Zero tariff for toiletries: Makeup measures!

The Productive Community social model is the formula adopted by the government to lead the Bolivian economy into uncertainty. Today the word most used to predict the future is “stagflation,” which implies a slowdown in economic growth and inflation.

The indicators confirm it. Thus, the World Bank has estimated that the Bolivian economy will grow by only 1.4% in 2024, and ECLAC projects a growth of 1.7%. At the same time, interannual inflation in September reached 5.5%, exceeding the government’s projection of 3.7% until the end of the year. The inflation of toiletries products, which reached 14%, is striking.

The government, with the purpose of mitigating the impact – which according to them is due to imported inflation and not to the lack of dollars – has decided to lower the import tariff to zero for three months, for personal hygiene products such as: pasta dental, deodorants, antiperspirants, toilet soap, diapers, detergents, among others.

For a correct understanding of the measure, it is worth remembering that Bolivia has several trade agreements in force such as: the Andean Community Agreement with Colombia, Ecuador and Peru; the Economic Complementation Agreement No. 36 with Argentina, Brazil, Uruguay and Paraguay (Mercosur), through which, on a reciprocal basis, the import tariff is zero. Added to this are bilateral agreements such as: the Agreement with Chile (ACE No. 22), with Mexico (ACE No. 31) and with Cuba (ACE No. 34) that, in the same sense, tariffs are reduced or canceled; generating what is technically called a South American free trade zone.

If the products come from countries other than South America, the tariff charged upon entry is 10% or 5% of the value of the merchandise.

That is, due to the effect of trade agreements, merchandise coming from any South American country -except the Guianas and Suriname – for more than a decade they have been able to be imported and do not pay tariffs. Therefore, the measure adopted is disconcerting, because the effect of the tariff reduction on hygiene products, which mostly come from neighboring countries, has a marginal impact.

This can be easily verified by using the market access and tariff database. available on the website of the Latin American Integration Association ALADI (https://www.aladi.org/accesoamercados/arancelesdeimportacion/), since the national customs tariff consultation service is interrupted.

According to the figures According to the IBCE, from January to August 2024, Bolivia imported toiletries worth 112 million dollars, with the main suppliers being those countries that have tariff preferences, which together represent more than 51% of total imports. The main suppliers are: Peru with 35%, Brazil with 15%, Colombia with 10% and Mexico with 6%.

The above are only formal imports and therefore, for a correct diagnosis of the measure, it is necessary to include informal trade.

In that case, it is well known that there is a wide and diversified supply of toiletries in popular markets, the vast majority of which They come from smuggling and that, regardless of their origin, due to their illegal nature, they obviously do not pay any type of customs duty or tax; which further relativizes the effect of the tariff reduction.

Finally, it is worth mentioning that any tariff modification, both in the CAN and in Mercosur, are contrary to the commitments assumed, because it is about having a common external tariff among the member countries.

In short, without fear of being wrong, we can affirm that the cancellation of the tariff for toiletries are only cosmetic measures, which attempt to change the appearance, but have no effect on the essence.

The Productive Community social model is in its final stage and its authors are desperately trying to cover up the disaster they have caused; However, reality is not hidden and economic history will ruthlessly judge, giving those who deserve what they deserve.