The fever for free trade.

• Author: Mayer, Vicki
• Position: Chile's free trade agreement with the US

In May 1992, President Patricio Aylwin Azocar of Chile met with President George Bush of the United States over a White House state dinner. The main course of conversation included grapes, tomatoes, wine and mining rigs. The menu was in honor of a Chilean/U.S. Free Trade Agreement (FTA) that would allow the export of Chilean copper, fruits, vegetables and wine to the U.S. and the import of U.S. mining machinery, telecommunications equipment, agricultural chemicals and other manufactured goods.

For the Chileans, the FTA signifies the expansion of U.S. markets through the reduction of tarriffs and other protectionist measures. Access to open markets have proven more important to Chile's recovering economy than financial aid, soft loans or debt relief. In fact, exports comprise about 30 percent of Chile's Gross National Product (GNP). For the United States, the FTA acts as a symbol for their support of the reinstitutionalization of democracy in Chile. Currently, the U.S. imports only about $1.3 billion from Chile, a small amount compared to the U.S. total imports from abroad.

Chile's democratic stability is key to the passage of the FTA, which is being touted as a demonstration of Chilean political consensus to revive the economy. Early in his presidential term, Aylwin prioritized free trade as the number one objective for his administration. The Chilean negotiation contingency included government officials, business leaders and representatives of the Chilean United Federation of Laborers (CUT). "We thus conveyed the image of a united, strong country that is properly functioning and in which people understand each other," remarked finance minister Alejando Foxley. Due to this nationwide unity, the negotiation of the Chilean/U.S. FTA is being considered relatively unproblematic, unlike free trade bids in other countries or the GATT Uruguay Round talks which have deadlocked or stalled.

Aside from political considerations, the FTA forges the way for continuing progress in Chile, the country which exemplifies the biggest Latin American economic success after the "Lost Decade" of the 1980s. Real growth rates have climbed steadily to six percent a year, while inflation rates have been maintained at about 18 percent a year. Much of Chile's monetary success has also filtered its way down to the general populous through new government social programs. This year the...