RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/57
21 June 1999
(99-2424)
Trade Policy Review Body
TRADE POLICY REVIEW
BOLIVIA
Report by the Secretariat
This report, prepared for the Trade Policy Review of Bolivia, has been drawn up
by the WTO Secretariat on its own responsibility.  The Secretariat has, as
required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Bolivia on its trade
policies and practices.
Document WT/TPR/G/57  contains the policy statement submitted by the
Government of Bolivia.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Bolivia.Bolivia WT/TPR/S/57
Page iii
CONTENTS
Page
(1) I NTRODUCTION .........................................................................................................................xiii
(2) T HE ECONOMIC  AND INSTITUTIONAL ENVIRONMENT .................................................................xiii
(3) T RADE POLICY DEVELOPMENTS ................................................................................................xiv
(4) S ECTORAL POLICY DEVELOPMENTS ...........................................................................................xiv
(5) T RADE POLICIES AND FOREIGN TRADING PARTNERS ..................................................................xv
I. ECONOMIC ENVI RONMENT.................................................................................................1
(1) I NTRODUCTION ............................................................................................................................1
(2) R ECENT ECONOMIC DEVELOPMENTS .........................................................................................1
(i) Aggregate supp ly and demand.......................................................................................1
(ii) Public finances............................................................................................................ ...3
(iii) Monetary and exch ange rate policy ...............................................................................5
(iv) Balance of  payments......................................................................................................7
(3) C OMPOSITION AND DIRECTION OF TRADE ..................................................................................9
(i) Merchandise  trade..........................................................................................................9
(ii) Trade in non-f actor serv ices ........................................................................................13
(4) T RENDS IN FOREIGN INVESTMENT ............................................................................................13
(5) O UTLOOK ............................................................................................................................... ...15
II. TRADE AND INVESTMENT POLICIES :  FRAMEWORK AND OBJECTIVES ...............16
(1) I NTRODUCTION ..........................................................................................................................16
(2) T RADE POLICY FRAMEWORK ....................................................................................................16
(i) General lega l framework..............................................................................................16
(ii) Structure of trade policy formul ation...........................................................................18
(iii) Trade policies and legislation ......................................................................................18
(3) T RADE RELATIONS ....................................................................................................................19
(i) World Trade Organization ...........................................................................................19
(ii) Preferential  agreements................................................................................................21
(iii) Dispute settlement........................................................................................................ 25
(4) I NVESTMENT POLICY FRAMEWORK ..........................................................................................25
(i) Policy objectives and in stitutional framework.............................................................25
(ii) International engage ments and relations......................................................................26
III. TRADE POLICIES AND PR ACTICES BY MEASURE........................................................27
(1) O VERVIEW ............................................................................................................................... .27
(2) M EASURES DIRECTLY AFFECTING IMPORTS ............................................................................27
(i) Registration an d documentation ..................................................................................27
(ii) Customs valuati on and inspection ...............................................................................28
(iii) Rules of or igin........................................................................................................... ..28
(iv) Import levies and charges ............................................................................................29
(v) Import proh ibitions ......................................................................................................33
(vi) Licensing and authoriza tion.........................................................................................33WT/TPR/S/57 Trade Policy Review
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(vii) Technical re quirements................................................................................................34
(viii) Impor t quotas ............................................................................................................ ...36
(ix) Import surv eillance ......................................................................................................36
(x) Import monopolies or cartels .......................................................................................36
(xi) Countertrade ............................................................................................................... .36
(xii) Anti-dumping and c ountervailing measures ................................................................36
(xiii) Safegu ard ac tions........................................................................................................ .36
(xiv) Measures implemented in exporting countries ............................................................37
(xv) Balance-of-payments and other measures ...................................................................37
(3) M EASURES DIRECTLY AFFECTING EXPORTS ............................................................................37
(i) Registration, documentation and origin cert ification...................................................37
(ii) Export prohibiti ons and licencing................................................................................37
(iii) Export quotas ............................................................................................................. ..38
(iv) Voluntary restrains, export charges and sim ilar meas ures...........................................38
(v) Actions by other countries affecting Bolivia n exports.................................................38
(vi) Duty and other tax concessions ...................................................................................38
(vii) Free-trad e zones.......................................................................................................... .39
(viii) Export subsidies, finance,  insurance and guarantees ...................................................40
(ix) Export promotion and marketing a ssistance................................................................40
(x) Generalized System  of Preferences .............................................................................40
(4) M EASURES AFFECTING PRODUCTION AND TRADE ...................................................................40
(i) Competition policy and regulatory issues....................................................................40
(ii) State trading .............................................................................................................. ...42
(iii) Government procurement ............................................................................................42
(iv) Production subsidies a nd tax concessions....................................................................43
(v) Local-conten t schemes.................................................................................................43
(vi) Pricing and marke ting arrang ements ...........................................................................43
(vii) Regional, research and devel opment, and othe r assist ance .........................................43
(viii) Trade-related in vestment measures..............................................................................43
(ix) Intellectual pr operty ri ghts...........................................................................................44
IV. TRADE POLICIES  BY SE CTOR............................................................................................48
(1) I NTRODUCTION ..........................................................................................................................48
(2) A GRICULTURE , FORESTRY AND RELATED INDUSTRIES ............................................................48
(i) Feat ures.................................................................................................................... ....48
(ii) Policy objec tives .......................................................................................................... 49
(iii) Key s ubsectors ............................................................................................................ .51
(3) M INING AND MINERAL PROCESSING ........................................................................................56
(i) Solid minerals .............................................................................................................. 56
(ii) Hydro carbons............................................................................................................... 58
(4) O THER MANUFACTURING .........................................................................................................59
(i) Main fe atures ............................................................................................................... 59
(ii) Policy  issues.............................................................................................................. ...59
(iii) Textiles an d clothing....................................................................................................6 0Bolivia WT/TPR/S/57
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(5) S ERVICES ............................................................................................................................... ....61
(i) Intr oduction................................................................................................................ ..61
(ii) Financia l serv ices......................................................................................................... 64
(iii) Telecomm unications....................................................................................................69
(iv) Transport.................................................................................................................. ....70
BIBLIOGR APHY… .................................................................................................................. ............73WT/TPR/S/57 Trade Policy Review
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CHARTS
Page
I. ECONOMIC ENVIRONMENT
I.1 Main indicators of macroeconomic performance 1990-97 6
I.2 Merchandise trade by product, 1993 and 1997 11I.3 Merchandise trade by partner, 1993 and 1997 12
I.4 Bolivian FDI inflows by origin and sector, 1993-98 14
II. TRADE AND INVESTMENT POLICIES:  FRAMEWORK AND OBJECTIVESII.1 Bolivia's trade with main regional partners, 1990-97 22IV. TRADE POLICIES BY SECTORIV.1 Evolution of the coca industry, 1988-96 53
IV.2 Distribution of value added in services, 1997 61Bolivia WT/TPR/S/57
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TABLES
Page
I. ECONOMIC ENVIRONMENT
I.1 Basic economic and demographic indicators, 1993-98 2
I.2 Economic performance, 1993-97 3I.3 Consolidated operations of the combined public sector, 1993-98 4
I.4 Balance of payments, 1993-98 8
I.5 Trade in non-factor services, 1993-98 13I.6 Foreign direct investment in Bolivia by main economic sector, 1990-98 14
II. TRADE AND INVESTMENT POLICIES:  FRAMEWORK AND OBJECTIVESII.1 Bolivia's notifications under the WTO Agreements (as of 30 April 1999) 20
II.2 Bolivia's duty-free imports, 1993-98 23
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 MFN tariff rates other than 10%, 1998 30
III.2 Structure of import charges in Bolivia 33III.3 Public services regulated by SIRESE, 1997 41
IV. TRADE POLICIES BY SECTOR
IV.1 Agricultural production, 1993-97 49
IV.2 Agricultural exports, 1993-97 49IV.3 Production and exports of wood products, 1990-96 55IV.4 Main mineral exports 57IV.5 Summary of Bolivia's sector-specific commitments under the GATS 62IV.6 Summary of Bolivia's GATS MFN exemptions 64
IV.7 Non-insurance financial institutions, 1998 65
IV.8 Non-air freight transport, 1996 71WT/TPR/S/57 Trade Policy Review
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APPENDIX TABLES
Page
I. ECONOMIC ENVIRONMENT
AI.1 Exports by groups of products, 1980-97 77
AI.2 Imports by groups of products, 1980-97 78AI.3 Exports by destinations, 1980-97 79
AI.4 Imports by origin, 1980-97 80Bolivia WT/TPR/S/57
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GLOSSARY
Administrative Appeals Body Superintendencia de Recursos Jerárquicos
Agricultural Research Center (CIAT) Ce ntro de Investigación Agrícola Tropical
(CIAT)
Bolivian Institute of External Trade (IBCE) Instituto Boliviano de Comercio Exterior
(IBCE)
Bolivian Institute of Metrology (IBMETRO) Instituto Boliviano de Metrología (IBMETRO)Bolivian Institute of Standardization and Quality
(IBNORCA)Instituto Boliviano de Normalización y Calidad
(IBNORCA)
Bolivian Standardization, Metrology,
Accreditation and Certification System(SNMAC)Sistema Boliviano de Normalización,
Metrología, Acreditación y Certificación(SNMAC)
Bolivian Stock Exchange Bolsa de Valores
Bolivian System of Agricultural Technology Sistema Boliviano de Tecnología Agropecuaria
(SIBTA)
Bolivian National Oil Company Yacimientos Petrolíferos Fiscales Bolivianos
(YPFB)
Coffee Exporter Registry Registro del exportador de caféContributor's  Registry (RUC) Regis tro Único de Contribuyentes (RUC)
Convention on Trade marks Convención sobre marcas de fabrica y comercio
Decentralized System of Animal Health Sistema descentralizado de Sanidad Animal
(SIDSA)
Economic Complementarity Agreement (ACE ) Acuerdo de Complementación Económica
(ACE)
Export Promotion Directorate (DPE) Direcci ón de Promoción de las Exportaciones
(DPE)
Exporter's Registry (RUE) Registr o Único del Exportador (RUE)
Free Trade Area of the Americas (FTAA) Área de Libre Comercio de las Américas
(ALCA)
Internal Revenue Service Servicio Nacional de Impuestos Internos
Law on Concessions for Public Works in the
Transport sectorLey de concesiones de obras públicas de
transportes
Law on the Cinema Ley General del Cine
Legal Counsellor of the National Culture
SecretariatAsesor Legal de Secretaría Nacional de Cultura.WT/TPR/S/57 Trade Policy Review
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Military holding company (COFADENA) Corporación de las Fuerzas Armadas para el
Desarrollo Nacional (COFADENA)
Ministry of Agriculture, Livestock and Rural
DevelopmentMinisterio de Agricultura, Ganadería y
Desarrollo Rural
Ministry of Economic Development Ministerio de Desarrollo EconómicoMinistry of Education and Culture Ministerio de Educación, Cultura y DeportesMinistry of External Relations and Worship Ministerio de Relaciones Exteriores y CultoMinistry of Finance Ministerio de HaciendaMinistry of Foreign Trade and Investment Ministerio de Comercio Exterior e InversiónMinistry of Health and Social Security Mi nisterio de Salud y de Previsión Social
Ministry of Rural and Agricultural Affairs Ministerio de Asuntos Campesinos y
Agropecuarios
Ministry of Social Security and Public He alth Ministerio de Salud y Previsión Social
Multilateral Exchange Rate (TCM) Tasa de Cambio Multilateral (TCM)National Customs Service (SNA) Servicio Nacional de Aduanas (SNA)National Chamber of Commerce Cámara Nacional de ComercioNational Chamber of Exporters Cáma ra Nacional de Exportadores
National Directorate of Production and
Agricultural ProtectionDirección nacional de producción y de
protección agrícola
National Directory of Commerce Servicio Nacional de Registro de Comercio
National Office for Intellectual Property Servicio Nacional de Propriedad Intelectual
(SENAPI)
National Programme for Irrigation Programa Nacional de Riego (PRONAR)National Secretariat of Agriculture and
LivestockSecretaria Nacional de Agricultura y Ganadería
(SNAG)
Partial Scope Agreement (AAP) Acuerdo de Alcance Parcial (AAP)
Phyto and Zoo-phytosanitary Census Padrón fito y zoosanitario
Profit tax (IUE) Impuesto a las utilidades de las empresas (IUE)Promotion Center of Bolivia (CEPROBO L) Centro Promoción Bolivia (CEPROBOL)
Registry of Commerce and Joint-Stock
CompaniesRegistro de Comercio y de Sociedades por
Acciones (RECSA)Bolivia WT/TPR/S/57
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Social and Economic Policies Analysis Unit
(UDAPSE)Unidad de Análisis de Políticas Sociales y
Económicas (UDAPSE)
Specific Consumption Tax (ICE) Impuesto a los Consumos Específicos (ICE)
Strategy for the Productive Transformation of
AgricultureEstrategia para la Transformación Productiva
del Agro
System of Administration of Goods and Services
(SABS)Sistema de Administración de Bienes y
Servicios (SABS)
Tax Devolution Certificate (CEDEIM) Certificado de Devolución de Impuestos
(CEDEIM)
Technical Assistance Service (SAT) Servicio de Asistencia Técnica (SAT)Temporary Import Regime Régimen de Internación TemporalTemporary Import Regime for Export promotion
(RITEX)Régimen de Internación Temporal para las
Exportaciones (RITEX)
The Chief Executive Officer (MAE) Máxima Autoridad Ejecutiva (MAE)The BOLINVEST foundation Fundación BOLINVESTThe National Export Council (CONEX) Cons ejo Nacional de Exportaciones (CONEX)
The National Plan for Food Security El Plan Nacional de Seguridad Alimentaria
(PLANSA)
Under-Secretary of Cultural Patrimony, National
Culture Secretariat.Subsecretario de patrimonio cultural, secretaría
nacional de cultura
Vice-Ministry of Agriculture and Livestock Viceministerio de Agricultura y Ganadería
Vice-Ministry of Industry and Internal Trade Viceministerio de Industria y de Comercio
Interno
Vice-Ministry of International Economic
Relations and IntegrationViceministerio de Relaciones Económicas
Internacionales e Integración
Vice-Ministry of Transport, Communications,
and Civil AviationViceministerio de Transportes,
Comunicaciones, y Aeronáutica CivilBolivia WT/TPR/S/57
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SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Bolivia has continued with great
success the macroeconomic stabilizationprogramme initiated in the mid 1980s.  Since
Bolivia's previous Trade Policy Review in
1993, GDP growth has been steady, inflation
has fallen, trade has increased and, despite
high foreign debt, external balances haveremained manageable.  The role of the State
has been reduced through a comprehensive
privatization programme which, together with
more liberal investment rules, has encouraged
a considerable rise in foreign directinvestment.
2. Bolivia has continued to consolidate
its generally outward-looking trade regime,
applying a near uniform 10% tariff and
shunning the use of non-tariff trade barriers,
including trade defence measures.  Bolivia's
trade regime is inherently predictable andtransparent and promotes an efficient
allocation of resources, although this is
undermined to some extent by persistent
administrative weaknesses and an uneven
application of laws affecting, at times, areassuch as customs administration, the use of
technical requirements, and the enforcement
of intellectual property rights.  Distortions
also arise from a large informal sector.
3. In coming to grips with these
weaknesses, Bolivia has engaged in a second
round of reform to strengthen governance and
incorporate informal activities into the formal
economy. Recognizing that the benefits of
sound economic policies and structuralreforms have been slow to filter down to the
population at large, and that per capita
income remains low, Bolivia has also taken
steps to bring about improvements in social
areas such as education and health.  These
reforms should help reduce constraints on
rates of growth by augmenting the supply ofskilled labour, reducing transaction and
production costs and, thus, enhancing the
international competitiveness of Bolivianproducers and exporters, as well as Bolivia's
attractiveness as an investment destination.
(2) T
HE ECONOMIC  AND INSTITUTIONAL
ENVIRONMENT
4. Relying on broad structural reforms,
fiscal discipline, a market based exchange rateand the support of the international
community, in particular through debt relief
programmes, the benefits of the Bolivian
stabilization programme, first initiated in
1985, have been substantial.  Between 1993and 1998, GDP grew at an average rate of
4.6% and the annual cumulative inflation rate
was brought down under 5%.  The share of
reported merchandise trade to GDP rose to
43% in 1997, from about 36% in 1993, andtrade flows have continued to diversify both in
terms of products and markets.
5. Foreign direct investment has
increased sharply since the beginning of the
1990s and has played a major role in the
modernization of Bolivia's economy.  The
elimination of foreign investment restrictions,together with macroeconomic stability and
structural reform, particularly the
privatization of public enterprises, have been
key factors in this trend.  New competition
policy provisions are helping to ensure thatthe abuse of market power does not impair
economic efficiency.
6. Following adjustments since 1993,
particularly to restructure or change the role
of various public entities, responsibility fortrade policy formulation and implementation
is shared by a number of ministries, including
the Ministries of Foreign Trade and
Investment and of External Relations and
Worship.  Although these adjustments havesought to encourage greater effectiveness in
public administration, they have in some
instances reduced its stability and
transparency;  recent efforts to decentralize
the public administration might have a similar
effect.  Bolivia has subsequently taken
measures to reduce governance problems andeliminate distortions resulting from relatively
weak institutions, particularly rent-seekingWT/TPR/S/57 Trade Policy Review
Page xiv
activities, such as contraband, propitiated by
loopholes in the application of the law.
(3) TRADE POLICY DEVELOPMENTS
7. Since 1993, Bolivia has continued to
consolidate its generally outward-looking
trade regime, thus creating a largely neutralset of formal trade instruments.  Reaping the
full benefits of this regime, and of other
economic reforms undertaken in recent years,
requires closing the substantial gap between
policy objectives and their implementation.Bolivia is taking steps in this direction,
including through the reform of customs
administration and the expected adoption of a
new customs law.
8. Bolivia offers at least most-favoured-
nation treatment to all its trading partners.  A
virtually uniform, ad valorem tariff is applied
on imports:  a 10% rate applies to all products
except for 429 HS lines (mostly capital goods),
on which a rate of 5% applies and five items
(books) rated at 2%.  Tariffs are bound at a
ceiling rate of 40%;  the few exceptions arebound at 30%.  The present tariff regime is
mostly the result of autonomous initiatives;
the Uruguay Round had only a minor effect on
Bolivia's applied tariffs or binding
commitments.  The most significant domestictax affecting imports is a uniform value-added
tax applied at a rate of just under 15% to all
products and services.
9. Detracting somewhat from the
inherent resource allocation, transparencyand predictability advantages offered by
Bolivia's tax structure are the wide gap
between applied and bound tariffs, possible
complexities arising from preferential trade
agreements, and the use of a selective specificconsumption tax (ICE).  The ICE also taxes
certain locally-produced alcoholic beverages
at a lower rate than imported beverages.
10. Bolivia has never taken anti-dumping
or safeguard actions.  The enforcement of
intellectual property rights, technical
requirements, and sanitary and phytosanitaryrules appears weak, but ongoing regulatoryand administrative improv ements should help
to address most concerns.  Bolivia has not
signed the plurilateral Agreement on
Government Procurement, and favours
national suppliers in public tenders.
11. Tax refund schemes support Bolivian
exports;  the budgetary revenue forgone is
modest but the schemes probably do little to
overcome the difficulties presented to
producers and exporters by structural
problems affecting several economic sectors.Bolivian exporters also face access difficulties
in certain foreign markets, including with
respect to technical requirements on some
products.  Bolivia has introduced export
prohibitions on unprocessed forestry products.Preshipment inspection for exports was
eliminated in 1999.
(4) S
ECTORAL POLICY DEVELOPMENTS
12. Bolivia has persevered with efforts to
establish a neutral incentive structure that
does not discriminate among sectors.  This
strategy has produced some noteworthysuccesses, especially in agriculture and
mining;  however, inadequate infrastructure,
high transport costs and a limited skilled
labour supply continue to impose constraints
on certain sectors, particularly inmanufacturing.  Moreover, resources for the
development of the formal sector have been
diverted by competition from informal
activities, including illegal drug-related
activities.  In this latter respect, Bolivia hasmade considerable progress through a number
of measures, including crop substitution
programmes and the destruction of illegal
crops.  However, driven by foreign demand,
the coca-cocaine industry maintains animportant, albeit declining role in the
economy.
13. Agricultural and related processing
activities, which are largely free of major
government intervention, including subsidies,
make a major contribution to Bolivia's foreign
exchange earnings.  Soya exports, inparticular, have undergone remarkableBolivia WT/TPR/S/57
Page xv
growth since 1993.  Wood production and
exports have also increased substantially.
14. Mineral extraction and processing,
including of hydrocarbons, represent an
important magnet for foreign investment,
spurred both by the privatization of miningassets and by new sectoral laws to further
liberalize private investment.  Mining
activities still account for a large share of
total export earnings, 42% in 1997, but the
mineral-export basket is diversified;  itincludes gold, natural gas, tin and zinc.
15. There has been little progress in
inducing a supply response in manufacturing
activities, other than the processing of
mineral, agricultural, and forestry products, inpart because of the infrastructural problems;
consequently, these activities still make only a
small contribution to Bolivia's economy.
16. In contrast, the services sector plays a
central role in the Bolivian economy.
Although in the past the State was an
important supplier of services, most of theseactivities have been privatized.  Far-reaching
steps have also been taken to strengthen the
institutional and legal framework, including
through the adoption of new legislation in
financial, transport and telecommunicationservices, as well as the setting up of new
supervisory agencies.  Most service activities
are now open to foreign investment, which has
played a key role in their modernization.  In
transport services, some concern remains onthe potentially discriminatory nature of certain
rail-freight charges levied at higher rates on
imports than on domestic products or exports.
(5) T
RADE POLICIES AND FOREIGN
TRADING PARTNERS
17. Although Bolivia's trade policy has
been largely based on unilateralliberalization, multilateral and regional
initiatives have played important supporting
roles.  Bolivia is committed to meeting its
Uruguay Round obligations, utilizing the
permitted implementation period for
developing countries.  Bolivia is undertakinglegislative reviews with a view to making the
necessary adjustments to take account of the
requirements of certain WTO Agreements,
such as on trade defence and customs
valuation.  In this context Bolivia agreed tobring its intellectual property legislation into
line with the TRIPS Agreement in 1999.
18. Bolivia's commitments under the
General Agreement on Trade in Services
(GATS) are relatively modest, although itsautonomous liberalization efforts have
established the bases for expanding them.  In
some cases, existing legislation offers more
liberal treatment to foreign providers than
Bolivia's bindings under the GATS.  Bolivia
undertook sector-specific commitments mainly
in telecommunications;  hospital services;hotels and restaurants;  travel agencies and
tour operators;  and recreational, cultural,
and sporting services.  Bolivia made
commitments on financial services under the
Fifth Protocol to the GATS;  their entry intoforce awaits the completion of the domestic
ratification process.
19. In recent years, trade relations have
become increasingly focused on the
negotiation of preferential agreements;  newagreements have been concluded with Chile,
Cuba, MERCOSUR and Mexico since 1993.
Bolivia has also continued to participate in the
Andean Community integration process.  In
view of Bolivia's geographical position, mostof these preferential initiatives have the
potential to increase trade and investment;
however, they could also undermine the
transparency, predictability and resource
allocation advantages of Bolivia's MFN trade
regime.