The US' decision to remove Bolivia's free-trade benefits under the ATPDEA (Andean Trade Promotion and Drug Eradication Act) trade agreement has forced four textile firms to close in the South American country.

More are set to follow as the industry braces with the prospect of 7,000 job losses, the Bolivian National Industry Chamber reports.

ATPDEA has allowed Bolivian textiles to enter the US duty free.

Bolivia traded US$363m of goods with the US last year, but now many companies have been stripped of their top customers, according to the chamber.

The US removed the benefits, which officially expire on 15 December, under claims that Bolivia has not done enough to eradicate its large coca trade.

Bolivian president Evo Morales branded the move as "political vengeance" against his socialist policies and deepening relations with US rival Venezuela.

Political tensions between the two countries have been exacerbated by Bolivia expelling its US ambassador in September for allegedly causing rifts with the opposition.

Charging that "Bolivia has been humiliated", Morales has vowed to improve the country's US relations when Barack Obama takes office.

By Ivan Castano-Freeman.