Brazil, Argentina Eager for Details Of Bush's Plan
AS President Bush begins his first South American tour here today, officials in five host countries are hoping the new, more sympathetic US attitude will soon be put into action. But many local economists wonder just how far good intentions will go, given the problems to be addressed.
The Bush trip highlights a trend toward better relations among the southern cone countries of Brazil, Argentina, Uruguay, and Paraguay; and the United States. Last Wednesday, Brazil and Argentina signed a nuclear accord putting their nuclear programs under the safeguards of the International Atomic Energy Agency. They thus hope to remove a major obstacle to scientific cooperation with the US.
Also last week, officials of the four Latin nations met in Uruguay with US officials to begin drafting a framework for freer trade among all five, moving beyond existing achievements with Canada and Mexico.
Last summer, Mr. Bush announced his ``Enterprise for the Americas Initiative.'' Focusing on the region's debt, trade, and investment troubles, the initiative proposes a free-trade zone from Canada to Argentina and forgiving some debts owed the US.
``We expect progress on the practical side of the initiative for the Americas,'' says an Argentine government official, ``something to support the reordering of our economies that we have been undertaking.'' Support, the official added, could be in the form of US pressure on international financial organizations to expand their lending in the region and to help out on debt.
Brazilian officials, aware that their debt burden must be worked out largely with private creditor banks, look to the Bush initiative to reduce trade barriers to products such as orange juice, steel, and textiles.
``US trade protectionism has to end,'' says foreign ministry spokesman Jos'e Vicente Pimentel. ``US law is so wide-ranging that any doubt about any sector of the Brazilian economy can generate retaliation ... we've got the sword of Damocles hanging over our heads.'' Americans now buy, he adds, close to 30 percent of Brazil's exports.
Despite such expectations, it's unclear just how far the US can or will go to help the region. The Bush initiative focuses on the private sector role in development, at a time when the US economy is in recession and the southern cone still poses big risks to investors.
Economists also say the hemispheric solidarity Bush envisions is likely to run into many of the same obstacles Argentina and Brazil have met with since they started cutting tariffs in 1985. These include never-ending problems with unemployment and price inflation, differences in laws, education, and income, forbidding geography, transportation difficulties and stubborn bureaucracies.
``It will never be integration,'' says Jorge Bogo, an Argentine economist who wrote one of the integration protocols. ``Only an increase in trade. It's impossible for two countries permanently on the edge of hyperinflation ... the exchange rate varies too much and you never know when the next plan to stop inflation will be announced ... you can't imagine a member of the European Economic Community with an inflation rate of 15 percent a month!''
Economists also say the neighbors haven't planned enough for the long-term consequences of their integration pact, set to take full shape by 1994. SOME Brazilians and Argentines, already skeptical about their own attempt at integration, are suspicious about Bush's free trade zone idea. They say it's a US strategy to get Europe to reduce agricultural subsidies at the General Agreement on Trade and Tariffs, and open up to foreign produce.
``GATT is the cornerstone. If [this week's Uruguay Round of talks] fails, if the discussions on agricultural subsidies don't go forward, the US will turn to regional integration,'' says Simao Davi Silber, a trade expert at the University of Sao Paulo. He and others fear that next, the US will drive a hard bargain, offering its huge market in return for Latin concessions on their own trade policies. And if the Europeans agree to substantial subsidy reductions, they add, South America will once again be forgotten.
Despite such concerns, Brazilian and Argentine officials alike see the Bush visit as a chance to emphasize to the American public the changes they have wrought under the new administrations of Presidents Fernando Collor de Mello and Carlos Sa'ul Menem, respectively. They point to market-oriented economic policies, the changes in nuclear policy, and support for US on Iraq and at GATT. In addition, Brazil touts its new, progressive stance on environmental issues.
Mr. Pimental, of the Brazilian Foreign Ministry, says that Americans, misled by the bygone belligerence of past military governments, still think the southern cone is a potential area of conflict, a place to mistrust.
Brazil, Pimental adds, is seen as a ``bad guy'' on issues such as debt, arms sales, and the Amazon. ``We want to show the US public that there is a very big convergence of interests and policies.... We want to undo a series of misunderstandings which American society has about Brazil.''