Trade Policy in the Western Hemisphere is undergoing major transformation. Developments during the past few years include entry into force of the Canada-US free trade agreement; the prospect of negotiations among Canada, Mexico, and the United States toward a North American free trade area; efforts to deepen economic integration between Argentina and Brazil; and the initiative of President George Bush for free trade in the Western Hemisphere.

Had the Bush proposal been put forward a decade or so ago, it would have been greeted with suspicion, perhaps even derision, as just another neocolonial US maneuver to keep Latin American and Caribbean (LAC) countries from developing their industrial capacity. Its reception, however, was generally favorable, even enthusiastic. It is premature to expect the conclusion of free trade agreements between LAC countries, other than Mexico, and the United States, but there is a dynamic moving in this direction.

After 8 Years of United States unilateralism in Central America and ideological confrontation on Capitol Hill, by 1989, newly-elected leaders in Latin America and Democrats in Congress yearned for a US president who would listen to their concerns, not just lecture them on the contras. George Bush's pragmatic style was therefore a welcome departure from the ideological intensity of his predecessor. With the democratic and pragmatic leaders of Latin America, Bush grappled with debt, democratic transitions, and drug trafficking, and together they sought new ways to relate the Hemisphere to a rapidly changing world.

Political or ideological obstacles have proved of paramount importance in Brazil's ability to adopt sound, consistent economic policies — the kind of policies the country needs if it is to overcome economic crisis and consolidate modern capitalism and democracy. Brazil's recent democratization was based on solid economic and social reality, representing the victory of civil society rather than a gift from the military regime. Nevertheless, it failed to tackle some of the basic ideologies and political practices which are typical of middle-income, industrialized, yet underdeveloped countries like Brazil: such as economic populism, developmentalism, anachronistic nationalist beliefs, political clientelism, unrealistic worker demands, conservatism, the orthodoxy of neoliberal monetarism, and the inability of short-sighted business elites to define the national interest.

On 11 March 1990, Patricio Aylwin took office as Chile's first elected president since 1970. Chile thus joined the list of Latin American nations making a transition from military to civilian government. Like the civilian governments in Argentina, Brazil, Uruguay, Peru, Bolivia, El Salvador and Guatemala, Chile's new government faced the challenge of returning the armed forces to a less central role in politics and reducing their institutional prerogatives.

Canada, Long-Oriented toward Europe and the Commonwealth, seeks to expand its involvement in Latin America. The development of a coherent Canadian policy for Latin America will depend on a variety of domestic and external factors, among them the Canada-United States relationship, rapid global change, and North American economic integration. Such a policy must reflect Canadian values and concerns — the importance of the collective welfare as well as individual good, the peaceful negotiation of disputes, and the acceptance of cultural, political, and ideological diversity.

Mexico's Foreign Policy of 1990 was marked by an acceleration of trends that began a few years ago, producing a pattern of relationships that would have been almost unimaginable only a decade ago. On the one hand, its most obvious characteristic — begun during the de la Madrid sexenio and heightened during Salinas's first year in office — was that economic recovery became the focal point of government strategy: i.e., there was an “economization” of foreign policy. On the other hand, and reflecting the weight given to economic issues, the movement toward integration with the United States — a trend already apparent in the previous administration — picked up speed and acted as a direct complement of the development strategy. This move became more concrete as preliminary talks got under way preparatory to signing a joint free trade treaty.

What are the medium-term prospects for the Nicaraguan economy where, by medium term, we refer to the year 2000? The difficult task of fortune telling is made enormously more complicated by the political economy that was established in the country by the Frente Sandinista de Liberacion Nacional (FSLN) after the 1979 revolution in which they, with the aid of diverse social factions, overthrew the government of Anastasio Somoza Debayle. After more than a decade, the FSLN then handed over power, in mid-1990, to a coalition of opposition parties (the Union Nacional Opositora or UNO) headed by Violeta Chamorro. The 1990 election brought the first peaceful transfer of power in Nicaraguan history but, perhaps, represented more an abdication by the beleaguered Sandinistas than it did a sea change in the balance of class conflict.

Brazil began the 1990s the same way it began the 1980s: in crisis. A decade ago, popular dissatisfaction with the performance of the political system was at an all-time high. As the legitimacy of the military regime installed in 1964 gradually dissipated, political and military elites turned their attention to the question of what kind of regime would be able to replace the one which was disintegrating. In one important aspect their vision coincided with the aspirations of the general population: the new political regime would have to be based on increased competition. Military elites would yield executive power, and the civilian politicians replacing them would agree to submit themselves to the popular verdict.

In 1990, the relationship between the states of the Caribbean Community (CARICOM) and the Latin American states of the Caribbean Basin seemed to have entered a new phase characterized by movement toward convergence, rapprochement, and initiatives of horizontal cooperation. This situation contrasts sharply with a past marked by persistent tensions and divergent views, rooted in legacies dating from colonial times of mutually disqualifying ethno-historical perceptions and boundary disputes and marked by frequent differences within the context of international organizations (Serbín, 1989a, 1989b, 1990d; Serbín and Bryan, 1990).

Japan's Current Role as the world's most dominant economic power has had an impact on its relations with Latin America despite the absence, historically at least, of few long-term ties between the two regions. While there is some evidence that contacts may date as far back as 1609, relations between them only began to acquire a certain relevance as recently as the 1970s and 1980s, when the Japanese domestic model, acquired after World War II, began to seem assured.

Nevertheless, it is impossible to understand either the relations between these two actors, or their future trends, without examining the policies and conditions that have marked Japan's reinsertion into the world — from its situation as a defeated, war-devastated, resource-poor country to one that is not only extremely wealthy but with the potential to become a superpower (Time, 1988: 6-9).

At the end of 1986, when Contadora and its Support Group reduced their presence in Central America, their member countries decided to create a permanent organism for consultation and agreement, thus re-orienting and extending their working agenda, which had originally been limited to the issues of Central American policy and, in the economic area (through the Cartagena Group), to the problem of external debt. Several factors prompted them to take this course. First, all had found the experiment in concertación policymaking to be valuable and were reluctant to lose the experience and momentum acquired over the years. Second, it was apparent that changing circumstances had altered their position in resolving the Central America crisis, so that the Contadora and Support Groups found themselves playing only a secondary role in the negotiations and becoming increasingly marginalized. Furthermore, some countries felt that the excessive emphasis on the Central American problem had circumscribed the ability of the Group to focus on other issues which, as tensions eased in Central America, were gaining priority on the foreign policy agendas of their respective governments.

During the Past Decade, Bolivia's peasant coca-leaf growers have made impressive strides in political development. This development is demonstrated by their almost mercurial ascent within the national political system, a climb which parallels the upward economic mobility of many growers. Organized through a network of unions (sindicatos), and determined to resist state policies and programs which threaten their local economies, Bolivia's peasant coca-leaf producers have learned to improve their political skills, including the building of alliances with other key political actors.

The thesis advanced here holds that not only has the peasant sindicato movement blocked attempts of the state to both reduce coca production and control coca-leaf marketing, but that those same state policies have actually strengthened the Left-of-Center labor unions and opposition political parties. Moreover, while the international war on drugs has thus far proved only minimally effective in curbing the flow of drugs from the Andean region, it has succeeded in antagonizing the sindicato organization of cocaleaf growers to the point that anti-US sentiment is widespread throughout the Bolivian countryside.

Argentines Fervently hoped that the transition from authoritarianism to democracy would reverse decades of economic decline and return their country to the path of modernization. Raúl Alfonsín and his Radical party assumed office in December 1983 confident of reconciling democratization with rapid development and social justice. This optimism was soon shattered, the victim of a succession of failed stabilization plans. Finally, a catastrophic economic collapse led to a convincing victory by Peronist Carlos Menem in the May 1989 presidential contest.

Carlos Menem assumed the presidency on 8 July 1989 in the midst of raging hyperinflation: from August 1988 through July 1989, consumer prices had risen 3,610% and wholesale prices had skyrocketed 5,062%. Menem responded with neoliberal, “free-market” reforms designed to restructure radically the beleaguered Argentine economy along the lines of the so-called “Washington Consensus.”

Since mid-1989, remarkable political and economic changes have occurred in the Soviet Union and Eastern Europe. Although the countries differ with regard to the scope, speed, and sequence of these changes, in the economic arena the objective is, in all cases, to abandon traditional central planning and replace it with a market economy. An integral component of these efforts to establish markets is the reform of foreign economic relations and greater involvement in the world economy.

While a tide of political and economic change has swept the East, Cuba has adamantly held on to a one-party political system and to orthodox central planning.

In July 1989, as Carlos Menem awaited his inauguration as president, Argentina was experiencing a situation very different from that of the early days of the Alfonsín administration. Much water had passed over the dam since the transition. The crunch of economic crisis — and the failure of the Radical administration to overcome it even minimally — had brought economic questions to center stage and relegated political claims to second place. In this setting, Argentina's new foreignpolicymakers put aside the practice, set by their predecessors, of standing on principle. From the beginning, their rhetoric emphasized three keywords realism, pragmatism, and “normality,” — as the basis of a policy which focused on the economy (Argentina, 1989a: 1).

According to Domingo Cavallo:

The foreign exchange market in Peru experienced the same kinds of overwhelming volatility and severe shocks as the rest of the national economy during the 1980s. Beginning in 1980, Peru's economy was buffeted by a severe decline in copper prices followed, in 1982, by a huge increase in real debt servicing costs as a result of the drop in industrial-country inflation and remaining high dollar interest rates. This simultaneous squeeze on export earnings and hike in debt service cost led to an inability to meet foreign debt commitments and, essentially, a cutoff from access to foreign capital.

Despite the Great difficulty in separating "good" international diversification from "bad" capital flight, the size and variance of these capital exports from developing countries have become a matter of increasing concern. According to some analysts, this capital flight has contributed to the sharp increase in foreign debt of developing countries, undermined the tax base, and — in extreme cases — even resulted in a net real capital transfer out of the country (Khan and Ul-Haque, 1985). This perception that capital flight might be undermining development efforts has led to a series of studies which have attempted to estimate the volume of capital flight. The best summary of this work is the conference proceedings edited by Lessard and Williamson (1987).

Eleven years after the start of an insurgent war, Peru's military appears no closer to defeating the two insurgencies that have plagued the country since 1980. The promise of greater political stability and a reduced role for the military in politics, which the the return to civilian rule held out, have largely been dashed. The war has meant a new active role for the military in politics which, under emergency decrees, directly rules over half of the country and maintains an influential voice in national policymaking. Under the previous two elected governments and the current Fujimori administration, the military institution has largely designed and implemented counter-insurgency strategy, leaving civilian policymakers aside in the decision-making process. What is more important, military officials have remained largely unaccountable for their decisions due to the lack of any civilian oversight capacity or alternative strategies. More than a decade after the start of the war, civilians have yet to devise methods that can increase military accountability.

The death of forbes burnham in August 1985 and the passing of power to Hugh Desmond Hoyte have produced dramatic changes in Guyana, South America's only English-speaking republic. Some of these have involved: (1) privatization of the public sector, (2) abolition of overseas voting, (3) negotiations with the International Monetary Fund (IMF), (4) rapprochement with the United States, plus (5) an agreement that observers — including former President Jimmy Carter and representatives from the London-based Commonwealth Secretariat—are being invited to oversee the upcoming elections scheduled for either August or September 1991.

Precipitated by domestic and international pressures, these changes have taken place within the context of a change in regimes as well, in which one dominant leader, Forbes Burnham, has been succeeded by another equally dominant, Desmond Hoyte.