U.S. proposes to suspend trade benefits for Bolivia

WASHINGTON (Reuters) - U.S. President George W. Bush is moving to suspend long-time U.S. trade benefits for Bolivia because of that country's failure to cooperate in drug-fighting efforts in the past year, the top U.S. trade official said on Friday.

The move reflects the increasingly strained relations between the United States and Bolivia under the leadership of Bolivian President Evo Morales.

"The Morales administration's recent actions related to narcotics cooperation are not those of a partner and are not consistent with the rules of these programs," U.S. Trade Representative Susan Schwab said in a statement.

Earlier this month, Morales expelled the U.S. ambassador after accusing Washington of fomenting violence against him in Bolivia.

"We regret that the proposed suspension that is prompted by the Bolivian government's action could affect hard-working Bolivians," Schwab said. "Once imposed, the suspension could be lifted as soon as the Bolivian government improves its performance."

Bolivia, Ecuador, Peru and Colombia have received duty-free status for most of their goods under a program dating to 1991 to help fight the illegal drug trade.

The law governing the program requires the U.S. Trade Representative's office to hold a hearing on the proposed suspension before it takes effect. That hearing has not yet been scheduled, Schwab's office said.

Bolivia's recent expulsion of U.S. Agency for International Development personnel and removal of U.S. Drug Enforcement Administration officials from the country's main illegal coca production areas are two reasons behind the proposed suspension of benefits, U.S. trade officials said.

"A marked increase in cocaine production, the government's failure to close illegal coca markets, and publicly stated policies that increase government-sanctioned coca cultivation, have placed in doubt the Bolivian government's commitment to cooperate in the fight against drug trafficking," the U.S. Trade Representative's office said.

(Reporting by Doug Palmer; Editing by Bill Trott)