Bush's Trade Tactics

November 28, 1990

Consider the timing of President Bush's just-concluded trip to Mexico and his coming journey to five Latin American nations: Both presidential forays in search of stronger economic ties within the hemisphere are a reminder to the rest of the world that the United States is not without a fallback position if the General Agreement on Tariff and Trade fails to liberalize world global commerce during its showdown session next week.

In Mexico, Mr. Bush made a strong pitch for a bilateral free-trade agreement much like the pact the United States signed with Canada two years ago. His partner in this enterprise is Mexican ** President Carlos Salinas de Gortari, who has made daring changes to open up his country's closed and protected economy. The two presidents have vigorously promoted good feelings across the Rio Grande, a border long marked by bitterness.

Although Mr. Bush has started a legislative clock ticking that will require Congress' up-or-down approval by Spring for the start of formal negotiations on a U.S.-Mexico pact, the administration's first priority is fast action on a GATT agreement. If an agreement materializes by the end of January, ostensibly the latest possible date, the White House will open a drive for its passage over the opposition of organized labor and other protectionist groups. Only after that will a Mexican agreement that meshes with the GATT pact move to the front of the congressional agenda.

In the background of the Bush-Salinas meeting was a probing on how to bring Mexico's full petroleum potential to bear in the effort to make the United States less dependent on Persian Gulf oil. The Mexican Constitution, reflecting the policies of the father of Mr. Salinas' foremost political opponent, forbids direct foreign investment in or ownership of Mexican oil facilities. Treasury Secretary Nicholas Brady, who accompanied Mr. Bush to

Monterrey, disclosed that this roadblock may be avoided through the financing of Mexican oil production via the U.S. Import-Export Bank.

This is just one more sign that Mr. Salinas is determined to make Mexico's economic liberation his No. 1 accomplishment. He is gambling on a free-trade border boom. The easy availability of U.S. loans and Asian investment indicate that financiers figure he is a winner.

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