SPOTLIGHT ON TRADE : Latin American Countries Are Lining Up to Be Part of NAFTA : Hemisphere: Many leaders see it as the best way to revive a foundering dream of increased intra-regional commerce.

Now that the North American Free Trade Agreement has passed a crucial test in the United States, Latin American nations are lining up to join a pact they believe brings closer to reality a free-trade zone for all of the hemisphere.

Indeed, U.S. Rep. Jim Kolbe (R-Ariz.) is expected next week to introduce legislation that would allow Chile to join NAFTA, which removes trade barriers among Mexico, the United States and Canada. Under NAFTA’s so-called accession clause, other nations in the Western Hemisphere--including all of the Caribbean--may join with the approval of the three legislatures of the current NAFTA participants.

All of the hemisphere’s nations, except Cuba, have signed framework agreements, basically an expression of their interest in a regional free-trade zone, dubbed the Enterprise of the Americas Initiative under the Bush Administration. Many enthusiastically backed NAFTA.

Argentina is considered the next likely candidate to join NAFTA after Chile, as are Venezuela and Colombia, currently in the final stages of negotiating a separate trade pact with Mexico.

Although Latin Americans have had their own free-trade association for more than three decades, trade among member countries has actually decreased in that time. Now known as the Latin American Integration Assn., the trade group has been unable to overcome problems stemming from the disparate levels of development and a strong tradition of protectionism in the region.

Many Latin American leaders say NAFTA may be the best vehicle for reviving a foundering dream of increased intra-regional trade, albeit with U.S. leadership.

A hemisphere-wide free-trade zone is also seen as a means to solidify the trade liberalization and free-market measures already under way in some Latin American countries.

“This will assure the U.S. new and vibrant markets throughout the Western Hemisphere and help spread economic prosperity and political stability in the region,” said Michael G. Wilson, policy analyst at the Heritage Foundation, a conservative think tank in Washington.

In recent years, Latin American countries have opened their closed economies to foreign investment, lowered trade barriers and sold state-owned enterprises. Governments have sharply cut back spending and reduced inflation.

Mexico and Chile have led the trend toward free-market economies and the rest of the region has followed, with varying degrees of success. Strong political opposition has plagued the reform efforts in the region’s largest economy, Brazil, which has made strides toward privatization but has been reluctant to open its huge market to imports.

“We seemingly have gotten past the convulsions and traumatic adjustments of the 1980s as the region takes on new economic methods based on open trade and oriented to exports, fiscal austerity and prudent management of monetary policy, as well as less government intervention in the market,” according to a recent report from the United Nations Economic Commission for Latin America and the Caribbean.

The possibility of a hemisphere-wide agreement took on additional significance for trade-minded Latin nations Thursday when the 17-member Asia-Pacific Economic Cooperation, meeting in Seattle, postponed Chilean membership a year and imposed a three-year moratorium on other new members. That forces them to look for an alternative route to increasing foreign commerce.

Adding more countries to NAFTA--which is expected to easily pass the U.S. and Mexican senates later this month--is not assured.

Nevertheless, Latin American leaders were jubilant about the agreement’s approval Wednesday in the U.S. House of Representatives, many in the obvious hope that they will also soon be part of the accord.

“NAFTA is a recognition by the United States that Latin America is a worthy partner for the future,” said Colombian President Cesar Gaviria Trujillo.

“Colombia is a leader in the economic integration of Latin America and in the implementation of free-trade reforms,” he said. “Now we want to be in the forefront of the effort to combine liberalization processes under way throughout the hemisphere into a free-trade zone that includes all nations of the Americas.”

Chile is first in line to join NAFTA because both the Bush and Clinton administrations had promised that once NAFTA was completed, focus would shift to that nation. Rep. Kolbe’s staff is revising a 1991 bill to initiate negotiations for a free-trade area with Chile, a staff member said.

Chile already has a free-trade agreement with Mexico but is willing to consider either joining NAFTA or negotiating a separate accord with the United States, said an official in the economic office of the Chilean embassy in Washington. “We will do whatever is most expeditious,” he said.