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NAFTA Expansion Is Slowed, but Not Stopped

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DESPITE the setbacks this year, the United States should not give up on the long-term goal of building a Western Hemisphere free-trade area. Nor should the other countries of the Americas give up on the US.

When the leaders of 34 nations of the Americas (excluding only Cuba) met in Miami nearly a year ago, their most significant accomplishment was to agree to establish - by 2005 - a free-trade zone that would span the hemisphere. The agreement was regarded as an opportunity to reshape inter-American economic relations. Although the governments left vague how they would proceed, provision was made for intensive consultations, extending through March 1996, to lay the groundwork for subsequent negotiations. And one concrete step was taken: The three NAFTA partners - the US, Canada, and Mexico - announced plans to add Chile to their ranks.

The consultative process is functioning. Working groups have been charged with gathering and analyzing information in seven key areas that affect regional trade. Four other groups will be set up next year. The statistical and technical foundations for eventual free-trade talks are being put in place. The politics, however, have been far more difficult to manage.

The biggest disappointment has been the failure of the White House and Congress to reach agreement on renewed ''fast track'' negotiating authority for the president - which is essential to undertake any serious trade negotiations. There is almost no chance the authority will be approved before next November's presidential election.

That means Chile's entry into NAFTA will be deferred at least until mid-1997. Another setback is Congress's inability to agree on an interim trade program for the economies of the Caribbean Basin until they are able to participate in NAFTA.

No one pays much of a price for failing to move forward on free trade, at least not right away. It will not do much harm to the US economy or to the economies of Latin America. The costs are mostly in missed opportunities. US leadership on trade and economic issues in the hemisphere has visibly diminished. A parallel trend appears to be the declining priority many Latin American countries are giving to free trade and economic integration. Governments in the region have been actively negotiating their own trade arrangements and have succeeded in boosting intraregional commerce, but market access to the US is what most propels their interest in free trade.

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