Bush Looks South and Finds a Market : Latin America: International economic realities and political changes make it hard for the U.S. to ignore the region in the 1990s.

President Bush’s “Enterprise for the Americas” initiative, which proposes the creation of a hemispheric free-trade zone and expands Washington’s debt-relief program, contradicts the conventional wisdom that the end of the Cold War will cause the United States to ignore Latin America.

Instead, the absence of a communist threat will allow Washington to work with its neighbors toward the creation of a single hemispheric market characterized by democratic governments engaged in free trade.

The assumption that international developments would turn Washington’s eyes east rather than south was not unjustified.

Since World War II, our policy toward Latin America had been driven primarily by security concerns. The Cuban revolution of 1959 produced a $20-billion anti-communist aid program known as the Alliance for Progress. Similarly, the Nicaraguan revolution of 1979 caused a notable, although more modest, increase in U.S. aid to prevent “another Nicaragua.”

In contrast, the relatively quiet period between the Alliance for Progress and the coming to power of the Sandinistas saw the so-called benign neglect of Latin America by Washington.

It seemed reasonable, therefore, to expect Washington to again ignore Latin America after the defeat of the Sandinistas. Early signs pointed in that direction. Congress tried to redirect aid from Nicaragua and Panama to Eastern Europe. Concern over the future of the Soviet Union, Germany and the rest of Eastern Europe also seemed to preclude stronger inter-American ties. And private investors appeared more eager to risk capital in Eastern Europe than in Latin America.

Unlike the 1970s, however, new international economic realities combined with unprecedented changes within Latin America will make it hard for the United States to ignore the region in the 1990s. The world is reorganizing into regional trading blocs. Despite assurances to the contrary, a unified Europe in 1992 might become “Fortress Europe,” making U.S. exports relatively uncompetitive. Japan also is intensifying its Asian trade. This leaves the United States with Latin America, an area where it already has a competitive advantage. In 1989, U.S. trade with Latin America for the first time exceeded $100 billion, and the book value of U.S. investment reached $49 billion.

Opportunities for expanding U.S. trade are good. Latin America has 435 million people, compared with Eastern Europe’s 113 million. Half of Latin America’s population is under 15 years of age, just entering the consumer market. It will also be easier to make Latin America’s already existing market economies more productive and competitive than to transform Eastern Europe’s centralized, command economies into market economies.

The profound economic restructuring that began in Latin America after the onset of the debt crisis in 1982 reinforces this conclusion. Most Latin American governments have begun to reduce the size of the state and its role in the economy and to lower or eliminate tariff barriers. Mexico and Chile have made the most progress, but others, such as Venezuela, Brazil, Argentina, Bolivia and Costa Rica, are doing the same.

Attitudes are also changing. Until now, Latin America has seemed more concerned with avoiding dependency, rather than fostering economic interdependence with the United States. Anti-Americanism and a desire to avoid U.S. economic and cultural penetration were the results. The end of the Cold War, combined with fear that changes in Europe would leave Latin America out in the cold, has caused the region to welcome foreign investment and to see closer ties with the United States more as an opportunity than as a threat.

A hemispheric free-trade zone is therefore an idea whose time has come. Latin America, except for Cuba, is governed by democratically elected presidents who appreciate the link between free trade and free politics. A free-trade agreement with Canada already exists, negotiations on a U.S.-Mexico agreement have begun and Central and South American governments are pressing for regional free-trade zones.

Much work still remains to make Persident Bush’s proposal a reality. But the goal of a hemispheric free-trade zone encompassing more people than the populations of Western and Eastern Europe combined seems well worth the effort.