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