Clinton considers new NAFTA members

The Associated Press

NEW YORK The Clinton administration is casting about for new members to its North American Free Trade Agreement. What would be more natural than to invite Argentina, a mere 4,000 miles south of the border?

President Carlos Menem, in town Tuesday for the 49th U.N. General Assembly, trumpeted the economic achievements of his country since he became president in 1989, saying Argentina's growth rate was third highest in the world behind China and Thailand and inflation just 3.5 percent this year.

There should be a free trade pact from Alaska to Tierra del Fuego, at the southern tip of South America, Menem told 600 businessmen and international investors at the Americas Society.

"It would be excellent if we could do it with NAFTA," Menem said.

Besides the United States, the NAFTA members are Canada and Mexico, a free-trade market of 370 million consumers.

Chile has drawn the U.S. administration's eye as a most-likely new entrant to NAFTA, due to its free-market economy, pro-democratic government and strong traditional ties to the United States.

Besides Chile, according to a draft paper prepared this summer by the office of the U.S. Trade Representative, the short-list for new members includes Argentina, Colombia and Venezuela.

However, Venezuela is suffering severe economic, social and political problems, including coup attempts by the military, and Colombia has a drug-trafficking image that some U.S. lawmakers would be hard-pressed to ignore.

In any case, neither Chile or Argentina expects an invitation this year to join NAFTA. Congress nixed that this month it must authorize the president to pursue "fast-track" negotiations with NAFTA wannabees and Washington doesn't expect that until next spring.

Some lawmakers, mostly Republicans, held up enlarging NAFTA because they worried about language in any pact to enforce environmental protection measures abroad.

Menem noted Tuesday that Argentina, with 33 million people, has been a model of growth during his presidency, has abolished nearly all trade barriers, has a stable currency for the first time in years and no such thing as hyperinflation.

Inflation was 5,000 percent annually when Menem was elected to replace Raul Alfonsin; it's expected to be 4.0 percent next year, when the economy will expand a hefty 7 percent, he said.

Menem said all the right things to the investors in the audience at the Waldorf-Astoria Hotel: intellectual property legislation to protect private investment and the rights of companies like pharmaceuticals will become law shortly; judicial reforms and patent laws are in the offing.

Argentina has modernized its industrial base, made the Mercosur southern-cone free trade zone a thriving market, is rapidly increasing trade with its rival Brazil, and this summer opened an oil pipeline between Chile and Argentina.

It ended a decades-long practice, mostly under Menem's Peronist party, of heavily subsidizing money-losing state companies, selling off the oil monopoly YPF, privatizing telephones, gas and power, even reforming the pension system.

"After decades of misfortune," Menem said, "We have become a credible and trustworthy country."

The Argentine peso, which some international investors say is overvalued, is "at par with the U.S. dollar. The peso is even worth a little bit more than the dollar," Menem said.

He likened Argentina's growth prospects to those years back of Japan and South Korea.

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