking, joining Venezuela and Myanmar.

"The Morales administration's recent actions related to narcotics cooperation are not those of a partner and are not consistent with the rules of these programs," said Schwab in the statement. The suspension could be lifted if the Bolivian government's efforts improve, she said.

The Andean trade preferences have been in place since the end of 1991 to help Bolivia, Colombia, Ecuador and Peru combat drug trafficking, giving duty-free treatment to most of these countries' exports. The benefits have been renewed every year.

On Thursday, U.S. business groups sent a letter to congressional leaders saying the trade preferences should be reconsidered for Bolivia and Ecuador. Ecuadorian President Rafael Correa is also a Chavez ally.

The letter was signed by the Business Roundtable, Emergency Committee for American Trade, National Association of Manufacturers, National Foreign Trade Council, and U.S. Chamber of Commerce.

The trade benefits are set to expire at the end of this year, and there is some uncertainty about what Congress plans to do given that a vote on the free trade agreement with Colombia has been postponed indefinitely by House Speaker Nancy Pelosi, D-Calif.

-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com