With the breakdown of world trade talks in Brussels, President Bush's journey through five Latin American countries this past week takes on added importance. His trip from the beginning was a veiled warning to the European Community that if it insisted on barriers to more liberalized trade in farm products, the United States had a fall-back position: formation of a hemispheric free trade area stretching from Alaska to Argentina.
Now that an impasse has occurred, this country is in a position to push ahead regionally, first in Mexico and later in South America. A U.S.-Canada free trade zone is already in place.
The faltering of the global approach secured for so long through GATT, the General Agreement on Tariffs and Trade, is an undoubted setback for a world trading system that has been a powerful locomotive for economic growth. Perhaps some or much can still be salvaged in follow-up negotiations early next year.
But with the EC moving toward economic union and Japan tightening its commercial lock on Southeast Asia, the Bush administration would be negligent if it did not protect both U.S. and Latin interests through tighter regional trade cohesion. Mr. Bush and Mexican President Carlos Salinas de Gortari have committed themselves to a bilateral trading arrangement. Now the longer-range goal should be to embrace the rest of the hemisphere through the "Enterprise for the Americas Initiative" the White House proclaimed last June.
Granted, this proposal is characterized by a vagueness Mr. Bush did little to dispel during his swing through Latin America. He was preoccupied with the Iraqi crisis, as were his compatriots, which meant that Latin issues were submerged even when the president was on the scene. But for Latin Americans themselves, it was something that a Yanqui president was making a rare visit to their part of the world, dispensing praise for their progress toward democracy and free-market economic systems.
The Bush administration's willingness under the EAI proposal to forgive a portion of the $12 billion in debt owed the U.S. government was enthusiastically welcomed by Latin governments. They probably were less impressed when Mr. Bush went to Brazil and effectively opted out of a serious dispute on debt reduction between U.S. commercial banks and Brazilian borrowers. This was an unfortunate message for countries plagued by poverty and debt service burdens.
Mr. Bush's first trade priority should be to rescue GATT under terms helpful to the United States and its Latin neighbors. But if this is not to be, he should follow-up his Latin trip by getting more substantive and specific about a regional trade zone. It should be open to trade elsewhere but still defend the economic interests of this hemisphere.