Global Trade Governance and Economics

This assignment delves into the complex world of global trade governance. It examines historical perspectives on free trade, analyzing influential thinkers and events that shaped contemporary trade policies. The focus extends to current challenges facing global trade, including protectionism, trade agreements, and the role of institutions like the World Trade Organization. Students are expected to demonstrate a nuanced understanding of the economic arguments for and against free trade, as well as the political factors influencing its implementation.

RUNNING HEAD: Protectionism and free trade 0
Protectionism and free trade

Protectionism and free trade 1
Introduction
Protectionism refers to the actions and policies of government which constrains international
trade. These actions are taken to protect local business from foreign competition. It protects
businesses by slowing economic growth and pushing up prices. It also creates competitive
advantages and jobs. The policies of protectionism can be applied by tariffs, import quotas,
product standards, exchange rates and government subsidies. It is designed to restrict free
trade and boost manufacturing of domestic nation (Switzer, Tom & Daniel Hannan 26.). Free
trade allows a country to trade without any interference of government. These interferences
are tariffs, subsidies and quota etc. Free trade is an ideal trading situation. It is just the
absence of any trade policies. In this report, Bolivia’s trade history is discussed. The social,
political, economic overview and orography of nation is explained. The export and import
value of country is categorised. Trade constraints and documents required for export and
import are discussed. Trade facilitation roadmap of country is explained to understand
protectionism and free trade.
Trade history of Bolivia
Bolivia is classified as lower middle income country by the World Bank. Bolivia ranks 88
among the largest export economy in the world. In 2004, the country had an estimated trade
surplus more than $340 million. It represented significant change in Bolivia’s economy
(Long & Alan 63-67). In 1998, before the increased hydrocarbon exports, the country faced a
trade deficit of $888 million. In 2002 also the country had negative balance of payments.
However it was altered by the increase in export value. In 2015, the country imported $9.7B
and exported $9.1B, it resulted in negative trade of balance. In the same year the GDP was
$33B and per capita GDP was $6.95k. The top exports are gold, ore, petroleum gas and
soybean meal and imports are cars, delivery trucks, refined petroleum, construction vehicles
and pesticides. Bolivia mainly exports to Brazil, US, Argentina, Colombia and China. The
country imports from Chile, United States, Argentina and China.
Social, political and economic overview
Bolivia is an isolated country in South America. The country has the largest percentage of
people nearly 9.3 million who make-up two third part of population. The population grows
annually at a growth rate of 2.4 percent. The 90 percentage of population in Bolivia are

Protectionism and free trade 2
Roman Catholic and remaining is protestant. From the view of education, there is divide in
rural and urban areas of country. The literacy rate of education in urban areas remains high.
The strength of the Bolivia economy are natural resources such as gas, oil, gold, silver, zinc,
tin and manganese. The country has membership of Andean community and is associated
with Mercosur. It also has the large foreign currency reserve.
Bolivia is a democratic republic country. The country has the executive, legislative and
judicial branches of government. The president is elected after every five years. An executive
cabinet is also elected. The president of country is responsible for setting economic policies,
commanding armed forces and foreign diplomacy (Drury, Cooper, Jonathan Krieckhaus &
Chika Yamamoto 39).
. Bolivia is the world’s 95 largest economies. It has the second-largest stashes of natural gas.
The country is also one among the world’s largest producers of cocoa. It is the main source of
income for farmers in the country. The country’s economic development remains troubled by
operational and institutional problems. It suffers from the lack of energy due to the
dependency on hydrocarbon sector. The weak regulatory framework and poor economic
infrastructure of country obstructs expansion of production. The involvement of state in
economic activities is increasing through nationalisation. The judicial independence is
reducing political interference in country (Lake, James & Daniel Millimet 156-178). The law
is not applicable in many areas due to widespread corruption. The lack of availability of
finance in market stops entrepreneurial growth. Since 2014, the fall in gas and oil prices has
reduced the value of exports and revenues of government. According to the World Bank’s
doing business survey report, the country ranks 149th out of 189 countries. The shortcomings
in doing business are regulatory framework, rule of law and control of corruption (Graca,
Joao Carlos & Teresa Nunes 111-140). Risk of social conflict, insecurity and drug trafficking
are weakness of the country. The less economic diversity and dependence on oil and gas also
symbolizes weakness. The country is landlocked and size of informal sector is small.
Orography of Bolivia
The orography of the country is rare among the nations of South America. It is also one of the
landlocked countries on the continent. Bolivia’s orography includes Altiplano and Lake
Titicaca. Altiplano is a highland hill of Andes and Lake Titicaca is the highest sturdy lake on
the Earth. The feature adds to Altiplano is Lake Titicaca on it’s northern end. The lake

Protectionism and free trade 3
controls the climate for a significant distance nearby it. It makes crops like maize and wheat
possible even in shielded areas. It is above the sea level. Altiplano is the highest hill and is
situated between the two mountains, Cordillera Occidental and Cordillera Oriental. Altiplano
contains four major basins. The eastern side of the Altiplano is a flat area, which has served
as country’s north south transport corridor.
Infrastructures (road, maritime, rail)
Bolivia has varying infrastructure. The transport and communication policies are improving
and expanding transportation system of Bolivia. For the establishment of community,
infrastructure is one of the operations of the country. Railway has a small role in the
transportation system of country. Mostly, transportation is done by road. The country has
90.568 km of road, out of which 9,792 km are paved. 34,840 km is rock-strewn and 45,936
km is dirt. The paved roads are connected La Paz to Africa, Desaguadero, Potosi, Trinidad,
Cochabamba and Santa Cruz. Others roads are not passable and are extremely slow going due
to lack of poor maintenance. The country relies on road for transportation communication.
Bolivia does not have actual coastline. At the end of four year war, the country lost 400 km of
coastline and 120,000 km of territory. Chile has invested $100 million to assist maritime
trade of nation and offered some kind of access to sea. Peru approved dock facilities, trade
free zone and space for economic activities in 2010. It also offered an option to build a
pacific coast (Gandolfo & Giancarlo 253-275).
The rail system of Bolivia has 3,960 km of track. It is divided into two divisions. The western
division is 2,500 km long which connects La Paz to Africa and Antofagasta, lake anchorage
of Guaqui and main cities in Altiplano and Andean valleys. Most of the part of western
division is not operational and is in poor condition. It is because country is affected by the
natural disasters due to change in climate. The eastern division links Santa Cruz to Brazil and
Argentina. It is operational and is maintained on regular basis. The country is constantly
increasing it’s trade relations with other countries after becoming the member of
MERCOSUR (Krugman & Paul 171-179).
Export and import value
According to the report of Economic Complexity Index 2015, Bolivia is the 88th largest
export economy. It has the second largest natural gas stashes. The export of the country

Protectionism and free trade 4
includes natural and manufactured gas, mineral flues, oil seeds, natural minerals, fruits, nuts,
cereals, zinc, gold and precious metals (Frey, Christopher 449-468). The country mainly
exports to Brazil, US, Argentina, Colombia and China. The country has also signed contracts
with Brazil and Argentina to increase exports of gas for the next 10 years. In 2009 the export
of the country stood at $4.8 billion. In 2016, Bolivia was 84th largest goods trading partner
with the total amount of $1.6 billion goods trade. In the same year export of the country stood
at $657 million and import at $974 million. The trade deficit of Bolivia was $318 million.
The country had trade deficits for computers and other machineries (Chia & Siow Yue 561-
591).
In 2009, the import of the country stood at $4.1 billion. The import commodities include
petroleum products, automobiles, cars, delivery trucks, pesticides, paper, plastics and
aircrafts. Bolivia imports products from the Brazil, US, Peru, Argentina and China. The trade
of Bolivia is increasing with neighbour countries due to various regional trade agreements.
The country is also developing it’s market through it’s membership of Mercosur. The other
members of Mercosur are Cuba, Nicaragua and Venezuela (Tongzon, Jose & Inkyo Cheong
323-338). In 2015 the import of the country stood at $9.7Billion. In 2008, the country form a
zero percent import tariff for fresh, frozen chicken meat and live bovine animal. The import
charges also include domestic taxes and private fees.
Depart/ reaching of goods at Bolivia
The economic growth of the country has been stuck because of the landlocked location. Some
agreements have been made by the country with Brazil, Argentina and Paraguay for railway
connections and duty free shipping from ports. In 1993, the country made access to Atlantic
Ocean port and Pacific Ocean for depart of goods and services. In 2008 Bolivia signed
contract with Chile to transport Bolivian goods freely (Stephens, Philip 16). It was made
possible for the first time after 1904. The river system is a significant means for domestic
transportation in the tropical lowland like Bolivia. The road transport of the country is rapidly
increasing. But the process through roads is slow and hazardous on the mountain roads. So,
goods reaching through roads take lot of time and it is quite expensive. Air transport is the
fastest method in country for reaching and departing of goods. This method is quite useful
when the roads are destroyed due to heavy rains and landslides. It can also be used to reach
goods at tropical towns and lowlands, where road transport is not possible (Austria & Myrna
220-238).

Protectionism and free trade 5
Time frame for import and export
The country shows better performance in time required for the preparation of documents
required for exports and imports. The document preparation requires 15 days. The inland
transportation and handling takes seven days. Custom clearance and technical control one day
and ports and terminal handling requires another one day (Duval, Yann & Emilie Feyler 153-
172). So totally it takes 24 days for exports. The procedure of import requires 36 days in all.
The documents preparation takes 29 days. Custom clearance and technical control require
two days and Ports and terminal handling one day. Atlast, inland transportation and handling
requires four days. Time taken to import goods in Bolivia is 28 days as of 2014. Earlier it
used to take 36 days in 2006. Currently it takes 29 days as per report. Export takes almost 24
days to reach at nation. The time taken for import is quite more; it increases the risk for
perishable goods. As keeping products packed for long time can be dangerous (Bieler &
Andreas 31-41).
Transport constraints
The Bolivian government does not apply any restriction on transportation. Since 2014, the
government permitted cars for imports more than one year old. The firms face issues with
infrastructure variables such as bad road. The mountain roads are big obstacle for transport
(Raihan & Selim 3S-18S). The road construction projects are needed to be reviewed. The
country is also sensitive to taxes, tax administrations and corruption at customs. The custom
takes almost 10 days for clearing. It is loss for firms (Lemieux & Pierre 5). The government
levies heavy taxes. The road transportation is not good in country, it’s still developing. The
buses are usually high jacked at night by robbers. Due to dependency on Chile, there is lack
of personnel at ports. The country is proposed to build a mega port and industry free zone.
Documentation required for import and exports
There are some formalities which are supposed to be fulfilled before exporting and importing
of goods. These are standardised documents and can be obtained easily with the interference
of government (Konishi, Hideo & Chen Yu-Pan 926). The official language of the country is
Spanish. It is used for the completion of documents. The documents required for imports are
invoice, insurance proof, ocean and inland bill of lading, transportation invoice, list of
packing items. Some others proofs are also given according to applicability such as,
certificate of inspection before shipment and certificate of origin. Airway bill is also used as

Protectionism and free trade 6
an alternative of bills of lading. The exporters are supposed to follow IATA and ICAO rules
for marking and packaging of hazardous and restricted goods. The documents required for
exports are seven. The documents are commercial invoice, insurance policy, Diplomatic Id
issued by the foreign ministry, packing list signed and stamped by embassy, value declaration
certificate and transport documents (Howse, Robert & Kalypso Nicolaidis 259).
Trade facilitation roadmap
The trade facilitation agreement came into force in 2017. Trade facilitation roadmap reduces
time to export by 50% and cost by 20%. It increases 10% value in exports and 1.7% increase
in GDP. It provides framework and scope for nation’s trade facilitation. Trade facilitation
map is used to change trading across Bolivia. It simplifies all the procedures and reduces time
and administrative costs (Urciuoli & Luca 580-596). The country will be benefitted by
importing raw materials and thus exporting their goods. The foreign investors can be easily
attracted by giving opportunity to invest where the country itself provide investment and
allows to export in same country (Limao, Nuno & Venables 451-479). The country has also
overcome it’s topographical problems and becoming a hub for international trade. The
challenges of dealing in country are dealing with construction permits, getting electricity,
proper registration, getting investors, paying taxes, trading across border and resolving
insolvency. As, country the country exports and imports through rivers and it is a long
process since products can be damaged. The trade facilitation map is going to help in pave of
roads. It has minimized trade deficit by 2014 and has boost exports. The country can improve
health of nation can be improved by importing medicines and vaccination. The objective
behind improving health of citizens is to make condition of country better. Export policy can
be helpful in improving the employment rate. Trade facilitation helps country to coordinate
with other countries and facilitates planning tools. Investment is done by the country to dirt
off roads so that road transport can be improved and country can better face the challenges
(Clark, Ximena, David Dollar & Alejandro Micco 417-450).
Prioritization of different areas for improvement in trade facilitation roadmap
The action plan covers infrastructure of country- railway, road and maritime. It is focusing
mainly on road and railway infrastructure leading to ports. These areas are prioritises the
activities into short, mid and long term. The country is connecting pave roads to many
regions to ease business activities. It is also working on rail system to make western segment

Protectionism and free trade 7
operative. The river system is more significant for the country to transport Bolivian goods.
The country has done agreement with Chlie for the transportation of goods through ocean
(Sally & Razeen 9). The objectives of nation can be improved by doing ease in business such
as paperless regulatory environment and improved investment climate. It can be done by
better infrastructure.
Trade agreement draft between US and Bolivia
Bolivia is also member of MERCOSUR group along with Chile. Bolivia and United States
have done a trade liberalisation agreement in 2009. This agreement can provide potential
gains and can ease free trade (Stamos, Iraklis, Glikeria Myrovali & Georgia Aifadopoulou
89-98). The country also had a complementary agreement with Mexico in 2010. It eliminated
tariffs on the list of products. The international trade of Bolivia has increased after trade
agreement with United States. The trade in country is improved by innovation in technology,
enhanced productivity growth, market niches and technology transfer (Chandra & Alexander
Christian 1-19). United States is country’s most important trading partner so stakes are high.
The trade agreement of Bolivia with US has reduced number of days need to exports by 50%.
The cost of export is also reduced by 20%. Now the nation is a established exporter and
dealing with China, Argentina, Peru and Japan.
Conclusion
From this report it can be concluded that Bolivia has become developing nation from under
developed nation. The improved infrastructure of the country has main hand behind this. The
country used to access trade by Atlantic Ocean and Pacific Ocean. To see the success of trade
by ocean, Bolivia signed a contract with Chile to transport Bolivian products. The river
system is significant to country for the transportation of goods (Schwarzschild & Maimon
1067). It is a better way to transport goods as the country is Tropical Island. The country also
has made amendments to reduce the time frame of exports and imports. Now, export takes 24
days and import 36 days in the country. Trade facilitation roadmap also reduces time to
export and cost. It also has helped in removing trade constraints. After all making all such
amendments the country faced positive balance of payments. Trade facilitation roadmap has
also reduced extra documentation work; it requires just seven documents (Shepherd & Ben 1-
11). The country has made significant changes after the trade agreement with United States.

Protectionism and free trade 8
References
Austria, Myrna S. "The Philippines and the AEC beyond 2015: managing domestic
challenges." Journal of Southeast Asian Economies (JSEAE) 32.2 (2015): 220-238.
Bieler, Andreas. "From ‘Free Trade’to ‘Fair Trade’: Proposals for Joint Labour Demands
towards an Alternative Trade Regime." Challenging Corporate Capital: Creating an
Alternative to Neo-liberalism (2016): 31-41.
Chandra, Alexander Christian. "Regional economic building amidst rising protectionism and
economic nationalism in ASEAN." Journal of ASEAN Studies 4.1 (2016): 1-19.
Chia, Siow Yue. "Modalities For Asean Economic Integration: Retrospect And Going
Forward." The Singapore Economic Review 62.03 (2017): 561-591.
Clark, Ximena, David Dollar, and Alejandro Micco. "Port efficiency, maritime transport
costs, and bilateral trade." Journal of development economics 75.2 (2004): 417-450.
Drury, A. Cooper, Jonathan Krieckhaus, and Chika Yamamoto. "How Democracy Facilitates
South Korean Interest in Free Trade Agreements." Korea Observer 45.1 (2014): 39.
Duval, Yann, and Emilie Feyler. "Intra-and extraregional trade costs of ASEAN Economies:
Implications for Asian Regional Integration." ASEAN Economic Community. Palgrave
Macmillan US, 2016. 153-172.
Frey, Christopher. "Tackling climate change through the elimination of trade barriers for low-
carbon goods: Multilateral, plurilateral and regional approaches." Legal Aspects of
Sustainable Development. Springer International Publishing, 2016. 449-468.
Gandolfo, Giancarlo. "Free Trade vs. Protection, and Preferential Trade
Cooperation." International Trade Theory and Policy. Springer Berlin Heidelberg, 2014.
253-275.
Graca, Joao Carlos, and Teresa Nunes. "The Liberal State, Economic Development and the
Crisis of the 1890s: Joao Crisóstomo and José Frederico Laranjo." History of Economic
Ideas 24.2 (2016): 111-140.
Howse, Robert, and Kalypso Nicolaidis. "Toward a global ethics of trade governance:
subsidiarity writ large." Law & Contemp. Probs. 79 (2016): 259.

Protectionism and free trade 9
Konishi, Hideo, and Chen-Yu Pan. Campaign Contributions for Free Trade: Salient and
Non-salient Agendas. No. 926. Boston College Department of Economics, 2017.
Krugman, Paul. "1988: Rethinking International Trade." The Best of Business Economics.
Palgrave Macmillan, New York, 2016. 171-179.
Lake, James, and Daniel L. Millimet. "An empirical analysis of trade-related redistribution
and the political viability of free trade." Journal of International Economics 99 (2016): 156-
178.
Lemieux, Pierre. "Protectionism by Any Other Name." Regulation 37.3 (2014): 5.
Limao, Nuno, and Anthony J. Venables. "Infrastructure, geographical disadvantage, transport
costs, and trade." The World Bank Economic Review 15.3 (2001): 451-479.
Long, Alan. "Port community systems." World customs journal3.1 (2009): 63-67.
Raihan, Selim. "South Asian Economic Union: Challenges and Tasks Ahead." South Asia
Economic Journal 16.2_suppl (2015): 3S-18S.
Sally, Razeen. "Free trade versus protection: An intellectual history." The Ashgate Research
Companion to International Trade Policy (2016): 9.
Schwarzschild, Maimon. "Free trade then and now, or still Manchester United." San Diego L.
Rev. 52 (2015): 1067.
Shepherd, Ben. "Did APEC's Trade Facilitation Action Plans deliver the goods?." Journal of
Asian Economics 43 (2016): 1-11.
Stamos, Iraklis, Glikeria Myrovali, and Georgia Aifadopoulou. "Formulation of a roadmap
towards the enhancement of international rail passenger transport–The South East Europe
example." Journal of Rail Transport Planning & Management6.2 (2016): 89-98.
Stephens, Philip. "US politics is closing the door on free trade." Financial Times 4 (2016):
16.
Switzer, Tom, and Daniel Hannan. "Life after brexit: Global Britain, free trade and the new
protectionism." Policy: A Journal of Public Policy and Ideas 33.1 (2017): 26.

Protectionism and free trade
10
Tongzon, Jose, and Inkyo Cheong. "The challenges of developing a competitive logistics
industry in ASEAN countries." International Journal of Logistics Research and
Applications 17.4 (2014): 323-338.
Urciuoli, Luca. "Port security training and education in Europe—a framework and a roadmap
to harmonization." Maritime Policy & Management 43.5 (2016): 580-596.