There's a New Vigor in Latin America

November 22, 1994|By CARL T. ROWAN

BUENOS AIRES, ARGENTINA — Buenos Aires, Argentina.--Back in the 19th century, Argentina and Brazil built railroads with different gauge tracks -- just in case one or the other wanted to invade its neighbor.

In 1977, Argentina held blackout drills against possible Chilean air raids.

Bolivia has nursed a grudge toward Chile ever since it lost its access to the Pacific Ocean.

But times are changing. After building up military and trade barriers out of ultra-nationalism, pride, resentment and fear, South American nations are entering an era of cooperation and friendship that has reverberations as far north as Washington.

A 1,595-mile highway is planned, linking Sao Paulo, Brazil's commercial capital, with Montevideo, Uruguay, and Buenos Aires.

Argentina is building a pipeline to supply Chile with natural gas. Since settling the last of their border disputes three years ago, Argentine-Chilean trade has trebled and Chilean investment in Argentina has skyrocketed from $100 million to $2 billion.

Chile and Bolivia have begun talks on a trade pact, as have Colombia, Ecuador, Peru and Venezuela.

The most ambitious venture of all is here in the southern cone of South America, where Argentina, Brazil, Uruguay and Paraguay have formed Mercosur -- short for South Common Market -- the second-largest trading bloc in the Western Hemisphere with

TC combined population of 190 million and a Gross National Product of $746 billion.

Since the start of Mercosur in 1991, commerce among the four countries has more than doubled (to $8 billion in 1993). Tariffs have gone down steadily and will hit zero on New Year's Day. Argentina and Brazil alone have increased their trade from $1.95 billion in 1989 to $6.16 billion last year.

By the end of the decade, the four member nations hope to cooperate in ways that once were only dreamed of in South America -- recognizing university degrees granted in the other countries, standardizing monetary systems and creating a southern-cone currency.

What has brought about this move to cooperation? One of the major factors is the collapse of military regimes. The 1970s and 1980s were decades of economic stagnation, declining wages and increasing gaps between rich and poor throughout South America.

With democratic reforms have come open markets. Countries no longer are spending vast amounts to build up defenses against feared invasions that never happened. According to the International Institute for Strategic Studies, the four members of Mercosur cut their military spending from $4.9 billion in 1990 to $3.7 billion in 1993.

Argentine President Carlos Menem has said, ''Foreign trade can solve an infinity of problems that have dragged us down for more than a century.''

Along with dropping trade barriers to their neighbors, the Mercosur countries have also reduced their tariffs to non-bloc members, which is likely to increase their trade with the United States. Latin America has already become the fastest-growing market for U.S. goods.

The new look in Latin trade dovetails nicely with the North American Free Trade Agreement (NAFTA). That pact has been a boon to U.S. foreign policy in ways that were never discussed during the bitter debate in Congress. It is seen in South America as an affirmation of U.S. support -- both economic and political -- for the governments that are pushing democracy and economic reform.

A number of countries, led by Argentina and Chile, are knocking at the NAFTA door. That is quite a switch from the days when ''Yankee, go home!'' was the cry, not ''Yankee, come here!''

Carl T. Rowan is a syndicated columnist.

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