Evo Morales, Bolivia's president, criticised the suspension as being part of "punitive" sanctions similar to those placed on Cuba.

"We don't have to be afraid of an economic blockade by the United States against the Bolivian people," he said.

The 17-year-old Andean trade pact lowers fees for imports into the US from Colombia, Ecuador, Peru and Bolivia in exchange for co-operating with a US anti-drug campaign.

Bush had signed a six-month extension of the pact last week.

Job losses

The US is Bolivia's third-largest trading partner after Brazil and Argentina.

"We don't have to be afraid of an economic blockade by the United States against the Bolivian people"

Evo Morales, the Bolivian president

The suspension will raise US tariffs on jewelery, wood and other imports from the south American state.

Relations between the two countries have soured of late.

Morales ejected the US ambassador from the country last month, accusing him of interfering in local politics.

The US responded by sending home Bolivia's senior diplomat.

Bolivia also demanded that US development projects and drug agency officials withdraw from the coca-growing region of Chapare.

Washington then blacklisted Bolivia for what it said was a failure to co-operate in anti-drug efforts and Bush recommended the suspension of the trade pact.

'Further corrosion'

Luis Alberto Arce, Bolivia's finance minister, called the raised tariffs an "injustice".

He met Republican and Democratic congressmen on Capitol Hill on Thursday to lobby for the pact's restoration.

Eliot Engel, a Democratic member of the House of Representatives, urged Bush not to suspend the programme as it would lead "to a further corrosion of US-Bolivia relations".

Dick Lugar, a Republican senator, called it a critical moment in the two countries' relationship.

"When Bolivia stands at the cusp of a new era, with a new constitution, US assistance should be forthcoming as an effort to help Bolivia, and not to be an impediment to its progress," he said.