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


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:


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.

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