NAFTA Poised to Play Major Hemispheric Role

IN Latin America and the Caribbean, the debate over the North American Free Trade Agreement was widely and anxiously viewed as a defining moment for the future of US relations in the Western Hemisphere: The US would choose either to open its markets or close its doors to the region.

With its hard-fought, come-from-behind victory in the battle for NAFTA, the Clinton administration has now opened the way for the United States to build a constructive and sustained partnership with Latin America. The Clinton administration can best pursue that opportunity by moving quickly to transform NAFTA into a hemispheric free-trade system, designed eventually to incorporate every nation of the Americas.

Immediately after winning the House vote on NAFTA, President Clinton flew to Seattle to meet with the leaders of 14 Asian and Pacific countries. The US has good reason to pay attention to this more distant region, which includes some of the world's largest and most dynamic economies. Yet Latin America, although far smaller and less prosperous, may offer greater economic opportunities for the US.

In the past several years at least, this hemisphere has provided US business with the fastest growing markets for its exports and the best returns on its investments. It is the only major region of the world with which the US has consistently run a trade surplus.

As Latin American nations rebound from their prolonged economic recessions and increasingly emphasize trade, they will import even more from the US. Its companies wind up with nearly 50 cents of every dollar Latin America spends on foreign goods and services. Nowhere else does the US enjoy that advantage.

Note also that each 1 percent of added growth in that region turns into some $5 billion in new US exports, compared with only $1 billion for the same rise in Japan's growth rate.

The nations of Latin America, moreover, are far more willing than those of Asia or Europe to eliminate their barriers to trade and investment from the US. In exchange for the right to sell freely in US markets, they are prepared to offer the reciprocal right to sell freely in theirs. This is an equal exchange that would be a good deal for everyone.

US willingness to engage Latin American nations as economic partners would fortify hemispheric political ties and allow for expanded cooperation on many other fronts, including efforts to protect democracy and human rights in the Americas; strengthen key inter-American institutions like the Organization of American States and the Inter-American Development Bank; address such common problems as environmental degradation, migration and refugee matters, and drug trafficking; and work together in international forums such as the United Nations and the General Agreement on Tariffs and Trade.

Over the coming months, US trade negotiators must focus their attention on bringing the global GATT negotiations to a successful conclusion.

The Clinton administration will have to work hard to patch up the divisions in the Democratic Party caused by the bitter struggle over NAFTA. However, it would be a failure of leadership and imagination to leave Latin America on hold and discard the opportunity to press toward broader hemispheric trade arrangements. There are four specific initiatives the administration could immediately undertake:

* First, the US and its NAFTA partners should open consultations with other governments to begin establishing criteria, procedures, and timetables for extending NAFTA and building toward a Western Hemisphere trade pact.

* Second, those countries that can readily meet the entry requirements should be invited to begin negotiations to join NAFTA. The US is committed to promoting Chile as the first candidate, but several other countries might also qualify in short order.

* Third, the US should work out interim arrangements with the nations of the Caribbean and Central America to protect the trade benefits they now receive from the US under the Caribbean Basin Initiative.

* Fourth, the US should join with other hemispheric governments to establish a regional organization to guide and coordinate progress toward a Western Hemisphere free-trade area. Despite the fundamental importance of trade and economic integration in the Americas, no organization has the mandate and expertise to exercise leadership on these issues.

Mr. Clinton should invite the Latin American and Caribbean heads of state to participate in whatever ceremony is planned to inaugurate NAFTA, as President Carter did for the signing of the Panama Canal treaties.

Converting that ceremony into a summit meeting of hemispheric leaders would do even more to affirm the administration's commitment to building on NAFTA and forging a new economic relationship with all of Latin America and the Caribbean. The nations of the region are waiting for that affirmation. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts by mail to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHEL.CSPS.COM.

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