Newspaper article The Christian Science Monitor

Central American Leaders Aim to Build Free-Trade Bloc LATIN AMERICAN SUMMITRY

Newspaper article The Christian Science Monitor

Central American Leaders Aim to Build Free-Trade Bloc LATIN AMERICAN SUMMITRY

Article excerpt

IN order to compete with the world's many emerging trade blocs, Central American presidents have begun hammering out an agreement this week that would integrate the region by the end of the year.

At a three-day economic summit that began July 15, the presidents of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua discussed how to break down internal barriers so they could negotiate with the United States as a bloc by 1992 for a free-trade agreement under the Enterprise for the Americas Initiative. The initiative, announced by President Bush in 1990, would bring Central and South America into a North American Free Trade Zone through investment, trade, and debt reduction.

"If we want to face the external market as a strong whole, we will need to break down our own internal barriers first," says Otto Becker, head of Guatemala's largest business group.

For example, Central Americans are already lowering some import tariffs - some top 75 percent. By 1995, they hope to have a 20 percent ceiling and 5 percent floor on almost all imports.

Since President Bush outlined his initiative, which includes creating a $1.5 billion investment fund for the region, Latin American countries have begun negotiating trade agreements with each other, as well as the US. Central Americans, in particular, worry that they won't be able to compete once Canada, Mexico, and the US sign a free-trade pact.

The leaders are considering Venezuelan President Carlos Andres Perez's proposal for a free-trade agreement between Venezuela, Colombia, and Central America as well as an agreement with Mexico expected to be in place by 1996.

The US is urging Central Americans to help their economies by boosting trade. "We benefit in practical business terms, as well as in foreign policy terms, from having more prosperous neighbors," Peter Whitney, of the State Department's Bureau of Inter-American Affairs, said recently. "The whole process of regional trade liberalization would be greatly enhanced if groups of Latin American and Caribbean countries organized to remove the many trade barriers that exist among themselves," he added. …

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