Trade that Binds the Hemisphere

July 03, 1994

A Mexican company called Maseca SA, which produces corn flour, is planning to invest between $60 and $80 million in corn flour plants in Venezuela and Colombia. The idea is that by the time they are built, the tariffs on the imported Mexican equipment will be greatly reduced by the free trade agreement signed last month by the presidents of the three corn-diet countries.

South America's problems with underdevelopment are largely attributable to a web of nationalistic, mercantilistic trade barriers that kept their national markets small and crippled their manufacturers in the name of protecting them. Fortunately for Latin American people, these barriers are breaking down.

The North American Free Trade Agreement linking Mexico with Canada and the United States, is the biggest of the new arrangements but hardly the first or last.

What brought the presidents together was a summit of 21 heads of state and government from Latin America, Spain and Portugal. And while the origin of such a trans-Atlantic talk-fest is cultural, the European members found themselves at a hemispheric free trade rally.

Chile proposes joining a customs union with Mercosul (Brazil, Argentina, Uruguay and Paraguay) Jan 1. The Andean Pact (Bolivia, Colombia, Ecuador, Peru and Venezuela) has agreed to become the Andean Free Trade Zone on that date. Mexico is pursuing free trade agreements with the Central American republics. Colombia and the 13-member Caribbean Community plan the same. Opposition candidates for the presidencies of Colombia and Brazil pledge to support the trend.

President Cesar Gaviria of Colombia used the summit to call for a hemispheric free trade area by 2000. He will be in a position to help, as head of the Organization of American States next month.

This is the path to prosperity for Pacific Rim countries. The new Latin leaders believe in the vision of turning NAFTA into an Alaska-to-Argentina free trading area.

The Latin summit's cheerleading for trade had a political edge as well. The leaders called for an end to "unilateral, coercive" measures that "harm living conditions for Ibero-American peoples," meaning the U.S. embargo on Cuba. To play his part, Cuba's Fidel Castro for the first time in 36 years of dictatorship went to a photo-op dressed in a peasant shirt suitable for a beach resort rather than a general's uniform. Such was the persuasiveness of his Colombian host.

President Clinton will find himself caught between intransigent leaders of the Cuban-American community in Florida and his fellow American presidents on this point. What is clear is that inter-American trade, having started take-off, will mushroom, penalizing any American republic that excludes itself. Any.

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