– Economic Complementarity Agreement (ECA) No 22 with Chile, in force since 6 April 1993, provides for the liberalisation of trade on the lists of products of interest to both countries. Negotiations are currently under way to expand its scope for a free trade agreement. Bolivia is participating in these negotiations mainly to improve the conditions of access for its products to the Chilean market and thus restore its bilateral trade balance, which has hitherto been very unfavourable. Supported by comprehensive structural reforms, fiscal discipline, a market-based exchange rate and support from the international community, particularly through debt relief programmes, the benefits of Bolivia`s stabilization programme, first launched in 1985, have been considerable. Between 1993 and 1998, GDP grew at an average rate of 4.6 per cent and the cumulative annual inflation rate was reduced to less than 5 per cent. The share of reported trade in goods in GDP increased from about 36 per cent in 1993 to 43 per cent in 1997, and trade flows continued to diversify in both product and market terms. 51. In addition, the Ministries of Foreign Affairs and Religious Services; Finance; justice and human rights; Economic development; Sustainable development and planning; and agriculture, livestock and rural development carry out specific tasks related to Bolivia`s foreign trade in their areas of competence. 59. The process of physical integration initiated by the countries of the Plaque Basin Group with the signing of the Treaty of Brasilia in 1969 is an extremely important project for Bolivia because of the prospects it offers for the development of its physical infrastructure, mainly related to foreign trade. In this context, the development of the Paraguay-Paraná waterway, of which Bolivia is the main promoter, will allow the country to direct a large and growing volume of its overseas trade across the Atlantic. In recent years, trade relations have increasingly focused on the negotiation of preferential agreements; Since 1993, new agreements have been concluded with Chile, Cuba, Mercosur and Mexico. Bolivia continued to participate in the integration process of the Andean Community.
Given Bolivia`s geographical location, most of these preferential initiatives have the potential to increase trade and investment; however, they could also undermine the transparency, predictability and benefits of resource allocation under Bolivia`s most-favoured-nation regime. The large gap between applied and bound tariffs, the possible complexities arising from preferential trade agreements, and the use of a selective specific excise tax (ECI) somewhat distract from the benefits inherent in resource allocation, transparency and predictability that result from the Bolivian tax structure. ICE also taxes certain locally produced alcoholic beverages at a lower rate than imported beverages. 14. The main incentives for foreign direct investment took place from 1995 onwards as a result of the privatization and capitalization of state-owned enterprises and new investments in various sectors of the economy, in particular the construction of the gas pipeline to Brazil. Thus, foreign direct investment has been channelled mainly to the hydrocarbon sector, more than 60 per cent of the total sector, and to the trade and services sectors, with recent investments in the banking and electricity sectors. Bolivia`s successful macroeconomic stabilization and outward trade and investment policies have led to steady GDP growth, lower inflation, and increased trade and investment. Bolivia`s trade regime is inherently predictable and transparent, according to a new WTO report on Bolivia`s trade policy. However, the report also notes that administrative gaps, uneven law enforcement and a large informal sector remain problems that Bolivia intends to address through a second round of reforms aimed at strengthening governance and integrating informal activities into the formal economy.
12. In 1998, there was a current account deficit mainly due to trade imbalances. This deficit was financed by long-term capital inflows, mainly foreign direct investment. The EU, Colombia and Peru concluded trade negotiations in 2011. The trade agreement between the EU and Colombia and Peru was signed in June 2012. The agreement has been provisionally applied with Peru since March 2013 and with Colombia since August 2013. 45. The import regime is governed by Supreme Decree No. 24440 of December 1996, which provides for the free importation without prior authorization of import quotas or other non-tariff measures for the importation of marketable goods. As a result of adjustments since 1993, in particular to restructure or modify the role of various public authorities, a number of ministries, including the Ministries of Foreign Trade and Investment, as well as External Relations and Worship, are responsible for formulating and implementing trade policy.
Although these adjustments were intended to promote greater efficiency in public administration, in some cases they reduced its stability and transparency; Recent efforts to decentralize public administration could have a similar effect. Bolivia has subsequently taken steps to reduce governance problems and eliminate distortions resulting from relatively weak institutions, in particular rent-seeking activities such as smuggling, which are justified by shortcomings in law enforcement. – Partial Scope Agreement (PAA) No. 34 between Bolivia and Cuba has been in force since 25 April 1997. The aim of the agreement is to accelerate the production and growth of trade flows and to take measures and actions to achieve closer economic relations. 10. The Bolivian economy is vulnerable to international crises due to its dependence on commodity exports (80% of total exports), its strong demand for imports of capital goods and raw materials and its need for external financing. Despite this vulnerability, the country was not affected by the Mexican crisis or by the rise in international interest rates in 1994. Capital flows have not declined but, on the contrary, foreign direct investment has continued to rise and international reserves have continued their upward trend. However, since the Asian crisis, the international environment has become less favourable and the Bolivian economy has felt the effects of the international crisis mainly through the fall in the prices of raw materials of the primary exporter, whose index fell by 12% between December 1996 and December 1998.
The economic impact resulted in a decline in exports of about 5.4% f.b in 1998, which led to an increase in the projected trade deficit for that year. However, the impact on economic growth was not significant, with economic activity increasing by 4.75% in 1998, in line with forecasts for the year. 1. In accordance with the provisions of Annex 3 to the Marrakesh Agreement, this report describes the trade policies and practices of Bolivia during the period 1993-1998. In doing so, it examines the context in which these policies and practices have developed, focusing on structural reforms of a political and institutional nature aimed at improving the market economy model and implementing the legislation and mechanisms resulting from Bolivia`s international obligations, in particular those adopted within the framework of the WTO. The new WTO report, together with a statement of principles by the Government of Bolivia, will serve as the basis for the Trade Policy Review of Bolivia by the WTO`s Trade Policy Review Body (TPRB) on 19 and 21 July 1999. Bolivia was last audited by the TPRB in 1993. The report states that Bolivia applies a uniform tariff rate of 10%, with the exception of a rate of 5% for capital goods and a rate of 2% for books. The current tariff system is mainly the result of autonomous initiatives. Bolivia has set its tariffs at a general maximum of 40%, leaving a significant gap between applied and bound rates. The report notes that this and the complexity resulting from preferential trade agreements and the use of a selective specific consumption tax could compromise the transparency and predictability of the Bolivian tax structure. There are several valuable trade agreements in Bolviai that create preferential trading conditions for exporters and importers operating in Bolivia and throughout the region.
However, trade regulations in Bolivia require special attention from potential traders. Foreign leaders who plan to use trade agreements in Bolivia for business should work with experienced and leading specialists in market entry and commercial law to successfully launch their expansion. .