IF Latin America was feeling left out in a world engrossed with
economic and political changes in Eastern Europe, President Bush
gave it a dramatic dose of attention this week.
He pledged to ease part of the $12 billion debt Latin American
nations owe the United States and proposed a $300-million annual
fund to spur investment in the region. But his most striking
proposal was a free-trade zone encompassing the entire Western
hemisphere - from the Yukon to Tierra del Fuego, a group of islands
at the tip of South America. (Brazil begins loosening trade
restrictions, page 4.)
The proposition has tremendous economic potential for the region,
according to economists, although the potential is five to 15 years
Almost as striking as Mr. Bush's proposals was his political
timing. On Tuesday, he made a low-key, but explosive, statement that
higher taxes would be necessary to deal with the budget.
"Clearly, this administration knows it's in deep political
trouble on the tax announcement," says political analyst William
Schneider of the American Enterprise Institute. "The president
clearly wants to talk about something else."
The tax statement came while Nelson Mandela's visit was
dominating the press. It was followed shortly with a politically
popular announcement that he would not allow further oil drilling
off the California and Florida coasts.
The Latin America proposal was months in the crafting, but the
final package appeared to be hurriedly put together. Administration
aides were getting outside advice on fundamental aspects of the plan
the afternoon before Bush's speech on Wednesday.
The obstacles to the plan, many economists say, are considerable.
Latin America has been opening up to the marketplace steadily during
the past two years, but the nations retain some of the world's most
William Cline, senior fellow at the Institute for International
Economics says Bush recognizes it could be many years before a
hemisphere-wide agreement is reached. The framework agreements, says
Mr. Cline, will be "embyronic," providing an ongoing forum for
resolution of bilateral trade disputes.
Bush acknowledged that point. "Some countries aren't yet ready to
take that dramatic step to a full free-trade agreement," he said
Wednesday, "and that's why we're prepared to negotiate, with any
interested nation in the region, bilateral framework agreements to
open markets and develop closer trade ties."
Bush stresses the biggest obstacles to US-Latin commercial
relations are "over-restrictive trade barriers that wall off
But economist Peter Hakim, director of the Inter-American
Dialogue, attributes the fall-off in US-Latin trade to a recession
in Latin America, where countries have had to generate trade
surpluses to pay off their debt. …