Latin America Awaits a Call by Clinton

NAFTA membership for Chile may be back in the offing after US election-season hiatus

Leaders from Panama to Paraguay are asking a question they thought had already been answered: In the post-cold-war era, is the United States really interested in Latin America?

Since the reelection of President Clinton - and a Republican-majority Congress, Latin American leaders and US Latin specialists say signs now point to "yes" - though they warn that expectations have been dashed in the past.

Latin America thought it got a clear response to that question at the White-House-sponsored Summit of the Americas in Miami in December 1994. The US showed a leadership not focused on security, as US policy toward southern neighbors had been since World War II. Mr. Clinton called for a hemispheric free-trade zone by 2005, and promised to bring Chile into the North American Free Trade Agreement by 1996.

But Latin countries are once again doubting the US. The Mexican peso crashed days after the Miami agreements, and expanding trade pacts was not a big campaign crowd pleaser in the US election season. Chilean leaders grew skittish about talk of US "commitments" when their country was dropped from the US agenda - though its prospects may have improved. Canada and Chile signed a free-trade pact Nov. 18 that some say will put it on the fast track to NAFTA membership.

As one Latin official puts it, "We know we can't compete with Russia or the Middle East for time on the dance floor, but we'd like to think we deserve more than the last dance." What Latin American countries are looking for, in exchange for closer cooperation with the US, is better access to the giant US market. And they are looking for evidence that it was not the Miami agreements that were the "blip" in the US pattern. They would like to think the '96 campaign hiatus was just a brief deviation from an otherwise no-U-turn road of US commitment to closer hemispheric ties.

The proof will come, both US Latin specialists and Latin American leaders say, in how quickly the Clinton administration picks up the ball on Chile's entrance to NAFTA that it dropped last year, and whether Clinton finally visits the region in 1997.

Europe picks up where US left off

In the meantime, Latin America has not waited around for its fickle suitor. Instead, it has moved forward with various trade pacts and trade-group expansions of its own, and has begun looking increasingly to Europe and Asia for trade and investment partners.

"Latin America has not been sitting on its hands waiting for the people inside the beltway [in Washington] to make up their minds," says Ambler Moss, director of the North-South Center at the University of Miami.

Following Latin American tours by Spanish Prime Minister Jos Mara Aznar, German Chancellor Helmut Kohl, and other high-level European officials this year, Europe's potential counterbalance to US influence in the region is looking more attractive to Latin countries. The European Union has reached a first-step accord with the South American Common Market (Mercosur), which includes Brazil, Argentina, Uruguay, and Paraguay, while Mexico expects to begin negotiating a free-trade and political cooperation pact with the EU soon.

Spain, in particular, has declared its ambitions to develop its relations with Latin America and foment an EU commitment to the region. But even Spanish officials caution that Spain can never, any more than Europe as a whole, fill the potential US leadership role in the region. "The Latin Americans pin too many hopes on our role," says Inocencio Arias, spokesman for the Spanish Foreign Ministry, in Santiago for last week's annual Ibero-American Summit. "Of course they look to us more at a time when the US seems to be paying less attention to the region, but the reality is that Spain is a middle power that can only do so much."

Still, growing European involvement in the region offers a picture of what the US stands to lose by failing to focus on the South. Latin America is estimated to need $150 billion in infrastructure development over the next 15 years, for example, but already European companies have the upper hand in several countries. The Latin countries have also reached agreements amongst themselves. Chile this year reached an association agreement with Mercosur, and the five-nation Andean Community is looking to join Mercosur. Last week Mexican President Ernesto Zedillo Ponce de Leon visited Argentina to further Mexico's bid to reach an association agreement with Mercosur. If those accords are reached, they will go a long way toward creating the South American trade bloc Brazil has long promoted as another counterbalance to better defend South American interests before the US government.

"Brazil's dream of a SAFTA [South American Free Trade Area] which we all scoffed at in Miami [at the summit] is looking quite possible now, with consequences down the road that the US may not like," says Mr. Moss.

In the days since Clinton's reelection, US officials, including Assistant Secretary for Inter-American Affairs Jeffrey Davidow, have been quoted in Chilean newspapers saying Chile's entrance to NAFTA will again be on the administration's priority list in January. But Chile has heard that before, and much still depends on how the trade issue plays in the new Congress - where both parties have anti-free-traders.

The ball is in the US court

But the American public is looking less convinced all the time that free trade is beneficial to the US. In a poll issued the day after the US election by BankBoston - whose new president since October is a Brazilian - a majority of US citizens agreed that free trade pacts have resulted in fewer jobs for Americans and that the US should refrain from signing any new trade agreements with Latin American countries.

The key to whether the US revitalizes its leadership role in Latin America may depend on how successful the administration is at taking a free-trade message to the public. Congress will hold a required three-year review of NAFTA in July, and some analysts say the administration's case for the trade agreements benefits could make or break a renewed US commitment to the region.

"The US has lost out from its recent lack of leadership in Latin America, but it is recoverable," says Susan Kaufman Purcell, managing director of the Council of the Americas in New York. "There is a strong case to be made for expanded trade relations with our southern neighbors, and it's up to the administration to make it."

In the meantime, the US will be under growing pressure from its NAFTA partners to fulfill the commitment it made to expand the pact to a foursome. The trade pact between Canada and Chile is intended as a stepping stone to Chile's NAFTA membership, and Mexico is ready to expand a previous accord with Chile to bring it in closer alignment with NAFTA. Chilean Foreign Relations Minister Jos Miguel Insulza says the idea is to "naftalize" Chile's relations with two of the three NAFTA partners, making membership a near-fait accompli.

Mexico's eagerness to see Chile inside NAFTA is something of a policy shift. Mexico was long suspected of a secret satisfaction with Washington's inattention to Chile's candidacy, preferring to keep southern competition outside the NAFTA club as long as possible. One Mexican official acknowledges that "there was some thinking along those lines for a while, but now the desire to see Chile inside is completely sincere. The thinking now," he adds, "is that Mexico is better off the more anchored the US is to Latin America."