Summit Officials To Harmonize Trade Pacts Into One Agreement
UNITED States officials are talking of a ``building block'' approach to creating a free-trade zone of the Americas. Not that they think the process is child's play.
The myriad of trade pacts that crisscross the region - and that Miami summit leaders will say should be progressively stacked to form one common hemispheric market - might seem confusing to even the most analytical economist.
At last count, experts listed no fewer than 23 separate trade accords in the two continents and the Caribbean, ranging in economic impact from the North American Free Trade Agreement to a bilateral agreement Mexico recently negotiated with Bolivia.
In addition to NAFTA, economists count four other regional trade accords that will likely function as blocks to build a hemispheric pact by early next century.
The most important of these is Mercosur, the Spanish acronym for ``Common Market of the South.'' Encompassing Argentina, Paraguay, Uruguay, and the awakening-giant, Brazil, Mercosur will take effect Jan. 1 as a customs union with common import tariffs. It will, in fact, kick off with hundreds of national exceptions to internal free trade; national tariffs are to be aligned by 2001. Bolivia and Chile are both considering association with the group, although Chile already has lower tariff levels than the Mercosur countries.
Other blocs include the Andean Group. It includes five countries from Venezuela to Peru on South America's northwest flank; the currently five-member Central American Common Market; and Caricom, linking most Caribbean islands and Guyana and Belize in South America.
How confusing is this collection of free-trade acronyms and undulating continental tariff levels for the investors and industrialists these countries are trying to attract?
``It's not a problem at all, on the contrary,'' says Manuela de Rangel, director of economic relations for the Latin America Economic System (SELA), a 27-country economic organization in Caracas, Venezuela. ``The proof is that, for the past few years, Latin America has attracted more foreign investment than any developing region.''
In 1993, foreign investment totaled $64 billion, though it is expected to slip to a still-impressive $55 billion this year. ``With these numbers, it would be hard to say that various trade and investment schemes are a brake on investment,'' Ms. Rangel says.
The important privatization programs that have accompanied the region's trade liberalization have attracted billions in investment. And while business-creation and investment may not be child's play, most Latin countries have simplified relevant procedures and regulations.