VICE PRESIDENT CALLS FOR "INTELLIGENT" TRADE

UNCLAS LA PAZ 000458 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/AND LPETRONI COMMERCE FOR JANGLIN TREASURY FOR SGOOCH STATE PASS TO USTR FOR BHARMAN E.O. 12958: N/A TAGS: ETRD EINV ECON USTR BL SUBJECT: VICE PRESIDENT CALLS FOR "INTELLIGENT" TRADE PROTECTIONISM ¶1. (U) Summary: In a February 17 speech to participants in a GOB-sponsored trade seminar, Vice President Alvaro Garcia Linera called for "intelligent" trade protectionism, arguing that Bolivia should follow the historical model of developed countries by seeking open access to foreign markets while protecting domestic industries. Garcia Linera derided the so-called "neoliberal" economic model, calling Latin America a "pathetic example" of the harmful effects of blindly following others' policy prescriptions and promising that the GOB would develop a unique approach to economic development, paying special attention to small and medium enterprises and "forgotten" small producers. His speech was preceded by an opening statement from Minister of Foreign Affairs David Choquehuanca and followed by presentations from representatives of four U.S. think tanks, who unanimously faulted the economic policies of the last twenty years for failing to produce economic growth and called on Latin American governments to resist outside pressure to open their markets to trade. Leading Bolivian businessmen worried the event would undermine efforts to secure Bolivia's participation in the proposed Andean Free Trade Agreement, but despite significant press attendance, the seminar generated surprisingly little negative coverage. End summary. ¶2. (U) In a February 17 speech to participants in a GOB-sponsored trade seminar, "Integration for Change: First Steps toward a New Policy of International Economic Relations," Vice President Alvaro Garcia Linera called for "intelligent" trade protectionism, arguing that Bolivia should follow the historical model of developed countries by seeking open access to foreign markets while protecting domestic industries. The world's wealthy countries, he said, had benefited from trade barriers while they developed and continued to benefit from such barriers today, despite assertions to the contrary. Lowering tariffs meant to protect domestic industries, Garcia Linera remarked, was fine for "servile" countries, but not for Bolivia. Commenting on the inability of less developed countries to compete with more developed ones, he said, "the ox cart in Bolivia can't compete with the spaceship in the United States." The vice 
president noted that most developed countries had once sought to trade with their neighbors while protecting domestic businesses from foreign competition; Bolivia, he said, should do the same, welcoming free entry into U.S., European, and other markets while ensuring Bolivian producers were protected. ¶3. (U) Garcia Linera derided the so-called "neoliberal" economic model, calling Latin America a "pathetic example" of the harmful effects of blindly following others' policy prescriptions. He argued that twenty years of trade liberalization had had "disastrous" effects on the region's economies, pointing out that agricultural commodity prices had fallen by up to 75 percent in some places and claiming that liberalization had coincided with an increase in Bolivia's informal sector and a decline in overall living standards. Bolivia, he said, was "less modern and more archaic" than it was twenty years ago, with a handful of big businesses benefiting from the country's openness at the expense of thousands of others. Garcia Linera promised that the GOB would develop a unique approach to economic development, paying special attention to small and medium enterprises and "forgotten" small producers. He called on the government to "insert itself intelligently" into the global trading system, welcoming market opportunities but refusing to accept them blindly. According to the vice president, the new administration would develop a comprehensive strategy for growth, seeking markets for exports while thinking always of Bolivia's 8.5 million people and protecting and supporting small and medium enterprises and "forgotten" small producers. "We can't accept free trade agreements without reflection," he concluded, saying, "We appreciate the opportunities for markets given to us by foreign countries, but they must be adjusted to suit us." ¶4. (U) Garcia Linera's speech was preceded by remarks from Minister of Foreign Affairs David Choquehuanca, who opened the seminar with a philosophical reflection on international trade. He noted the traditional indigenous value of "la tama," or family, and suggested all living creatures belonged to one family, with even the least plant or animal deserving consideration when talking about global integration. He also called attention to the value of "la tumba," or concern, and noted all peoples' responsibility to show concern for others' welfare. Lastly, he called attention to the indigenous flag, the Wipalla, a banner composed of numerous squares of equal size, and said it served as "a symbol teaching that all people are of equal importance." For Bolivians, Choquehuanca said, "the agronomist is not superior to the farmer." The minister called on seminar participants to pay close attention to the provisions of free trade agreements, emphasizing the need for fairness and concern for the welfare of all. ¶5. (U) The two speeches were followed by presentations from representatives of four U.S. think tanks, including the Center for Economic Policy Research, Public Citizen Global Trade Watch, the Washington Office on Latin America, and the Institute for Agriculture and Trade Policy. Each speaker faulted the economic policies of the last twenty years for failing to produce economic growth and called on Latin American governments to resist outside pressure to open their markets to trade. Dr. Mark Weisbrot, Co-Director of the Center for Economic Policy Research, called the reforms of the last two decades a "total failure" and suggested Bolivia's participation in the proposed Andean Free Trade Agreement (FTA) would be a "mistake." His ideological counterpart, Dr. Lori Wallach, Director of Public Citizen Global Trade Watch, described the existing global trade system as one that "subjugated" smaller countries to the demands of others and criticized U.S.-sponsored free trade agreements for undermining countries' sovereignty and eliminating governments' decision-making power. She described such agreements as a kind of Trojan horse, in which countries like the United States used access to their markets as "bait" while forcing countries to accept packages of policies "totally unacceptable to their populations." Free trade agreements, Dr. Wallach declared, "put countries in handcuffs," eliminating flexibility and hindering rather than promoting long-term economic growth. ¶6. (U) Leading Bolivian businessmen worried the event would undermine efforts to secure Bolivia's participation in the proposed Andean Free Trade Agreement, many declaring the seminar a thinly veiled attempt by Garcia Linera and other GOB officials to derail Bolivia's attempt to win a place at the negotiating table. Gary Rodriguez, General Manager of the Bolivian Foreign Trade Institute, said his organization would respond by issuing press statements to try to "neutralize" the seminar's negative messages and retain control of public discussion. He and Marcos Iberkleid, President of Ametex, Bolivia's leading apparel manufacturer and largest private employer, said they would stick to a fundamental message: "jobs, jobs, jobs," repeatedly reminding private and public sector representatives that agreements like the Andean FTA would ensure Bolivian producers' continued competitiveness and create and protect thousands of jobs. Their worry that the event would generate substantial press coverage ultimately proved unfounded, as the seminar garnered little more than back-page articles in weekend newspapers. The articles highlighted Garcia Linera's speech but provided little to no coverage of other speakers' statements. ¶7. (SBU) Comment: For many in the audience, the event provided the first real insight into the new administration's attitudes toward international trade and existing market-oriented economic policies. In today's framework of open markets and gradually falling trade barriers, Garcia Linera's calls for increased protectionism seemed out of place, and many observers wondered how the socialist overtones of his remarks might translate into GOB action in the next few months. We have yet to receive an official expression of interest in the Andean Free Trade Agreement from the GOB, and if the views expressed by Garcia Linera are any indication of official policy, there may be little room for a productive discussion of the topic. End comment. ROBINSON