Making the Americas a Free-Trade Hemisphere

PRESIDENT Bush's vision for the Americas is a fully free, democratic hemisphere with all countries equal partners in a Free Trade Agreement (FTA) from Alaska to the Antarctic. Last December Bush spent a week visiting Latin America electrifying its leaders with his vision. A month later, I revisited Central and South America, where I spent 20 years in the foreign service. I found business and government leaders agog with ideas of governmental reform, privatization, free markets, debt reduction, investment promotion, return of flight capital, human rights, and the environment. What a change from my foreign-service days!

The president announced on June 27 his Enterprise for the Americas Initiative. The plan would expand trade, promote investment, ease the mountain of debt owed by Latin America (nearly $500 billion), and protect the environment. Congress would be asked to provide $100 million a year over five years to encourage market-oriented investment initiatives and reforms, privatization efforts, and worker training.

Central to the plan would be a hemisphere-wide free-trade agreement. Earlier, Mexican President Salinas and Bush agreed to start negotiations for an FTA. Canada, which already has an FTA with the United States, agreed to become a full participant in the negotiations. ``Framework agreements'' were entered into with many countries in Latin America and the Caribbean in anticipation of the goal. Countries were urged to enter into FTAs with their neighbors in preparation for the continent-wide pact. Brazil, Argentina, Uruguay, and Paraguay agreed to form their own interim FTA. Chile asked to join with Mexico in the extension of the Canadian-US FTA.

The last few years have seen an amazing transition - nearly a revolution - on the political front. Democratization has caught on like a forest fire sweeping the continent's rudimentary democracies that previously knew only military authoritarian rule. Despite a delicate balance between civil and military authority, civilian leaders now preside in Guatemala, Chile, Nicaragua, Uruguay, Paraguay, and even Haiti. Today, for the first time, every Latin American country except Cuba enjoys at least nominal dem ocratic government. The insurgencies in El Salvador and Guatemala appear to be winding down. Except in Peru, South America is now insurgency-free.

For the shrinking US economy these developments portend exports and jobs. Due to self-imposed discipline and reform, the Mexican economy has made great gains in recent years. Consequently, our exports to Mexico, which had been running about $15 billion a year, increased $10 billion in the last two years. This translates into 300,000 new US jobs. Trade with Latin America for the first time exceeded $100 billion.

SINCE the 1960s, 1,900 US assembly plants known as maquiladoras have been established in Mexico within 200 miles of the border. Under an FTA, plants of this nature could locate throughout Mexico and would export not only to the US, but also would supply the growing Mexican market and other world markets. This would boost the Mexican economy, reducing illegal Mexican immigration. Costa Rica, recognizing the potential for increased exports to Mexico, has already entered into a bila teral agreement with Mexico in anticipation of the US-Canadian-Mexico FTA. Japan is watching developments closely and has entered into special agreements with Mexico and Chile. Venezuela is closely monitoring developments and seems anxious to enter the proposed FTA. Increased oil and gas imports from Canada, Mexico, Venezuela, and Ecuador can significantly reduce US dependence on Mideast oil.

President Bush's plan is the first bright spot on the Latin American scene in many years. The Latins have suffered a series of traumatic setbacks. JFK's Alliance for Progress, with its security preoccupation, spawned a series of military, autocratic governments. In the 1970s, a multiplicity of loans, largely from private US banks, were urged on Latin America for projects of doubtful merit. The current mountain of debt resulted. The 1980s saw US obsessed with ``communist subversion'' in Central America, to the neglect of constructive development.

Many roadblocks must be overcome. Principal among them is an annual population increase of 4 percent in Mexico, 4.8 percent in Venezuela, and 6 percent in Nicaragua and Guatemala, as compared to 1.2 percent in US. Perhaps the astonishing spread of Protestantism, plus the ``liberation theology'' practiced by local Roman Catholic priests, will permit more vigorous governmental and private birth-control programs. Second, the US seems to be speaking with two voices on demilitarization. Embassy and USAID off icers are advocating diversion of scarce funds from military to economic development. At the same time, however, US military officers assigned to train Latin American military forces are pushing sales of US military equipment. Finally, and most important, unless the economic lot of the impoverished is significantly improved, the fledgling democracies will disappear.

The quinquecentennial of the discovery of the Americas will reveal whether the hemisphere is sufficiently united to forge a genuine partnership in seeking solutions to mutual problems.

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