South America's Free-Trade Island in a Sea of Populism ; A New Trade Accord between the US and Chile May Spur Hemisphere- Wide Trade Talks Next Month

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Auto salesman Carlos Carreno is ecstatic about the free-trade accord reached last week between the United States and Chile.

"It's fabulous," he says. "It'll bring us more jobs and create more possibilities to export our products."

Soda vendor Miguel Vega is equally excited. "We're an underdeveloped nation," he says from behind his pushcart. "This will help us become a developed nation."

This kind of zeal for free-market economics is hardly typical in most corners of Latin America. Embattled Venezuelan President Hugo Chavez calls such change ineffective and suggestive of US imperialism. Leftist presidents are poised to take power in Brazil and Ecuador, and both indicate that wholesale acceptance of such policies could imperil their economic independence. And Argentina is in the midst of an economic crisis that many blame on the "Washington consensus," which includes liberalized trade.

But this new agreement is the latest in a long series of free- market moves by Chile. Beginning 20 years ago, through a string of presidents - even socialists - who have used the economic gains from trade to fund their social agendas, Chile has solidified its status as an island of unfettered neoliberalism in a populist region.

"Chile has always been the beauty queen in terms of neoliberal economic reform," says Jerry Haar, a researcher at the University of Miami's North-South Center, a think tank that studies Western Hemisphere public policy issues.

The accord, the first free-trade pact between the US and a South American nation, will immediately eliminate tariffs on some 85 percent of goods and on most others within four years. That, says Chile's National Chamber of Commerce, could prompt a 30 percent rise in trade, which reached $8.8 billion last year.

Chile has been trying to secure the pact for much of the past decade, which still has to be approved by both country's legislatures. But with free-markets the wish of both President Ricardo Lagos' center-left Concertacion coalition and the right- wing Alliance for Chile, the main opposition coalition, analysts expect passage sometime next year by an ample majority.

Chile began promoting open markets during the regime of dictator Augusto Pinochet from 1973 to 1990. Mr. Pinochet deregulated industry, reduced corporate taxes, and cut duties, aiming to create a stable economic environment for foreign investment and increased exports. By the mid-1980s, Chile's GDP had rebounded, in contrast to the runaway inflation under Marxist President Salvador Allende.

Pinochet is still reviled by many stemming from the death or disappearance of some 3,200 dissidents. …


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