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NEWS ANALYSIS : Miami Summit Is Benchmark for Free Global Trade : Commerce: There is doubt whether United States, Latin America have political willpower to meet goal of agreement.

December 12, 1994|JAMES GERSTENZANG | TIMES STAFF WRITER

MIAMI — The goal could hardly be grander, more ambitious or more specific: the establishment of a free-trade zone of unprecedented scope, making it no more taxing, in terms of duties and quotas, to sell an Iowa-built refrigerator in Argentina than it is to sell the same productin Alabama.

All goods and services, coming from the factories of the United States' Rust Belt to the cattle ranches of the Pampas, could cross international borders throughout the Western Hemisphere with the same ease that artichokes from Castroville are sold in the markets of Chicago.

By committing their economically diverse nations to embark on such a path by 2005, the 34 participants in the weekend Summit of the Americas laid down a benchmark that will become a challenge not just for themselves but, even in the short run, for nations around the world as the global economy grows ever more interdependent.

The agreement demonstrates just how far the hemisphere has come since the last such gathering a generation ago, when the gold braid of generals mingled with the business suits of civilian leaders and the common demand was for preferential economic treatment. Now the summit is made up of countries that are, more or less, democracies. The chance to compete on a level economic playing field, rather than hiding behind protective tariffs or demanding favorable quotas, is the goal.

And there is skepticism about whether the political willpower in the United States, if not in Latin America, will be sufficient to meet the goal.

But among the most enthusiastic supporters of the expansion of free trade, there is the strong expectation that the summit will have a direct impact, and it is this impact that most stands out after the two days of meetings.

By setting a specific goal of negotiating a free-trade pact by 2005, the summit nations may well have set off a global competition that will force others to send tariffs, quotas and other barriers to global commerce into a free fall--as much as anything happens in an uncontrolled and hasty manner in the deliberate world of international trade--while encouraging a flow of investment capital to the Americas.

Will the goal be accomplished?

"I really believe that the most meaningful thing coming out of the summit won't be what happens in Miami. It will be what happens after Miami--to see if we continue our cooperation or if we let it drag, and to see if we start right away," Treasury Secretary Lloyd Bentsen said shortly before the meetings began.

There are potential political pitfalls.

Many Latin American nations are lining up to join the North American Free Trade Agreement implemented Jan. 1 by the United States, Mexico and Canada. The three announced Sunday that they will open talks to include Chile. Argentina, Colombia and Costa Rica would like to join quickly, too.

It is, in short, a far cry from just a decade or less ago, when such cooperation with the United States, and the abandonment of towering protective tariffs intended to keep foreign products from competing with those of local workers, would have prompted a huge political outcry.

"If you asked me 10 years ago, I would have said, 'No, this is not possible,' " said Nora Lustig, a senior fellow studying Latin American economies at the Brookings Institution in Washington.

But in the United States, the North American accord prompted an angry yearlong political debate. Its expansion could well bring a replay, with labor organizations and environmentalists raising concerns that expansion of free trade can hamper protection of worker rights and the environment.

Susan Kaufman Purcell, vice president of the Americas Society, who served in the State Department's policy planning staff with responsibility for the Caribbean and Latin America in the early 1980s, said some U.S. officials, led by President Clinton, see the nation moving aggressively to promote free trade.

But, she said, the political problems facing Clinton can be compounded because others, "with an eye toward 1996," are worried that if the Administration does not provide sufficient protection for workers thrown out of jobs by foreign competition, it could be thrown out of work itself.

Still, the Administration has made free trade the horse it hopes to ride, with the goal of using it to open markets for U.S. goods and thus keep the economy growing while producing higher-wage jobs.

With the agreement to create a Free Trade Area of the Americas, following the decision made in Indonesia to create such a region among the 18 Pacific Rim nations, including the United States, by 2020, the Administration hopes it has provided new impetus to efforts to cut tariffs and eliminate other barriers that slow down global commerce.

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