Briefing Paper : Bush's Latin Tour: Talks on Aid, Debt and Unity : The News:

By WILLIAM R. LONG

Nov. 27, 1990 12 AM PT

TIMES STAFF WRITER

President Bush will be emphasizing his interest in Western Hemisphere unity with a five-day South American tour scheduled to begin Monday and to include stops in Brazil, Uruguay, Argentina, Chile and Venezuela.

The trip will take place in an international context that has evolved markedly in the last few years. Overriding U.S. concerns in Latin America are no longer fear of Marxist revolution or uneasiness with harsh military rule. Democracy has become predominant in the region, and Washington now faces little competition for influence from Moscow or Havana. At the same time, South American governments are less worried these days about warding off “Yankee imperialism” than about increasing exports to the United States and attracting American investment.

Bush and his South American colleagues will discuss a wide range of world issues such as the Persian Gulf crisis, the decline of communism, and difficult world trade negotiations that will be going on in Geneva the same week. But inter-American issues, such as Bush’s Enterprise for the Americas initiative and the problem of Latin American debt, will get the most attention.

Regional Issues:

Bush’s Enterprise for the Americas proposal last June to create a hemispheric free-trade zone, ease Latin America’s debt burden and promote U.S. investment in the region has the grandiose goal of uniting the hemisphere’s countries in a vast “economic partnership” for development and prosperity. Chile and the United States have reached an initial “framework agreement” aimed at bilateral free trade, and discussions have begun on a similar deal to promote free trade between the United States and a regional common market planned by Brazil, Argentina, Uruguay and Paraguay.

Those four countries have set Jan. 1, 1994, as the deadline for eliminating all tariff and trade barriers among them. If successful, they will create the first fully functional common market in Latin American history. But some U.S. officials worry that deeply ingrained protectionism in Argentina and Brazil, as well as chronic economic instability and inflation, may retard efforts for free trade.

Meanwhile, the South American presidents will want more details from Bush on what his Administration is prepared to contribute, as well as an indication of how intensely and rapidly Washington intends to pursue the initiative’s goals.

Outlook: Reinforcement of U.S. commitment to development in South America, new stimulus for restructuring South American economies, and more hemispheric trade cooperation. The countries Bush will visit owe a total of more than $230 billion to foreign creditors. Brazil and Argentina will be seeking Bush’s support in their negotiations with banks for easier repayment terms, arguing that easier terms are in everyone’s interest because they allow the economic development that eventually will regenerate capacity for repayment.

Bush may be sympathetic with the South Americans, but he cannot forget the interests of stockholders in American banks that are losing money on delinquent foreign loans.

The Enterprise for the Americas plan includes relief on much of the $12 billion owed by Latin American countries to the U.S. government, but the amounts are relatively small for the countries Bush will be visiting. And while Bush can urge debtor countries and private banks to seek mutually beneficial accommodations, experience shows that there are no easy solutions.

Outlook: Little direct impact on foreign debt problems, but perhaps better understanding on both sides.

In addition to the regional issues, there will be bilateral questions on the agenda in each country:

Brazil

Bush will spend Monday in Brazil, the most populous (150 million people) and economically powerful country in Latin America, albeit one currently in a recession.

Because boosting exports to the United States is an important part of Brazilian growth strategy, President Fernando Collor de Mello may complain to Bush about what Brazil considers protectionist American regulations and bureaucratic procedures that restrict the entry of many agricultural and manufactured products from Brazil. Bush, in turn, could urge Collor to move ahead with his plans for reducing import taxes and other barriers against imports. Generally, however, trade relations between the two countries are greatly improved since Collor took office in March.

Collor also may ask Bush to help persuade suspicious members of the U.S. Congress that there is no risk in permitting Brazil to buy the high technology needed for development. Washington has been cautious about authorizing the sale to Brazil of technology that could be used in missiles or nuclear bombs, even though Collor has vowed that his government will not build the bomb.

Bush probably will mention the importance given by the United States to the protection of “intellectual property” such as pharmaceutical patents and software copyrights. Violations by Brazil have been a problem in the past, but Collor’s policy favors patent protection. He may ask for patience on pharmaceuticals, however, because it will take time to wean the Brazilian industry from pirated formulas.

Outlook: Improvement in already excellent U.S.-Brazil relations, with progress toward resolving some bilateral differences, and increased U.S. recognition of Brazil’s international importance.

Uruguay

Bush will give a strong symbolic boost to democracy in Uruguay, a nation of 3 million people. Luis Alberto Lacalle, who took office in March, is the second elected president to govern Uruguay since the armed forces gave up power in 1984.

Few Latin American countries have more to gain than Uruguay from the free-trade policies pushed by Bush. The Uruguayan economy is heavily dependent on its larger neighbors, Brazil and Argentina, and the main markets for its agricultural exports are the United States and Europe. The same day Bush announced his Enterprise for the Americas plan, Lacalle telephoned him to express full support.

Lacalle may voice some concern to Bush over U.S. subsidies for farm products that compete with Uruguayan exports, but greater attention is likely to be given to their common position in favor of lowering agricultural subsidies worldwide under the General Agreement on Tariffs and Trade. The European Community has been resisting drastic cuts in its subsidies in the current stage of GATT negotiations, called the Uruguay Round, which began in 1986 at the Uruguayan resort of Punta del Este.

Outlook: Full cooperation and strengthened relations.

Argentina

Bush will be in Argentina, population 32 million, on Dec. 5. U.S.-Argentine relations are said by Argentine diplomats to be the warmest since before World War II, as indicated by President Carlos Saul Menem’s decision to send two warships to the Persian Gulf in a display of solid alignment with U.S. policy there.

Menem will avoid confrontation with Bush, but there are points of friction. For example, the Argentines object to U.S. duties, quotas and other restrictions on such Argentine exports as meat, steel, textiles and leather clothing. As a major grain exporter, Argentina also quietly complains of unfair competition from subsidized American grain exports. Menem may tactfully suggest to Bush that the United States should practice the free-trade ideas that it preaches, while reiterating his administration’s commitment to lowering Argentine import taxes.

Outlook: A historical high point in U.S.-Argentine relations, and progress on bilateral trade problems.

Chile

Bush’s visit to Chile on Dec. 6 will symbolize a welcoming U.S. embrace for that country of 13 million following its return to the hemisphere’s family of democratic countries. President Patricio Aylwin, who took office when dictator Augusto Pinochet stepped down in March, is eager to resolve U.S.-Chilean conflicts left over from the Pinochet era.

Chile wants the United States to end a ban on the sale of military equipment and parts to the Chilean armed forces. The ban was imposed by Congress in 1976 after a car bomb in Washington killed former Chilean Ambassador Orlando Letelier and his American assistant, Ronni Moffitt. The United States wants extradition of Chilean officers charged in the case or progress toward bringing them to justice in Chile.

Aylwin will argue that his administration’s efforts to resolve the matter justify lifting the military sales ban.

Aylwin also wants the United States to give Chilean products the same exemption from some import duties that it gives other Latin American countries under the international General System of Preferences. The latest reason given by the United States for excluding Chile was infringement on American pharmaceutical patents by Chilean laboratories. Chilean officials hope Bush can be persuaded that a recently enacted Chilean law protecting patents satisfies conditions for granting the exemptions.

Chile also is concerned about U.S. tariff sanctions against such Chilean exports as flowers, tomatoes and textiles that U.S. producers claim are subsidized and therefore compete unfairly.

The Aylwin administration hopes that by helping to resolve those and other problems, Bush will demonstrate concrete support for democratic government in Chile, bolstering it against criticism by the right-wing opposition and army officers who were happier with Pinochet as president.

Outlook: Progress may fall short of Chilean government expectations.

Venezuela

On his way back to Washington, Bush will spend the night of Dec. 7 in Venezuela, where he will meet with President Carlos Andres Perez.

During an earlier term in the 1970s, Perez often criticized U.S. policy in Latin America, siding with Cuban President Fidel Castro and Nicaragua’s Sandinista revolutionaries. But now he seeks harmonious relations with Washington.

Whereas the old President Perez nationalized U.S. investments in Venezuela, a country of 18 million, now he is offering guarantees and favorable conditions to attract new foreign capital. Once he fostered government subsidies and state enterprise; now he is a free-marketeer.

The new Perez administration, which took office in February, 1989, is preparing to sign an agreement with the United States for the protection of patent rights, and will renew a 1980 agreement on science and technology that was suspended because of disagreements between the two countries.

American officials were hoping Venezuela, the hemisphere’s biggest oil exporter, would be ready to reach a framework free-trade agreement by the time Bush arrived. It’s not, though apparently not because of any disagreement.

Outlook: More cooperation and trade.

The President Goes South

President Bush will visit Brazil, Uruguay, Argentina, Chile, and Venezuela during a five-day tour scheduled to begin on Monday.

Bush’s itinerary:

1. Dec. 2

Depart Washington D.C.

2. Dec. 3

Arrive Brasilia, Brazil.

3. Dec. 4

Depart Brasilia, arrive in Montevideo, Uruguay.

Depart Montevideo, arrive in Punta del Este, Uruguay.

4. Dec. 5