A Latin Common Market

The experts smiled skeptically two years ago when a U.N. economist. Argentine-born Raul Prebisch, got six Latin American nations to talking about forming a common market. That kind of thing was all right for a well-developed Europe, they said, but backward Latin nations were too accustomed to protecting national industries with high tariff walls. And since a major slice of every government's revenue came from import and export duties, they could hardly be expected to agree on mutual tariff cutbacks. But last week seven Latin nations * brought their common market to life by simultaneously cutting tariffs against one another on 2,500 items of trade.

Actually, Latin American countries are not generally one another's best customers. In the past four years, the 20 nations' trade with one another has slipped between 5% and 10%. Europe bought 30% of Latin American exports before forming its own economic union, and Latin American nations now fear that Common Market nations will give increased preference to goods from the African nations, with which they have close ties. In Uruguay in February 1960, the seven nations signed a treaty to form the Latin American Free Trade Association, and agreed to eliminate all tariffs between members within twelve years at a minimum yearly rate of 8%.

Last September they began a three-month meeting to work out the initial reductions on everything from lemons to razor blades and burlap. When the agreements were averaged out, they amounted to 27%, instead of the treaty-set minimum of 8%. At next August's meeting, the cuts may go deeper. Already two more nations--Ecuador and Colombia--have asked to join, and by August, the Latin American common market should include 86% of Latin America's territory, 81% of its population, more than 70% of its gross product, and 60% of its total trade.

* Argentina, Brazil, Chile, Mexico, Paraguay, Peru and Uruguay.

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