By Linda Robins; Jack Epstein; Tim Zimmermann; David Bowermaster; Matthew Cooper
North America tends to pay attention in Latin America only when something goes horribly awry: A coup or communist guerrillas threaten a government, a debt crisis erupts, a wave of refugees sets off for U.S. shores.
That could change this week when 33 heads of state meet with President Clinton in Miami at the Summit of the Americas, the first hemispheric summit in 27 years. The visitors' message: America south of the United States no longer is a tumultuous backwater but a region of opportunity and vitality. The question is whether Washington is prepared to meet its hemispheric partners halfway.
Over the past decade, Latin America has thrown off all but one of its repressive military dictatorships and ended most of its guerrilla wars. Elected governments have launched economic reforms including privatization and lower trade barriers. The region's debt crisis has passed, and inflation is slowing.
The payoff has been a real growth rate of 3 percent since 1990, with Peru posting a whopping 12 percent this year. Latin inflation has dropped dramatically from 1,200 percent in 1989; investment is up sevenfold and exports threefold.
The region is the fastest-growing market for U.S. exports, which have more than doubled to $80 billion since 1986. By 2000, U.S. exports to Latin America are expected to exceed those to Western Europe.
What most Latin governments want above all from Clinton is a clear commitment to carve out a hemispherewide free-trade area, a vision first held out by President Bush in 1990 -- and a logical next step, the Latins will argue, after last week's approval by the U.S. Congress of the General Agreement on Tariffs and Trade. Advocates of an Americas-wide trade area point out that it would include more than 800 million people and have a gross domestic product of $7 trillion -- almost a third of the world's wealth.
The North American Free Trade Agreement between the United States, Mexico and Canada is exhibit A for the free-traders. NAFTA, they contend, has reaped enormous benefits for the United States in its first year: Trade with Mexico has expanded by 19 percent, and an estimated 100,000 U.S. jobs have been created.
What's more, promoting stability down south helps ease immigration pressure, drug trafficking and potentially entangling conflicts for the United States. Susan Purcell, vice president of the Americas Society, a New York think tank, says: "If you look at what caused the U.S. problems in the last decade, Central America consumed a tremendous amount of energy, and the debt crisis nearly brought down the world financial system."
Hot buttons. But the United States may yet miss its chance to lock in these gains and harvest the benefits. One reason: Rather than the hardheaded pursuit of national interests, issues that push domestic hot buttons such as protectionism and anti- immigrant sentiment have shaped the Clinton administration's policies toward the region, as they did during past administrations. Fidel Castro is the only Latin leader not invited to the summit. Regional leaders urge Washington to talk with Castro to facilitate Cuba's transition to democracy. But that's anathema to the powerful Cuban exile community in the United States.
Passage of GATT, ironically, has actually hurt prospects for rapid free-trade accords with Latin America. To win GATT votes, the administration bargained away "fast track" authority to negotiate future trade deals without congressional revision -- including expanding NAFTA. "The Latins were aghast when fast track was pulled off the table," says Peter Hakim, president of the Inter-American Dialogue, a Washington-based group.
Clinton's announcement in Indonesia last month of a 2020 deadline for free trade with Asia only rubbed salt in the wounds. Many participants warn that the Miami summit will flop unless it produces an earlier, specific date for establishing a free-trade zone across the Americas. Latin America, they argue, has moved much faster and further than Asia to lower barriers to U.S. goods. Even Nicaragua, impoverished by 10 years of war and bad government, slashed tariffs in one stroke from 110 percent to 15 percent.
But because of continuing differences between administration free-traders and officials who are worried about domestic political fallout, it is unlikely that President Clinton will commit to a firm date for free trade. Yet at some point down the road, administration officials suggest, a formal target date might well be set. "This is a more important market to the United States than Asia," insists one senior official. "You're going to see a much speedier process than at APEC [the Asia Pacific Economic Cooperation forum]. The realities are much different. Of the 33 countries coming, 27 would like to join NAFTA tomorrow."
Chile is the leading candidate to be the next member of NAFTA, and it might be formally invited as soon as the Miami summit to start talks to join the trade pact. Supporters hope that the U.S. Congress might prove less an obstacle than feared, since newly elected Republicans have traditionally supported free trade. Illinois Republican Philip Crane, likely chairman of the trade subcommittee of the House Ways and Means Committee, thinks limited fast-track authority, which could apply to Chile, will be forthcoming; Republican Sen. John Chafee of Rhode Island predicts "some difficulties" in the Senate.
Courtship. No country has courted Washington's favor more ardently than Argentina, which lent troops to the Desert Storm operation and backed U.S. policy on Haiti and Cuba. "We are waiting for an invitation from the NAFTA countries," President Carlos Saul Menem told U.S. News recently, but he admits his country has yet to meet some pact conditions such as adopting a patent law to protect intellectual-property rights.
Still, while Latin America is open for business, it cannot join the First World until it tackles the severe social ills that undermine its stability. Unemployment has grown in every country since 1990, and the region's income disparities remain the widest in the world. Average wages still have not recovered to the level of 1980, and almost half the region's people live in poverty. Governments are still plagued by corruption. An action plan to be adopted at the summit proposes joint efforts to increase public scrutiny of governments, catch accused criminals who flee across borders, mediate crises and expand education and health care.
Backsliding is a very real danger. In Venezuela, the economy has shrunk 4.5 percent this year. Former President Carlos Andres Perez launched ambitious reforms, but his oil-rich country fell off the wagon after riots, two coup attempts and Perez's resignation in 1993. Matters have worsened under new president, Rafael Caldera, who responded to the failure of 11 banks with a botched bailout, price and currency controls and suspension of constitutional liberties.
But the overall picture is brightening. Brazilians are counting on newly elected President Fernando Henrique Cardoso -- the former finance minister who this summer tamed chronic hyperinflation -- to make Brazil a growth engine for the region. With 190 million people and a GDP of $746 billion, Mercosur (a trade pact among Argentina, Brazil, Paraguay and Uruguay) is a vast market to tap. Uruguay's outgoing President Luis Alberto Lacalle told U.S. News: "We have unilaterally agreed to open our economies. We are no longer part of the problem but part of the solution."
Similar ambitious plans for a common market were announced at the last hemispheric summit, which took place in Uruguay in 1967. But nothing came of them: Most leaders around the table wore military uniforms and espoused protectionist, nationalistic policies, and the United States' attention was already being diverted by the Vietnam War. This time, in Miami, the Latin Americans are far more ready to make good on their promises. It remains to be se
