RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/154/Rev.1 
9 December 2005  
 
(05-5862) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
BOLIVIA 
 
Revision 
 
 
 
 
This report, prepared for the third Tr ade 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 Bolivia on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to:  
Ms Ulla Kask (tel.:  (022) 739-5627), Mr  Diego Iribarren (tel.:  (022) 739-6392) 
or Mr Raymundo Valdés (tel.:  (022) 739-5346). 
 
Document WT/TPR/G/154 contains the policy statement submitted by Bolivia. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Bolivia.  Bolivia WT/TPR/S/154/Rev.1 
 Page iii 
 
 
CONTENTS 
 
 Page 
 CONTENTS iii 
SUMMARY OBSERVATIONS vii 
 (1) INTRODUCTION vii  (2) ECONOMIC
 ENVIRONMENT vii 
 (3) TRADE  AND  INVESTMENT  POLICY  FRAMEWORK vii 
 (4) MARKET  ACCESS  FOR  GOODS viii 
 (5) OTHER  MEASURES  AFFECTING  TRADE ix 
 (6) SECTORAL  POLICIES ix 
 
I. ECONOMIC ENVIRONMENT 1  
 (1)  OVERVIEW  1 
 (2) R ECENT ECONOMIC DEVELOPMENTS  1 
 (i)  Structure of the economy 1  
 (ii)  Production and employment 2  
 (iii)  Fiscal policy 4  
 (iv)  Monetary and exchange policy 7  
 (v)  Balance of payments 9  
 (3)  TRADE AND INVESTMENT FLOWS  10  
 (i) Structure of trade 10  
 (ii)  Geographical breakdown of trade 11  
 (iii)  Foreign direct investment 11  
 (4)  OUTLOOK  12 
 
II. TRADE AND INVESTMENT REGIME 13  
 (1)  OVERVIEW  13 
 (2) F ORMULATION AND IMPLEMENTATION OF TRADE POLICY  13  
 (i)  General legal and institutional framework 13  
 (ii)  Trade policy formulation and objectives 15  
 (3)  FOREIGN INVESTMENT REGIME  16  
 (4)  TRADE POLICY OBJECTIVES  19  
 (i)  World Trade Organization 19  
 (ii)  Preferential trade agreements 21  
 (5)  TRADE AGREEMENTS AND ARRANGEMENTS  26  
 
III. TRADE POLICY BY MEASURE 27  
 (1) O VERVIEW  27 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  28  
 (i)  Procedures 28  
 (ii)  Customs valuation 31  
 (iii)  Rules of origin 32  
 (iv)  Tariffs 33  
 (v)  Other import taxes 42  WT/TPR/S/154/Rev.1 Trade Policy Review 
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 Page 
 
 (vi)  Import prohibitions and restrictions and import licensing 43  
 (vii)  Antidumping and countervailing measures 45  
 (viii)  Safeguard measures 46  
 (ix)  Standards and other technical requirements 47  
 (x)  Sanitary and phytosanitary regulations 50  
 (3) M EASURES DIRECTLY AFFECTING EXPORTS  55  
 (i)  Procedures, documentation and registration 55  
 (ii)  Export taxes charges and duties 56  
 (iii)  Export prohibitions and restrictions and export licensing 57  
 (iv)  Tariff and other tax concessions, including free export zones 59  
 (v)  Export promotion, financing, insurance and guarantees 63  
 (vi)  Measures applied in foreign markets 64  
 (4) O THER MEASURES AFFECTING PRODUCTION AND TRADE  65  
 (i)  Legal framework for business, including registration 65  
 (ii)  Competition and pricing policy 67  
 (iii)  Incentives and other government support 69  
 (iv)  State trading, govern ment-owned enterprise s and privatization 71  
 (v)  Government procurement 73  
 (vi)  Intellectual property rights 77  
 
IV. TRADE POLICY BY SECTOR 82  
 (1) OVERVIEW  82 
 (2)  AGRICULTURE , LIVESTOCK , FORESTRY , 83  
 (i)  Special features 83  
 (ii)  Policy objectives for the sector 85  
 (iii)  Key subsectors 87  
 (3) MINING AND MINERAL PROCESSING  89  
 (i)  Main features 89  
 (ii)  Policy and institutional framework 90  
 (4) MANUFACTURING  92  
 (i)  Main features 92  
 (ii)  Support policies and measures 93  
 (5) PETROLEUM AND NATURAL GAS  94  
 (i)  Main features 94  
 (ii)  Regulatory framework 95  
 (6)  ELECTRICITY  98  
 (i)  Main features 98  
 (ii)  Regulatory framework 99 
 (7) SERVICES  101 
 (i)  Main features 101  
 (ii)  Telecommunications 103  
 (iii)  Financial services 107  
 (iv)  Transport 114  
 (v)  Tourism 120  
 (vi)  Professional services 122  
 REFERENCES 125 
 
APPENDIX TABLES
 131 Bolivia WT/TPR/S/154/Rev.1 
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CHARTS 
 
 Page 
III. TRADE POLICY BY MEASURE 
III.1 Breakdown of the incidence of MFN tariff rates, 2005 37 
III.2 Tariff escalation by ISIC 2-digit industry, 2005 37 
 
TABLES 
I. ECONOMIC ENVIRONMENT 
I.1 Breakdown of GDP and employment, 1998-2004 2 
I.2 Main economic indicators, 1998-2004 3 
I.3 Central government accounts, 1998-2004 5 
I.4 Main monetary indicators, 1998-2004 8 I.5 Balance of payments, 1998-2004 9 
I.6 Flow of foreign direct investment, 1998-2003 11 
III. TRADE POLICY BY MEASURE 
 
III.1 Structure of Bolivia's tariff, 1998 and 2005 34 
III.2 Summary of Bolivia's MFN tariff, 2005 35 III.3 Tariff concessions granted under various customs regimes, March 2005 38 
III.4 Summary of Bolivia's preferential tariff under selected agreements, 2005 40 
III.5 Prior authorization - imports 44 III.6 Administrative resolutions in effect since the establishment of the SENASAG 51 
III.7 Prior authorization - exports 57 
III.8 Free zones in Bolivia, 2002 62 III.9 Investment, 1999-2002 72 
III.10 Public bidding by type of call for tender 74 
III.11 International agreements ratified by Bolivia 77 III.12 Domestic or regional legislation on the protection of intellectual property rights, 2005 78 
IV. TRADE POLICY SECTOR 
 
IV.1 Economic contribution and job creation in agricultural production 88 
IV.2 Selected telecommunications indicators, 1999-2004 103 
 WT/TPR/S/154/Rev.1 Trade Policy Review 
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APPENDIX – TABLES 
 Page 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Merchandise exports by product group, 1998-2003 133 AI.2 Merchandise imports by product group, 1998-2003 135 
AI.3 Merchandise exports by trading partner, 1998-2003 137 
AI.4 Merchandise imports by trading partner, 1998-2003 138 
II. TRADE AND INVESTMENT REGIME 
 
AII.1 Summary of notifications by Bolivia to the WTO, 1999-June 2005 139 
AII.2 Main bodies of the Andean Integration System 141 
IV. TRADE POLICY BY MEASURE 
 
AIV.1 Private crop production, 1998-2004 142 
AIV.2 Preferences granted by Bolivia to regional partners on major Bolivian imports, 2004 143 AIV.3 Agricultural imports of Bolivian origin subject  to tariff preferences, USA and European Union 144 
AIV.4 Value added and employment in the manufacturing industry 145 
AIV.5 Manufacturing sector:  tari ffs and international trade 146 
AIV.6 Summary of specific commi tments under the GATS 148 
 
 Bolivia WT/TPR/S/154/Rev.1 
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 SUMMARY OBSERVATIONS 
(1) INTRODUCTION 
1. Since the last review of its trade policy 
in 1999, Bolivia has taken measures to 
modernize and simplify its trade regime.  
Tariffs have been lowered (the average applied MFN tariff is 8.2 per cent) and there appear to be few non-tariff barriers.  Foreign investors generally enjo y national treatment, 
and major strides have been made in 
increasing market competitiveness in key sectors such as telecommunications.  The past few years have seen rapid growth in exports, boosted by a favourable international climate. 
2. Nonetheless, investment trends have 
proved disappointing, economic growth has 
been sluggish and per capita GDP has fallen since 1999.  This is the outcome of a complex situation in which problems of domestic instability have been compounded by external 
shocks.  In such a context, it is of critical 
importance to increase investment, including foreign investment, in order to enhance productivity and promote sustainable growth.  Bolivia would make significant headway in that direction if it improved the predictability 
of its trade and investment regime by 
undertaking broader multilateral commitments to consolidate and expand its liberalization initiatives. 
(2) ECONOMIC
 ENVIRONMENT 
3. There has been only a slight increase 
in Bolivia’s real GDP since the previous review, although the pace of growth picked up from 2002 onwards, underpinned by favourable trends in the global economy.  
Nevertheless, per capita GDP fell to US$950 
between 1999 and 2004, as a result of external shocks such as the contraction of international credit and economic difficulties facing neighbouring countries, as well as periods of social and political instability that undermined 
Bolivia's capacity to implement economic 
policies.  This also affected the investment environment, and investment indicators (including gross capital formation and foreign 
direct investment) dropped significantly over the course of the period under review. 
4. Exports have been an essential factor 
in the recent increase in GDP.  International 
trade rose to 57 per cent of GDP in 2004, mainly as a result of the upward trend in exports.  The trade balance and the general balance of payments underwent marked 
improvement for the same reason.  Bolivia's 
major export products are natural gas and agricultural products (especially soya bean-based products), and the country's regional trading partners, notably Brazil, have become its main export and import markets. 
5. Following a serious setback, the fiscal 
situation started to improve in 2003 after various measures had been taken to control spending and increase revenue.  Although the situation remains somewhat precarious, in 
2004 the fiscal deficit was down to 5.5 per 
cent of GDP and Bolivia's public debt represented slightly over 77 per cent of GDP.  The effectiveness of Bolivia's monetary policy is hampered by the high level of dollarization of the economy. 
(3) TRADE
 AND  INVESTMENT  
POLICY  FRAMEWORK 
6. Although Bolivia is a member of the 
Andean Community, the country's trade policy is designed mainly at the national level.  In 
May 2005, Bolivia adopted a programme of policies aimed at, inter alia , boosting its 
participation in integration processes, opening 
up new export markets, promoting investment, and building up the alliance between the 
public and the private sector.  In order to 
provide more effective access to foreign markets, Bolivia is also endeavouring to maintain and impro ve preferences and to 
make further progress with trade facilitation. 
7. Bolivia has been a Member of the 
WTO since September 1995.  It plays an active 
role in the multilateral trading system and has put forward a number of proposals in the WT/TPR/S/154/Rev.1 Trade Policy Review 
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 context of the Doha Development Agenda.  
The country's primary areas of interest are agricultural trade, trade facilitation, special and differential treatment for landlocked 
developing countries, the TRIPS Agreement 
and public health, and dispute settlement.  Bolivia has submitted a large number of notifications to the WTO.  It has only once had recourse (as a third party) to the WTO dispute 
settlement mechanism. 
8. Bolivia is a founding member of the 
Andean Community.  The Community does not yet fully apply a common external tariff, but it is planning to define a common tariff policy by the end of 2005.  It also proposes to liberalize 
trade in services in 2005. 
9. Bolivia is a member of the Latin 
American Integration Association and has concluded economic complementarity agreements with Chile, Cuba, MERCOSUR 
and Mexico.  It has observer status and hopes 
to become a full participant in the negotiations on a free-trade agreement between three other Andean Community members and the United States.  Bolivia's exports benefit from the GSP and other unilateral preferences granted by 
several WTO Members. 
10. Bolivia provides foreign investment 
guarantees through bilateral investment treaties, free-trade agreements and GATS commitments.  Foreign investors enjoy 
national treatment. 
(4) MARKET
 ACCESS  FOR  GOODS 
11. Since its last review, Bolivia has taken 
measures to modernize and simplify its trade regime, including the adoption of the WTO 
definition of transaction value, the elimination 
of preshipment inspec tion and the enactment 
of a new General Customs Law and Regulations.  In addition, measures have been taken:  to facilitate trade, including the phasing in of a single export declaration and a 
reduction in physical inspections of imports;  
to deal with  management and  supervision   problems in customs;  and to combat 
smuggling. 
12. Tariffs are the main instrument of 
protection at the border.  The arithmetic 
average of the MFN tariff applied in 2005 fell 
to 8.2 per cent from the 9.7 per cent registered in 1999.  All tariffs are ad valorem.  The average applied MFN tariff is slightly higher for agricultural products (9.8 per cent, WTO 
definition) than for other products (7.9 per 
cent).  Bolivia does not apply the Andean Community's price band system for agricultural goods, nor does it intend to do so.  It participates in a number of free trade agreements that provide tariff preferences of 
widely varying scope.  The agreements that 
cover the largest number of products are those with the Andean Community, MERCOSUR, and Mexico. 
13. Bolivia has bound all its tariffs, 
thereby enhancing the predictability of its 
trade regime.  Predictability would nevertheless be improved if the gap between applied tariffs and bound tariffs was narrowed.  The average bound tariff is 40 per cent. 
14. During the period under review, 
besides tariffs, a number of other duties and taxes were applied solely to imports, which are also subject to internal taxes such as value-added tax (VAT) and a tax on specific 
consumer goods.  VAT is applied at a nominal 
rate of 13 per cent on the selling price of goods and services.  "Chicha", a locally produced alcoholic b everage made from 
maize, is subject to the tax on specific 
consumer goods but at a lower rate than that 
applying to alcoholic beverages. 
15. Non-tariff measures do not, on the 
whole, appear to be a major barrier to trade.  Bolivia applied no anti-dumping, countervailing or safeguard measures during the period under review.  The law allows import  restrictions for  economic  reasons.   Bolivia WT/TPR/S/154/Rev.1 
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 Since January 2004, Bolivia has allowed 
right-hand drive vehicles to be imported to free zones for refitting, but the ban on importing vehicles refitted abroad still stands. 
16. All imports of animals or plants and 
their products must be accompanied by an animal health or phytosanitary certificate.  In addition, the import of these products and processed foodstuffs also requires 
phytosanitary, animal health and food safety 
permits.  Since the previous review, Bolivia has notified eight sanitary and phytosanitary measures and two technical regulations to the WTO. 
(5) OTHER
 MEASURES  AFFECTING  
TRADE 
17. Bolivia applies no export taxes.  
Exports of unprocessed forestry products are subject to restrictions and prior authorization is required for a number of products.  All 
exports are subject to random inspection at 
customs. 
18. Fiscal incentives for exports are 
granted under several regimes, including the free zone regime, the temporary admission for final processing regime (RITEX), and under 
the tax refund system.  Taxes and duties paid 
on imports of raw materials and intermediate goods are refunded through an automatic procedure based on a coefficient applied to the f.o.b export value.  Bolivia has reserved the 
right to grant subsidies under two regimes for 
the promotion of exports (free zones and RITEX). 
19. Bolivia offers a number of investment 
and production incentives that focus on 
specific regions and sectors.  These provide 
technical assistance or grant subsidies to small and medium-sized companies or agricultural producers. 
20. Bolivia has no general competition 
law, but there are specific provisions 
governing competition in certain sectors.  The 
level of competition in the market appears to vary significantly from one sector to another.  
There are price controls for energy products and certain services. 
21. Bolivia is not a party to the WTO 
Plurilateral Agreement on Government 
Procurement.  In 2004 it enacted a new law on government procurement, aimed in particular at making procurement a more efficient and transparent process.  However, the new 
regime continues to give Bolivian companies 
and products preferences, which in some cases are linked to national content.  Foreign companies wishing to bid for government procurement consultancy contracts must do so in association with a Bolivian company. 
22. In 2001, the TRIPS Council examined 
Bolivia's intellectual property legislation.  The current legal framework protecting intellectual property rights consists of domestic laws and regulations as well as 
Andean Community and WTO provisions.  
Parallel import of products protected by patents is allowed subject to certain conditions, but not para llel import of products 
protected by copyright. 
(6) SECTORAL
 POLICIES 
23. Agriculture is a key sector in terms of 
its contribution to em ployment and exports, 
but because of its low productivity, its contribution to GDP is relatively modest.  Since 1999, institutional change, social 
conflict and restrictions on access to credit 
have adversely affected the sector's performance.  Nonetheless, there has been a marked increase in some agricultural exports, which have benefited from preferential access 
to foreign markets, particularly in the Andean 
Community.  The main border measures applied to agricultural imports are tariffs and sanitary and phytosanitary measures.  Bolivia's most recent notifications on export subsidies and domestic support were submitted 
to the WTO in 2001 and 2002 respectively. 
24. Mining has traditionally played an 
important role in Bolivia's economic WT/TPR/S/154/Rev.1 Trade Policy Review 
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 development and continues to occupy a 
leading place as a generator of exports.  Mining companies are subject to payment of a supplementary mining tax, whose rate for 
sales on the domestic market is lower than the 
rate applying to exports. 
25. The manufacturing sector is fairly 
small, and its low productivity reflects the weakness affecting Bolivia's production 
structure in general.   Some industries, 
however, have seen their exports increase significantly thanks to negotiated trade preferences as well as those applied unilaterally.  The manufacturing sector in particular benefits fr om support programmes 
(RITEX and the free zones, for example). 
26. The natural gas industry has 
contributed greatly to exports and foreign investment in Bolivia.  In May 2005, a controversial hydrocarbon s law was enacted, 
which, inter alia, changed the tax regime and 
the nature of agreements between the State and operators and could discourage foreign investment in this and other sectors.  Most prices and rates in the electricity sector have also been regulated, and cross subsidies 
continue to be granted. 
27. As for the services sector, Bolivia has 
undertaken commitments in five of the twelve sectors covered by the GATS.  It has also signed the Fourth Protocol to the GATS (on 
telecommunications) and adopted three of the 
principles contained in the Reference Paper.  Bolivia has not signed the Fifth Protocol (on financial services).  There is thus ample room for Bolivia to improve the predictability and 
transparency of the foreign investment regime 
by making new commitments under the GATS. 
28. In 2001, the existing exclusivity rights 
for the supply of long distance telephony services were abolished pursuant to Bolivia's commitments under the WTO.  This has raised 
the level of competitiveness, which has in turn led to lower prices and a wider range of 
services on offer.  However, there are some restrictions on consumption abroad for telecommunications services. 
29. The banking sector appears to have 
recovered from the serious problems it suffered during the period under review.  Foreign investors are given national treatment, but operations by offices 
representing foreign banks are restricted.  In 
2004, a temporary tax on financial transactions was introduced for a period of two years.  Foreign insurance and re-insurance companies established in Bolivia receive national treatment.  However, any 
person contracting insurance in Bolivia must 
do so through a company established in Bolivia.  In its schedule of specific commitments annexed to the GATS, for reinsurance services Bolivia undertook not to 
impose restrictions on market access or 
national treatment in the cross-border supply and consumption abroad modes of delivery. 
30. The cost of transporting goods in 
Bolivia is the highest in South America, largely because of a limited infrastructure.  
Bolivia allows foreign participation in the 
construction and operation of airports and related services, but not in cabotage activities. 
31. Tourism is the fourth most important 
generator of foreign currency in Bolivia.  
National treatment is given to foreign 
suppliers of tourist services, except for tourist guides.  As regards professional services, the practice of law and the ownership of legal offices are confined to Bolivian nationals.  In 
other professions too, foreigners are subject to 
restrictions and in some cases their participation is subject to the existence of a reciprocity agreement.  Bolivia has a number of agreements on the recognition of qualifications obtained abroad, particularly 
with the countries of the Andean Community.