NEWS ANALYSIS : Mexico Looks South in Bid to Broaden Its Trade Base : Commerce: Recent agreements are a new approach to Latin American economic integration and help to blunt criticism of increasing dependence on the United States.

Mexico’s umbrella agreement for free trade with five Central American nations, announced Thursday, provides a convenient comeback to arguments that the country is turning its back on Latin America to pursue closer ties with its rich northern neighbors.

Mexico has taken great pains throughout the North American Free Trade Agreement negotiations with Canada and the United States to show it is also broadening trade relations to the south.

While Mexico’s trade with Latin America is nominal and has diminished overall in recent years, these bilateral agreements are a new approach to overcoming decades of failed attempts at Latin American economic integration.

In addition, they give the Administration of President Carlos Salinas de Gortari the appearance of pursuing commerce in the region, blunting domestic criticism of increased dependence on the United States, which accounts for about 70% of Mexico’s foreign trade.

Shortly after initiating NAFTA negotiations, Mexico announced a free trade agreement with Chile, on Sept. 22, 1991. At a recent press conference, Salinas bristled at a question from a Chilean reporter who asked whether Mexico was leaving the rest of the region behind.

Salinas quickly pointed out that Mexico-Chile trade--$161 million last year--has quadrupled since the free trade agreement between those countries was signed. That is still a fraction of last year’s $63 billion in trade between the United States and Mexico.

Less than a year into the Mexico-Chile agreement, business people in both countries are pressing for more rapid reduction of tariffs than originally negotiated, a sign of increasing interest in each others’ markets.

“It was thought that with the negotiation of the (North American) agreement that Mexico would concentrate its attention exclusively on the United States and Canada, but we have insisted that diversification is the backbone of our trade relations,” Salinas said.

Commerce Minister Jaime Jose Serra-Puche emphasized that point in Thursday’s signing of an agreement that sets the general rules for Mexico’s free trade negotiations with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

“Mexico is looking for integration with different economies in the world with the resulting opportunities of access to diverse markets for our producers and exporters,” he said.

Besides the initial agreement with the five Central American countries, Mexico is pursuing a trilateral trade accord with Colombia and Venezuela.

Immediately after negotiations for the NAFTA were concluded last week, Venezuelan President Carlos Andres Perez called to offer congratulations and to reiterate his interest in concluding their three-way agreement, Salinas said.

Just how much trade these agreements will generate remains to be seen.

“Latin American integration efforts have been off and on,” said Joseph Grunwald, an economist at UC San Diego who studies regional economic integration. “From a practical viewpoint, it is very difficult” because of the distances involved and similarities of goods produced.

The region has tried without success for more than two decades to tear down trade barriers. The economic reforms that countries have taken individually in recent years--privatizing state-owned companies and eliminating subsidies--make the chances for integration better, Grunwald said.

However, Mexican business people react skeptically when asked about the possibility of increasing exports to Latin America.

“Cultural ties are nice, but you have to sell where the money is,” said one manufacturer.