Mexico, 5 Nations Plan Free-Trade Zone

The presidents of Mexico and five Central American countries, ending their first meeting ever, agreed Friday to create a regional free-trade zone over the next six years to strengthen their nations’ economic ties.

At the same time, Venezuela, which acted as an observer to the two days of talks, and Mexico agreed to a new mechanism for financing Central American development projects with oil revenues that would be administered by the Inter-American Development Bank.

A senior Mexican official said privately that the accords were aimed at filling the void left by the United States, which he said has shown little interest in developing Central America after a decade of financing civil wars in El Salvador and Nicaragua.

“The economic and social development of Central America is a priority for Mexico,” said a spokesman for Mexican President Carlos Salinas de Gortari. “The regional peace process is not sufficient if it is not accompanied by a decisive (program) of social and economic cooperation.”

In their final communique, the presidents of Mexico, Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica noted their support for President Bush’s Enterprise for the Americas proposal to open up hemispheric trade. Mexico is scheduled to begin free-trade negotiations with the United States this year.

At the meeting in this capital of the southernmost Mexican state of Chiapas, the six presidents decided to begin negotiations to gradually liberalize trade among their countries until a fully integrated free-trade zone is established by December, 1996.

“In the short term, there will be a greater opening of the Mexican economy and later an opening of the Central American economies,” said Jaime Serra Puche, Mexico’s secretary of commerce and industrial development.

Venezuela and Colombia, which also sent its foreign minister to observe the meeting, eventually would be invited to join the free-trade zone.

Mexican officials said they were exacting no immediate quid pro quo from Central America for opening the Mexican market of 85 million people. But there is a political payoff for President Salinas in helping his Central American neighbors at a time when he is seen by many at home as too closely allied with the United States.

And the development of the region is in Mexico’s interest insofar as it would keep Central Americans from migrating illegally to Mexico in search of work. Eventually, the market of 20 million Central Americans will be open to Mexico.

The proposal of Mexico and Venezuela to funnel oil payments through the Inter-American Development Bank is an effort to help the Central American countries offset the rising cost of petroleum imports because of the gulf crisis.