The U.S. Trade Representative's Office said there was "explicit acceptance and encouragement of coca production at the highest levels of Bolivian government."

Bolivia's president, Evo Morales, is a former coca-growers' union leader and expelled U.S. drug agents last year. His government has said ending the tariff exemptions could cost impoverished Bolivia about 20,000 jobs.

The U.S. trade office also announced it was extending Ecuador's exemptions under the Andean Trade Preference Act for another six months, when Peru and Colombia's duty-free privileges also expire.

Periodically renewed, the U.S. law has allowed the region's cocaine-producing and transit countries to export thousands of products to the United States duty-free since 1991. The idea is to provide incentives for licit exports and help wean peasants off coca, the basis of cocaine.

In Bolivia, the trade office said in a document published on its Web site explaining the decisions, the growth of coca cultivation is "unconstrained" and the leaf is increasingly being sold to drug traffickers.

The Bush administration suspended Bolivia's trade preferences in November after Morales expelled the the U.S. ambassador and Drug Enforcement Administration agents.

Morales alleged that Ambassador Philip Goldberg was helping incite a pro-autonomy revolt in Bolivia's eastern lowlands and that the DEA was engaged in espionage.

U.S. officials deny the allegations, and complain that it is now "open season" for drug trafficking in landlocked Bolivia, which exports most of its cocaine to Europe through Brazil and Argentina, according to the DEA.

The trade office said Tuesday that the loss of the DEA presence and "its information network has severely diminished Bolivia's interdiction capability."

It also provided a number that U.S. government officials had refused to disclose to The Associated Press despite repeated inquiries.

It said the DEA had 57 employees in four cities throughout Bolivia, the agency's headquarters for the region.

DEA agents have now been spread throughout the region and U.S. law enforcement officials say Bolivia is a black hole for them.

The U.S. government estimates Bolivia's potential cocaine yield at 195 metric tons.

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Associated Press Writer Nestor Ikeda contributed from Washington.