Mexico's Salinas Pushes Free Trade in Central, South American Tour but US-Mexico Progress Seen as Linchpin for Most Regional Agreements

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LATIN American leaders are moving forward on the idea of an Alaska-to-Argentina free-trade zone. A spate of bilateral and multilateral commitments is being developed with the ambition of creating a tariff-free Western hemisphere in the next three to five years.

- The presidents of Mexico, Colombia, and Venezuela met in New York on Sept. 30 and announced an agreement to initiate the process toward a free-trade accord between them. This was the first meeting of the "Group of Three."

- Last week, Brazil, Argentina, Uruguay, and Paraguay expressed their intention to start talks immediately on a four-way free-trade agreement. Chile was invited to join the Southern Cone accord, but for now is pursuing bilateral free-trade agreements.

- Today Mexican President Carlos Salinas de Gortari begins a six-nation Central and South American tour that is being billed as laying the groundwork for freer inter-American trade.

The Salinas tour will culminate in Venezuela with the Oct. 11-13 meeting of leaders from the nine-nation "Group of Rio." One of the aims of this gathering will be to try to establish common policies and mechanisms for attaining an integrated free market.

"The momentum in Latin America toward freer trade has been surprisingly strong," notes William Cline at the Institute for International Economics in Washington, D.C.

In part, Mr. Cline sees this as a reaction to President Bush's "Enterprise for the Americas" initiative announced in Washington on June 27. Essentially, Mr. Bush has offered to restructure or reduce the amount of debt owed by Latin American nations to the US government, providing that those countries liberalize trade and investment rules.

The response has been mostly positive. "The (Bush) initiative represents a potentially important opportunity to increase commercial flows and investment in Latin American and the Caribbean overall, because it provides Latin American producers the possibility of securing stable access to the United States market," says a report released this week by the United Nations' Economic Commission for Latin America and the Caribbean.

But the Bush initiative is only one of the catalysts. Liberalizing trade is viewed as a logical step in inflation-fighting economic reforms, such as privatization of government assets, that are under way in many of these countries.

Lower tariffs and easier investment laws are encouraged by the International Monetary Fund and World Bank as means of increasing trade in order to reduce the huge debt loads carried by many Latin nations.

The leaders of these countries are well aware of economic arguments that produced the 1992 European Common Market plan and the US-Canada free-trade agreement.

Argentina and Brazil were already moving down the free-trade path when the Bush plan was announced. Within a matter of days, the two nations set the goal of establishing a common market between them by 1995. …