Bush's Latin Plan Troubles Caribbean Basin

CARIBBEAN and Central American leaders are worried that President Bush's Enterprise for the Americas Initiative could be costly for them. That's because most of their nations now enjoy preferential trade treatments under various United States laws. ``We are worried that all the gains we've made in the past decade in the basin will be erased by immediate trade benefits that are equal to or better than those earlier given to the Caribbean countries,'' says Peter Johnson, executive director of the Caribbean/Central America Action, a Washington-based group.

This was not the intent of Mr. Bush's initiative. It seeks to create a Western Hemisphere free-trade zone from Alaska to Tierra del Fuego, stimulate new investment, and reduce the region's $12 billion debt to the US government. Bush recently ended a five-nation South America tour to tout the Initiative, which was praised by those countries. In addition to the Initiative, the US is negotiating free-trade agreements with Mexico, Canada, and Nicaragua.

``Small vulnerable Caribbean Basin countries should not be required to enter into a reciprocal free-trade relationship with major industrialized trading nations such as the USA and Canada, or indeed Brazil or Argentina,'' said J.G. M. Compton, prime minister of St. Lucia, at a Miami conference earlier this month. Instead, he suggested negotiating agreements similar to those now existing between European nations and their colonies and territories.

The recent collapse of international talks in Brussels under the General Agreement on Tariffs and Trade, aimed at liberalizing world trade, was hailed by many Caribbean Basin leaders as a brief reprieve for the Caribbean region, which now has preferential access to European markets as well, especially in sugar and banana commodities. However, GATT negotiations are expected to resume in a month or two.

Puerto Rican Governor Rafa'el Herna'ndez Colon pressed his Caribbean neighbors to adopt a ``spirit of regional integration and cooperation'' to combat any potential negative impact from relaxed trade barriers either in the hemisphere or in Europe.

He said Caribbean survival in the new world marketplace will require upgrading countries' infrastructures, diversifying their single-crop economies, improving the competitiveness of their goods, and attracting more foreign investment.

In search of that investment, Nicaraguan President Violeta Chamorro urged Miami business owners to take advantage of her country's new foreign investment laws. In a recent address to the Miami Herald's editorial board, Mrs. Chamorro also invited the estimated 150,000 Nicaruagan exiles in Florida to return home to rebuild their country.

Sally Grooms-Cowal, a Department of State official, says President Bush is committed to economic development of the region: ``The US has finally recognized that its neighbors are very important.''

LAST year, the US imported $27 billion of goods from Mexico and another $23 billion of goods from other Latin American countries, compared to $1.4 billion of goods from all Eastern European nations. In addition, the US has benefited from the region's growth: US exports to the region last year topped $8 billion, 25 percent more than in 1983.

Over the last decade, the US has urged Caribbean Basin governments to expand private-sector operations and develop export-oriented economies. Yet this strategy has made these countries more vulnerable to trade fluctuations and more vulnerable to protectionist policies of US and European nations. With the emergence of a European trading bloc, the opening of East European markets, and the potential creation of an Asian trading bloc, Caribbean Basin leaders are fearful their products cannot remain competitive. The potential diversion of US and West European aid from Latin America to Eastern Europe also worries Caribbean Basin leaders.

In August, Bush signed legislation to update the Reagan administration's Caribbean Basin Initiative (CBI), launched in 1983 to promote trade and investment in the region. The update reduced tariffs on leather products by 20 percent and eliminated duties on products assembled or processed CBI countries with US components. CBI covers 24 Caribbean Basin countries.