A Strategy for Latin America
THE GLOBAL ECONOMY
A LITTLE noted but potentially important step toward hemispheric economic coordination took place in Washington last week. Called together by United States Treasury Secretary Nicholas Brady, top US and Latin American financial authorities met to plot a common course on regional and global issues. This first Western Hemisphere economic summit did not produce any major new agreements, but it usefully reinforced the positive changes that have been in train for the past several years, and broadened the agend a of regional economic integration.
Three accomplishments of the summit stand out:
First, at a time of growing doubt, the US and Latin America reaffirmed their mutual commitment to forging closer economic ties. The US elections have clearly slowed progress this year on US-Mexican free-trade negotiations, on the structuring of a framework for wider hemispheric free-trade arrangements, and the implementation more generally of President Bush's two-year old Enterprise for the Americas Initiative. What has now been made clear is that the slowdown did not reflect faltering interest or good w ill on the part of either Washington or Latin America.
Second, the meeting gave new standing to broadly multilateral approaches to inter-American economic cooperation. Traditionally the US has been more comfortable dealing with major economic matters on a bilateral basis, one country at a time. By departing from its usual practice, Washington has opened the way for a genuinely regional initiative to define the course of hemispheric economic integration.
Third, and perhaps most significant, the assembled finance ministers emphasized that, unless Latin America's deep social problems were effectively addressed, the region's drive toward market reforms, open trade, and sustained economic growth would almost surely falter. The Enterprise Initiative, as initially put forth, had simply ignored the widespread poverty and inequalities that pervade Latin America. But economic reform without social advance cannot long endure because it is neither ethically accepta ble nor politically viable.
The Achilles' heel of current economic-liberalization efforts throughout the region is the widely held perception that market-oriented economic policies are inherently indifferent or even inimical to equality and fair play. The finance ministers acknowledged that they have to battle both the perception and whatever reality lies behind it.
The Washington meeting underscored two potential roadblocks to hemispheric integration, however. One mostly concerns the nations that were not invited to the meeting - mainly the smaller, poorer countries of Central America and the Caribbean. Less important economically and, with the end of the cold war, no longer of strategic interest, these nations are still part of the Western Hemisphere and their needs have to be considered in hemispheric discussions.
A SECOND matter that requires urgent attention is the lack of adequate institutional capacity to guide regional integration efforts and engage the many problems and opportunities that are emerging as these efforts move forward. Last week's meeting, for example, was not well prepared. No background papers were commissioned to inform the discussions, and it was only at the last minute that an agenda was formulated.
The hemisphere's financial authorities should meet on a regular basis, but just as important, a new inter-governmental institution is needed to exercise leadership on regional integration issues. Such an institution would serve as a clearinghouse to collect, systematize and disseminate information on trade and financial matters; as a think tank to analyze the key issues affecting hemispheric integration and propose policy alternatives; as a monitor to review and evaluate integration initiatives; and as a
source of technical assistance for countries that need help in designing and harmonizing policies. With this all in place, future regional economic summits would be far more substantive and productive.
At the Washington summit, the meeting was the message: Regional integration remains a top priority that will be pursued through multilateral forums and with a broadened agenda encompassing financial markets and macroeconomic management as well as trade. Western Hemisphere economic summits should be annual affairs, and a solid framework needs to be established to orchestrate a complex integration process.