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Bush South America Trip Will Pump Free-Trade Plan

WHEN President Bush unveiled last June his far-reaching economic plan for Latin America, a collective cheer went up from across the continent. Latin leaders had grown worried that Western focus on Eastern Europe would leave them on the fringes. The prospect of Western Europe as a united mega-economy overpowering countries and regions loomed large - and still does.

On Monday, five months after it was announced, Bush begins six days of follow-up attention to his ``Enterprise for the Americas Initiative.'' The rare presidential tour of South America begins in Brazil, and continues to Uruguay, Argentina, Chile, and Venezuela.

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The plan provides for erasing some of the $12 billion in Latin debt owed to the United States, incentives for boosting investment in Latin America, and eventually, a hemisphere-wide free-trade zone.

Administration officials say the president's trip aims to reinforce the initiative. But Bush will highlight other themes as well: South America's progress in returning to democratically-elected governments; the importance of South America's world role including its support for removing Iraqi forces from Kuwait; for maintaining human rights, antidrug operations, and nuclear nonproliferation.

Still, the focus of the trip will be Bush's hoped-for economic master plan.

``These countries know that Bush isn't coming with a bunch of pens'' for the signing of agreements, says Peter Hakim, staff director of the Inter-American Dialogue. ``What they want is a sense of what Washington is asking of them. For example, they want to know what the US means when it says `free trade.'''

To be sure, Latin America cannot immediately expect its own version of Europe's increasingly close economic integration. For the Western Hemisphere, which contains some of the most closely protected economies in the world, free trade will mean at first the dropping of tariff and nontariff barriers to trade.

Any immediate action on barriers, however, awaits a resolution of stalled international trade negotiations in Brussels that are stuck on agriculture supports and restrictions. Also, negotiations on any US-Latin trade accords must await completion of the US-Mexico free-trade agreement expected in 1992.

Until then, the most important prerequisite is simply pulling into shape the Latin economies, some of which are desperate. It will take at least 10 to 15 years to put a hemisphere-wide free-trade zone in place, if not longer.

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But to lay the groundwork for free-trade pacts, Latin nations and the US are working out framework agreements on trade and investment. The purpose of the framework accords is to outline areas of concern and keep dialogue moving. STANDARD agenda items include cooperation on the international trade negotiations, increased market access, protection of intellectual property rights, investment policy, and reduction of trade barriers. So far, at least seven nations have signed such agreements: Mexico, Honduras, Bolivia, Ecuador, Colombia, Chile, and Venezuela. The US also welcomes bilateral and multilateral talks on free trade between and among the Latins, such as Brazil and Argentina's ongoing talks.

One of the brightest signs yet for the future of regional economic cooperation is a five-way discussion in progress among Argentina, Brazil, Uruguay, Paraguay, and the US aim to create a framework agreement. The multilateral accord, when reached, will be significant.

``The image has been a hub and a lot of spokes,'' says Mr. Hakim, referring to US-Latin framework pacts. ``That does not add up to a free-trade zone.''

The debt-reduction component of the Bush initiative should have quicker results. Congress did not complete most of the legislation the Bush administration submitted in September, but it did manage to pass one bill setting up debt-for-nature (protection) swaps.

The final component, a plan to set up a fund at the Inter-American Development Bank to promote trade and investment reforms in Latin America, has become snagged. The Bush administration pledged $500 million during the next five years for ``technical assistance,'' but has not defined what that means. Also, the administration has not clarified what aid would be coming from others namely Japan and Europe. So far, the fund has not been established.

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