WT/TPR/S/57 Trade Policy Review
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II. TRADE AND INVESTMENT POLICIES:  FRAMEWORK AND OBJECTIVES
(1) INTRODUCTION
1. Since the mid 1980s Bolivia has embarked on ambitious reforms aimed at modernizing its
economy and turning it away from decades of import-substitution policies and direct government
control of production activities.  Those reform efforts have continued since Bolivia's previous Trade
Policy Review in 1993, touching key areas such as public administration, financial markets andstate-owned enterprises.  As a result, there has been a significant shift in the role of the State, which
has largely abandoned its role as manager of productive units to place greater emphasis on creating a
stronger institutional environment supportive of private economic initiatives.  With this objective, the
public administration has been decentralized, major state-owned enterprises privatized, and a
regulatory structure is being put in place to prevent distortion in competition.
2. Recognizing the persistent fragility of the judiciary system, the authorities are taking
purposeful steps to ensure full compliance with the rule of law.  Steps taken include the creation of an
ombudsman office, an administrative and disciplinary organ of the judicial power, as well as an
ambitious programme, started in early 1999, to  improve customs administration and reduce
governance problems.  Improved public governance in particular is vital to the elimination of existing
distortions resulting from relatively weak institutions, particularly rent-seeking activities by economic
operators exploiting loopholes in the application of the law.  Progress in this area would reduce
transaction costs to economic operators and thus enhance the international competitiveness of
Bolivian producers and the attractiveness of the country as an investment destination.
(2) T
RADE POLICY FRAMEWORK
(i) General legal framework
3. Since its previous Review in 1993, Bolivia's legal framework has undergone important
changes.  The Constitution was modified in 1994 and new laws were adopted including in specific
areas such as the mining and energy sectors (Chapter IV).  The Marrakesh Agreement was ratified
in 1995, and several international agreements covering trade and investment have entered into force.
4. Under the Constitution, executive power is ex ercised jointly by the President and his
Ministers.  The President and Vice-President are elected simultaneously for a five-year term by directsuffrage.  The Ministers, whose number and responsibilities are determined by law, are appointed by
the President through decree.  Legislative power is  vested in the National Congress, composed of a
130-member Chamber of Deputies and a 27-member Senate.  Under the Constitution, theVice-President presides over the Congress.
5. Judicial power is exerted by the Supreme Court, the Constitutional Tribunal, Upper District
Courts, Instance Tribunals and Judges, and other j udges and courts defined by law.  The Council of
Judicature is the administrative and disciplinary organ of the judicial power.  The President and the
twelve judges of the Supreme Court are proposed by the Council of Judicature and elected, by
two-third majority, by the National Congress for ten-year terms.  All judges and magistrates areindependent in the exercise of their functions.
6. The constitutional reform of 1994 increased the presidential term from four to five years,
lowered the voting age from 21 to 18, and introduced the direct election of half of the Deputies.
Reform also resulted in greater recognition of indigenous communities, the creation of an ombudsmanoffice, and administrative decentralization.  In this respect, Article Nos. 200 and 201 of the
Constitution provide for municipalities to be governed and administrated by municipal governmentsBolivia WT/TPR/S/57
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with normative, executive, administrative, technical and fiscal autonomous authority. These municipal
governments are comprised of a Major and a Council elected by direct suffrage.
7. The hierarchy of Bolivian legislation is, in decreasing order of precedence, the Constitution,
national laws, supreme decrees, supreme resolutions, multi-ministerial resolutions, bi-ministerial
resolutions, ministerial resolutions, and administrative resolutions.  International treaties subscribedby the President and ratified by the Congress have the status of national law and are thus part of the
domestic legal system.  They can be applied and invoked in domestic courts without requiring further
legislative implementation.  Nevertheless several domestic laws have been, or are in the process of
being, amended to harmonize them with Bolivia's international obligations and to facilitate their
enforcement.
8. Since 1993, new statutes have been promulgate d to consolidate Bolivia's outward-oriented
policy framework.  Most of the statutes are linked to the modernization and the disengagement of the
State from its traditional productive activities through the privatization and capitalization processes
(Box II.1).  The major new statutes are the Law on Banks and Financial Entities (1993), CapitalizationLaw (1994), Sectoral Regulatory System Law (1994), Electricity Law (1994), Telecommunication
Law (1995), Central Bank Law ( 1995), Hydrocarbons Law (1996), Pe nsion Law (1996), Mining Law
(1997), Organization of Executive Power Law (1997), Council of Judicature Law (1997),
Ombudsman Law (1997), Stock Market  Law (1998), Insurance Law (1998), and Law on Concessions
for Public Works in the Transport sector (1998).
Box II.1:  The capitalization process and the sectoral regulatory system
Bolivia initiated a capitalization process (partial privatization) in March 1994 to modernize and increase the
efficiency of state-owned enterprises in sectors such as energy (electricity and hydrocarbons companies),
telecommunications, and transport (air and railway companies).
The capitalization process, governed by Law No. 1544 (the Capitalization Law), consists of three phases.  In the
first, state owned companies are transformed into one or more mixed capital corporations.  These corporationsare created through capital paid by the State (assets at book value), and workers' voluntary purchase of shares inthe new companies (at book value).  In the second phase, "strategic partners" are invited to invest an amountequivalent to 50% of the market value of the corporations, the investor gaining control of the administration.The last phase consists of the stock distribution, involving the deposit of the shares held by the State in privately
managed pension funds in the name of all Bolivians age 21 or over on 31 December 1995.
This capitalization process has attracted substantial foreign investment.  As of the third quarter 1998, the direct
investment pledged by strategic partners taking control of public enterprises amounted to US$1,671 million, of
which US$1,109 million had actually been invested. By transferring shares of the privatized firms to the pensionsystem, this process has also proved to be an effective mechanism to diffuse domestic opposition to the sale ofstate assets.
Given the monopolistic nature of the sectors involved in privatization, the authorities recognized that the
privatization process could generate a number of sub-optimal outcomes, such as the appropriation of rents bythe private sector or inadequate services to low income  groups.  To prevent market failures and protect the
interests of all economic agents, a comprehensive regulatory system was created establishing rules and
procedures for the operation of the pr ivatized entities.  The system, the autonomous Sectoral Regulation System
(SIRESE), is composed of a general superintendency and five sectoral superintendencies fortelecommunications, transport, hydrocarbons, electricity, and water.  Other regulatory institutions were createdin parallel, such as the SIREFI for the financial sector and the SIRENARE for natural resources.  The systemalso includes administrative courts.  Complaints from consumers, producers or the Government may be filed in
the appropriate sectoral superintendency and appealed to the general superintendent.  If required,  appeal
processes may go further, through the Supreme Court.
Source :  Bolivian authorities.WT/TPR/S/57 Trade Policy Review
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(ii) Structure of trade policy formulation
9. There have been major changes in the structure of trade policy formulation since 1993.
Executive power was reorganized in 1997 in accordance with Law No. 1788 and its regulations
(Supreme Decree Nos. 24855 and 25055).  The number of high-ranking civil servants has been
reduced from 325 to 194.  Under the new executive power organization, the institution in charge of
coordinating all economic policies and with overall charge for policy formulation and implementationis now the National Council of Economic Policy (CONAPE).
1  The Council is composed of the
Ministers of Agriculture, Economic Development, Finance, Foreign Trade and Investment,
Presidency, and Sustainable Development and Planing.  Other ministers or officials from different
institutions may be convoked as necessary.  CONAPE's advisory body is the Social and Economic
Policies Analysis Unit (UDAPE).
10. The Ministry of Exports and Economic Competitiveness, which had been directly responsible
for foreign trade policy formulation and implementation, has been replaced in that role by the
Ministry of Foreign Trade and Investment.  This new Ministry is also in charge of the formulation and
implementation of investment policies and of th e privatization and capitalization processes.  It
participates, in coordination with the Ministry of External Relations and Worship and other relevantministries, in negotiating trade agreements.  It also evaluates and monitors export promotion schemes,
although those involving tax concessions are carried out jointly with the Ministry of Finance.  The
Ministries of Foreign Trade and Investment and of External Relations and Worship are both involved
in WTO issues.
11. The Ministry of Finance is in charge of fiscal policy, including tariff policy.  In collaboration
with the Ministry of External Relations and Worship, it negotiates tariff concessions in preferential
trade agreements. The Ministry of Finance also supervises the National Customs Service and monitorscontracts with the private trade inspection companies.
12. The National Export Council (CONEX), created in April 1993 by Law No. 1489, is
responsible for proposing export policies, programmes and strategies.  Under Supreme Decree
No. 25023 it participates in the elaboration of policies.  CONEX also evaluates the activities of
commercial attachés on diplomatic external mission s, and it can be consulted on legislative projects.
CONEX is presided over by the Minister of Foreign Trade and Investment;  other members are the
Vice-Ministers of Exports, International Economic Relations and Integration, Fiscal Policy, and
Agriculture and Livestock;  the president of the National Chamber of Exporters;  and a representative
from the industrial, agricultural and forestry sectors.
13. The formulation, promotion and regulation of sectoral economic policies are under the
responsibility of the Ministry of Economic Development.  This Ministry deals with some trade-related
issues such as standards, intellectual property rights and competition policy.  Within the Ministry the
Vice-Ministry of Industry and Internal Trade is the competent authority for the initiation and conduct
of anti-dumping investigations.  Its recommendations are transmitted to CONAPE for decision.
(iii) Trade policies and legislation
14. Since Bolivia's previous Review in 1993, there has been substantial continuity in its trade
policy objectives.  Bolivia emphasizes outward-looking, trade liberalization policies designed to
attract foreign investment, accelerate technical progress, enhance productivity and, therefore, increase
efficiency of Bolivian firms.  Through participation in regional and multilateral agreements, Bolivia is
                                                     
1 It replaces the National Council of Economy and Planing (CONEPLAN).Bolivia WT/TPR/S/57
Page 19
seeking broader access to international markets so as to generate economies of scale and
specialization.  Bolivia's trade policy instruments are relatively simple and transparent.
15. Beyond the international obligations contracted through its participation in regional and
multilateral negotiations, Bolivia's trade regime is regulated by several national laws and supreme
decrees.  Law No. 1182 of 17 September 1990 established the principle of unrestricted import and
export of goods and services with some exceptions for security and health reasons.  Law No. 1489 of16 April 1993 defined the tax treatment of exports, based on the principle of tax neutrality.
Subsequent legislation has mostly taken the form  of supreme decrees:  Supreme Decree Nos. 22410
and 22526 of 1990 regulate duty-free zones;  the general import regime is regulated by Supreme
Decree No. 24440 of 13 December 1996, while the temporary entry regime is regulated by Supreme
Decree No. 24480;  and Supreme Decree No. 24498 of 27 February 1997 established the Bolivian
Standardization, Metrology, Accreditat ion and Certification System (SNMAC).
(3) T
RADE RELATIONS
(i) World Trade Organization
16. The Marrakesh Agreement establishing the WTO was ratified in the Bolivian National
Congress on 5 July 1995 by Law No. 1637.  As required by the Agreement, Bolivia has made severalnotifications to the WTO;  Table II.1 contains a survey of those made up to end 1998.
17. Bolivia has reserved its right to delay the application of some WTO Agreements.  In
particular, the application of the Agreement on Implementation of GATT Article VII (on custom
valuation), and part of Article 2.2 of the Ag reement on Import Licensing Procedures has been
delayed.
18. Bolivia accords at least MFN treatment to all its trading partners.  Departures from MFN arise
from Bolivia's participation in preferential trade agreements, including those signed within the
framework of the Latin American Integration Association (LAIA) and the Andean Community.
19. In a statement prepared for this Review, the Bolivian authorities gave their views on various
aspects of the Uruguay Round.  From an economic perspective, these Agreements and their resulting
obligations promoted the economic policies implemented in Bolivia since 1985.  In particular they
contributed to Bolivia's open trade regime, and the transition from a state to a market economy.  Froma purely trade perspective, the Uruguay Round resulted in a stronger and more predictable multilateral
trading system, which should increase market access opportunities for small countries like Bolivia.
The Agreements on Technical Barriers to Trade, Agriculture, and the Application of Sanitary and
Phytosanitary Measures, in particular, have the potential to increase Bolivia's participation in world
trade.
20. The authorities also noted, however, that Bolivia's actual realized benefits from the Uruguay
Round are lessened in practice by its narrow range of exports, largely made up of primary and low
processed goods, for which market access is still relatively restricted.  The authorities also noted that
the special provisions of the multilateral trading agr eements in favour of developing countries resulted
in no concrete support for Bolivia.  Moreover, the Uruguay Round resulted in the erosion of thepreferences accorded to Bolivia by different countries under the Generalized System of Preferences
schemes.  According to the authorities, Bolivia would be able to take advantage of those preferences
only if their scope were extended to other products, for instance agricultural, leather and textile
products.WT/TPR/S/57 Trade Policy Review
Page 20
Table II.1
Bolivia's notifications under the WTO Agreements (as of 30 April 1999)
Article/instrument
imposing obligationWTO document - date
(last document if recurrent)Description of requirement
Agreement on Agriculture
Article 18.2 G/AG/N/BOL/2 - 27.05.98 Table  DS:1 - Domestic support.
Article 10 & 18.2 G/AG/N/BOL/1 - 27.05.98 Table  ES:1 to ES:3 - Export subsidies.
Anti-dumping (Agreement on Implementation of GATT Article VI)
Article 16.4 G/ADP/N/35/Add.1 - 20.3.98 Semi-annual reports.
Article 16.5 G/ADP/N/14/ADD.8 - 27.4.99 Competent authorities.
Article 18.5 G/ADP/N/1/BOL/1 - 26.4.95 Incorporation of Agreement in national legislation.
Customs Valuation (Agreement on Implementation of GATT Article VII)
Article 20.2 G/VAL/2/Rev.3 - 14.4.96 Invocation of Special Provisions
General Agreement on Tariffs and Trade (GATT)
Article XXVIII:5 G/MA/47 - 13.1.97 Reservation of right to modify schedule.
Agreement on Import Licensing Procedures
Article 7.3 G/LIC/N/3/BOL/2 - 21.4.98 Replies to questionnaire on procedures.
Articles 1.4(a) & 8.2(b)) G/LIC/N/1/BOL/1 - 3-6-97 Notification of publications, laws and regulations.
Agreement on Preshipment Inspection
Article 5 G/PSI/N/1/Add.5 - 3.2.97 Notification of laws and regulations.
Quantitative Restrictions (Decision on Notification Procedures for Quantitative Restrictions)
WTO document G/L/59 G/MA/NTM/QR/1/ADD.4 - 17.4.97 Initial and biennial reports.
Agreement on Rules of Origin
Article 5.1 G/RO/N/9 - 19.4.96 Non-preferential rules.
Annex II(4) G/RO/N/22 - 19.8.98 Preferential rules.
Agreement on Safeguards
Article 12.6 G/SG/N/1/BOL/1/Suppl.1 - 14.1.98 Notification of laws and regulations.
Sanitary and Phytosanitary Measures (Agreement on the Application of)
Article 7, Annex B No notification received Transparency of regulations.
State Trading  (Understanding on the Interpretation of GATT Article XVII)
Article XVII(4)(a) No notification received Annual state-trading activities.
Agreement on Subsidies and Countervailing Measures
Article 25.1 G/SCM/N/16/BOL - 7.4.98 Annual report on subsidies.
Article 25.11 G/SCM/N/23/Add.1/Rev.3 - 21.10.98 Semi-annual report on countervailing actions.
Article 25.12 G/SCM/N/18/Add.8 - 27.4.99 Competent authorities.
Article 32.6 G/SCM/N/1/BOL/1 – 5.4.95 Incorporation of the Agreement in national legislation.
Agreement on Technical Barriers to Trade
Articles 2.9 and 2.10 G/TBT/NOTIF.96.457 - 18.12.96 Proposed and adopted technical regulations.
Article 15.2 G/TBT/2/Add.14 - 19.7.97 Notification of laws and regulations.
Table II.1 (cont'd)Bolivia WT/TPR/S/57
Page 21
Article/instrument
imposing obligationWTO document - date
(last document if recurrent)Description of requirement
Annex 3(c) G/TBT/CS/N/68 - 1.7.97 Acceptance of  Code of Good Practice on voluntary
standards.
Agreement on Textiles and Clothing
Articles 2.8(a) and 2.11 G/TMB/N/230 - 6.2.97 Lists of products to be included in the second stage of the
integration process.
Articles 2.6 & 2.7 G/TMB/N/112/Add.2 – 15.4.96 Lists of products to be included in the fist stage of the
integration process.
Article 6.1 G/TMB/N/111 - 15.8.95 Retention of right to use safeguard mechanism.
Agreement on Trade-Related Aspects of Intellectual Property Rights
Article 4(d) IP/N/4/BOL/1 - 19.8.97 Justification of MFN exemptions.
Article 63.2 No notification received Notification of laws and regulations.
Article 69 IP/N/3/Rev.2 - 22 July 1996 Notification of contact points.
Agreement on Trade-Related Investment Measures
Article 5.1 G/TRIMS/N/1/BOL/1 - 4.8.98 Notification of TRIM inconsistent with the Agreement.
Source :  WTO Secretariat.
21. From an institutional perspective, the authorities believe that the WTO Agreements have
imposed an additional burden on Bolivia's relatively limited institutional capacity, as their
implementation requires more elaborate legal and institutional structures compatible with the new
international rules, and the development of qualified human resources.  They note that the direct
benefits to the population appear to be negligible; in fact, despite years of sustained economic growth,poverty levels remain high, and in some cases have increased.
(ii) Preferential agreements
22. Regional and bilateral agreements are core elements of Bolivia's foreign trade policy.  Bolivia
is a founding member of the Andean Community and is a member of the Latin American Integration
Association (LAIA).  Within the LAIA framework, several new agreements covering broader issues
have been concluded by Bolivia since 1993.
23. Bolivia's greater emphasis on preferential arrangements is reflected in its trade flows
(Chapter I(3)(i)).  Total Bolivian exports to partners in the western hemisphere, excluding Canada and
the United States, grew from US$421 million in 1990 to US$548 million in 1997, while total
registered imports from the same source amounted to US$331 million in 1990 and US$834 million
in 1997.  The importance of some regional partners has risen significantly: as depicted in Chart II.1
the export share to the Andean Community more than tripled during the 1990-97 period, while theimport share doubled.
24. Table II.2, which shows the proportion of goods imported by Bolivia at a zero tariff rate,
confirms the relatively high level of integrat ion achieved within the Andean Community.  The
evolution of the preferential trade with Mexico is also considerable;  some 40% of Bolivia's imports
from Mexico entered Bolivia duty free in 1998, only three years after agreement was signed.WT/TPR/S/57 Trade Policy Review
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0510152025303540
1990 1991 1992 1993 1994 1995 1996 199703006009001,200
051015202530
1990 1991 1992 1993 1994 1995 1996 199704008001,2001,6002,0002,400Chart II.1
Bolivia's trade with main regional partners, 1990-97
(a)  Exports (f.o.b.)
Per cent of total exports                                                                                                                           US$ Million     
(b) Imports (c.i.f.)
UNSD, Comtrade database (SITC Rev.1). Sourc e:MERCOSU R Andean Community Mexico Chile
Value of total ex ports and im ports
   Per cent of total imports                                                                                                                           US$ Million    Bolivia WT/TPR/S/57
Page 23
Table II.2
Bolivia's duty-free imports, 1993-98a
(Per cent of total imports from individual countries)
Country 1993 1994 1995 1996 1997 1998b
Andean Community
Colombia 32 64 70 70 66 62
E c u a d o r 4 97 78 28 18 47 5
Peru 77 85 89 82 86 53
V e n e z u e l a 4 07 78 88 55 16 2
MERCOSUR
Argentina 2 6 2 27 4 4
B r a z i l 21297 1 1
Paraguay 53 8 19 38 5 16
Uruguay 5 4 14 12 8 12
Other
C h i l e 22165 1 0
Cuba 0 0 54 8 51 17
Mexico 0 0 28 37 42 41
a The shares refer exclusively to duty-free imports;  imports benefiting from partial preferences are not included.
b Preliminary figures January-November.
Source : Data provided by the Bolivian authorities.
(a) The Andean Community
25. The Andean Community has implemented significant changes over the last six years.2  The
Andean Group became the Andean Community in June 1997 with the adoption of the Trujillo
Protocol, which modified the Cartagena Agreemen t signed in 1969.  This new Protocol introduced
important institutional changes such as the creation of a Presidential Council and a Council of ForeignMinisters with decision making responsibilities.  The Trujillo Protocol was also aimed at reinforcing
the internal cohesion of the Andean integration process by regrouping all its institutions under a new
structure, the Andean Integration System.
26. Modelled on the European Union, the new Andean institutions have supranational powers.
The highest-level body of the Andean Integration System is the Presidential Council, comprised of thePresidents of the member countries.  This Council defines subregional integration policies.  The
Andean Council of Foreign Ministers is responsible for ensuring that the objectives of subregional
integration are attained and for making and carrying out the Andean Community's foreign policy.
This Council shares a legislative role with the Commission of the Andean Community, made up of a
plenipotentiary representative from each member country.  The executive body is the General
Secretariat.  The Andean Community also has a Court of Justice with territorial jurisdiction in the five
countries.  The Court ensures the legality of provisions, interprets Andean Community law, and settlesdisputes.  The Andean Parliament is the deliberative body of the Andean Integration System.  At
present it comprises representatives of the five National Congresses but from 2003 its members will
be elected by direct and universal vote.
27. Since 1993, duties and other barriers to Andean internal trade have been partly removed and
the Andean Community has adopted, with exceptions, a common external tariff (CET).  However theresulting custom union is incomplete:  in particular, the CET is applied only by Colombia, Ecuador
and Venezuela.  Bolivia has been exempted from im plementing it and maintains its flat national tariff.
                                                     
2 The Andean Community members are Bolivia, Colombia, Ecuador, Peru and Venezuela.  Peru
suspended its participation in the Andean liberalization programme in 1992, although bilateral agreements withthe other members were maintained.  In June 1997, Peru started an eight-year gradual reintegration into theAndean Community.WT/TPR/S/57 Trade Policy Review
Page 24
28. Beyond the usual rules and mechanisms associated with the development of trade in goods
(such as rules of origin, safeguards measures, anti-dumping mechanisms or dispute settlement
procedures), the Andean Community has addressed other issues such as investment, competition
policy, services and intellectual property rights.  Common regimes have been adopted in most of these
areas.  A common regime has been adopted also in the area of transport;  the regulations allow for the
free movement of passenger and commercial vehicles in land transport.  In maritime transport, cargorestrictions at the subregional level have been eliminated.  Flight frequency has been boosted by the
enforcement of an open skies policy.
29. Within the Andean Community framework, Bolivia  is participating in the negotiation of a
free-trade agreement with Panama, and in the different negotiation groups of the Free Trade Area of
the Americas (FTAA).  An agreement was reached in April 1997 between the Andean Communityand MERCOSUR for the completion of a free-trade area, establishing a timetable of negotiations for
preferential tariffs.  It replaced all the existing bilateral partial agreements with the exception of the
agreement between Bolivia and MERCOSUR, which remains in force.
(b) Agreement with MERCOSUR
30. This agreement between Bolivia and MERC OSUR, recorded in the LAIA as Economic
Complementarity Agreement No. 36, was subscribed in December 1996 and entered into force in
February 1997.  Its main objectives are the creation of a legal and institutional framework for physical
and economic cooperation and integration;  the creation of a free-trade area within ten years;  the
establishment and promotion of investment;  and the promotion of technical and scientific
cooperation.
31. The agreement covers most tariff lines and defines a general regime with progressive tariff
reductions, starting at 30% in 1997 and reaching 100% in January 2006.  Different groups of sensitiveproducts are subject to specific schedules:  they will reach a zero tariff level within 15 to 18 years.
In 2011, all MERCOSUR's tariff lines for imports from Bolivia will be at 0%, while 28 Bolivian
imports (vegetable oil and sugar) will have non-zero tariff rates until 2014.
(c) Agreement with Chile
32. Despite the absence of diplomatic relations, the economic links between Bolivia and Chile
have grown considerably since the implementation in July 1993 of the economic complementarity
agreement (LAIA's Economic Complementarity Agreement No. 22), which is being extended through
additional protocols.  This agreement, includes on ly a limited list of items, mainly agricultural,
agro-industrial and textile products, mainly at zero tariff rates.
(d) Agreement with Mexico
33. This agreement, recorded in the LAIA as  Economic Complementarity Agreement No. 31,
entered into force in January 1995.  It covers trade in goods and services, technical barriers to trade,
custom valuation, sanitary and phytosanitary norms, public procurement, investment, intellectual
property, and dispute settlement procedures.  The main objectives of the agreement are the
diversification and consolidation of bilateral relations through the removal of all barriers to trade.Different tariff relief schedules are applied, with total liberalization planned for January 2009.  The
services agreement is based on the principles of national treatment, most favoured nation and
local-presence right.  Specific engagements have been concluded in areas such as
telecommunications, financial services, and professional services.Bolivia WT/TPR/S/57
Page 25
(e) Agreement with Cuba
34. Bolivia and Cuba entered into an agreement in May 1995, recorded as LAIA Partial Scope
Agreement No. 34;  it was adopted in Bolivia in April 1997.  A tariff concession of 100% of the MFN
rate is given to 110 Cuban products (covering a large range of goods), while the same tariff
concession is applied to 80 Bolivian items (mainly agricultural, textile and mining products).  The
agreement also covers rules of origin, safeguard measures, unfair trade practices, and investment.Both countries have committed to cooperate on broader issues such as trade in services, transport,
intellectual property, and technical regulations.
(iii) Dispute settlement
35. Through February 1999, Bolivia had not been involved in any case under the WTO dispute
settlement mechanism. The Bolivian authorities indicated that no formal complaint against Boliviahad been raised in dispute settlement fora outside the WTO.
36. Bolivia has requested bilateral consultations in the Committee on Sanitary and Phytosanitary
Measures with regard to the European Union's permitted aflatoxin levels for Brazil nuts
(Chapter IV(2)(iii)).
(4) I
NVESTMENT POLICY FRAMEWORK
(i) Policy objectives and institutional framework
37. The formulation of policies to promote national and foreign private investment is the
responsibility of the Vice-Ministry of Investment and Privatization in the Ministry of Foreign Trade
and Investment.  Within the Ministry, the Promotion Center of Bolivia (CEPROBOL) is in charge of
foreign investment promotion.
38. Investment in Bolivia is promoted through several laws that provide a relatively simple and
coherent legal framework.  (Data on foreign direct investment into Bolivia is presented inChapter I(4).)  There are no investment subsidies, but a favorable climate to investment is sought
through macroeconomic stability, sustained liberalization and economic deregulation.
39. At a general level, Investment Law No. 1182 of September 1990 is still in force.  The major
legal changes directly affecting investment are linked to the privatization processes, with the adoption
of the Privatization Law in April 1992, the Capitalization Law in March 1994, and the SectoralRegulation System (SIRESE) Law and its associated laws and regulations (Box II.1).
40. There are no major restrictions on foreign direct investment, which is provided national
treatment, with the possible exception of Article 25 of the Constitution establishing that foreign
ownership of property is forbidden within an area of 50 kilometres of Bolivia's borders.
41. The Investment Law was designed to promote and protect national and foreign investment.
Private ownership and freedom to trade goods and services are guaranteed.  This law also guaranteed
free market price determination, although to prevent abuses and lack of competition in privatized
sectors this has been restrained by subsequent  regulations included in the SIRESE framework.
Transactions denominated in domestic and foreign currencies are permitted.  There is no restriction on
the repatriation of dividends, interest and royalties beyond the normal tax obligations, which applyequally to foreign and domestic investors.  The law also recognized joint ventures as a contractual
modality, as well as duty-free zones for the production of goods for export (Chapter III(3)(vii)).WT/TPR/S/57 Trade Policy Review
Page 26
42. The investment framework has been completed with the adoption, in March 1997, of a law on
arbitration and conciliation (Law No. 1770).  This law recognizes alternative ways of dispute
settlement by allowing differences to be submitted to national or international arbitration.
43. According to the authorities, there are no specific incentives for investment generally
available in Bolivia.  However, at a regional level Law Nos. 876 and 877 of May 1986 provide special
incentives and treatment to promote investment  in the Departments of  Oruro and Potosí .  Investment
in hydrocarbons and in mining is regulated by specific sectoral laws (Chapter IV).
(ii) International engagements and relations
44. The Andean Community has a series of common provisions favoring investment, including
Decision 291 to regulate foreign investment, Decision 292 governing Andean multinational firms and
intraregional capital movements, and Decision 40 to avoid double taxation.
45. Bolivia has entered into bilateral tax treaties with a number of countries to prevent double
taxation.  Since 1992, Bolivia has signed such agreements with the Netherlands (10 March 1992),
China (11 February 1993), Peru (30 June 1993), Sweden (14 January 1994), the United Kingdom
(3 November 1994), Germany (9 June 1995), France (31 June 1995) and Spain (30 June 1997).
46. Bolivia has also made efforts to negotiate bilateral agreements for the promotion and
reciprocal protection of investments.  Since 1993 Bolivia has signed such agreements with Peru
(30 June 1993), the Netherlands (17 March 1994), Argentina (17 March 1994), Mexico
(10 September 1994), Chile (22 September 1994), Cuba (6 May 1995), Ecuador (25 May 1995),
Denmark (12 March 1995), Romania (8 October 1995),  Republic of Korea (1 April 1996) and the
United States (18 April 1998).
47. Bolivia participates in international schemes for the protection of investment, having joined
the Multilateral Investment Guarantee Agency (MIGA) in January 1990 and the International Centrefor the Settlement of Investment  Disputes (ICSID) in August 1994.