Liberty at core of Denver parley

Leaders of business and government from 34 Western Hemisphere nations will assemble in Denver this week for a four-day conference to discuss opportunities for trade expansion and economic integration in the Western Hemisphere. The meeting agenda is a fresh example of the dramatic changes that characterize the new world order.

In the old days (before 1989), when leaders of the hemisphere got together, the dominant themes were the Cold War, Cuba, domestic insurgencies, repression, the lack of democracy, statist economies, spiraling inflation, capital flight, and the debt crisis.

Today's climate is much different. Liberalization toward free and open markets, free flow of capital free movement of goods and people and privatization are official policies in most Latin American countries, where all but one (Cuba) now has a freely elected democratic leader.

Most Latin American governments have also adopted free trade policies. Result: Trade is booming. Tariffs are coming down, and non-tariff barriers are being addressed -- in part, through multilateral institutions, the newest of which is NAFTA.

NAFTA joins North America's 380 million people in a trade bloc that is the world's largest, youngest, richest, most multicultural and the most well endowed with natural resources, especially energy. NAFTA, with a user-friendly accession clause, can be easily expanded -- and will soon add Chile.

Other trade pacts dot the hemisphere and are reducing trade barriers, including MERCOSUR, nearly 200 million people in Brazil, Argentina, Paraguay and Uruguay, and the Andean Pact, nearly 100 million people in Venezuela, Colombia, Ecuador, Bolivia and Peru.

However, despite these dramatic changes, all is not well in the Western Hemisphere. There are still fundamental barriers to economic opportunity and political freedom, as shown by "the crisis" in Mexico that began with last year's peso devaluation.

Too many governments in the hemisphere still seek to own or control "strategic sectors" of their economies, like energy, banking, telecommunications and railroads. In fact, fierce competition is the way to create new efficiencies and innovation.

Some government-run monopolies were privatized simply to raise money or in a manner that merely created private sector-run monopolies. They stifle growth as much as public ones. Unstable currencies and capital markets coupled with an underdeveloped financial services sector undermine the ability of entrepreneurs and small businesses to grow.

In short, while external barriers to trade and commerce are being reduced, Latin America's entrepreneurial enterprises still face monumental barriers at home -- including government paternalism, overregulation, corruption, overreaching bureaucracies, obscure and contradictory legal rules and procedures, and high taxation that chokes off the very engines of wealth creation that are the key to the future.

So expanding trade is not enough. All the nations of the Western Hemisphere, including the U.S., must focus on ways and means to limit government, eliminate corruption and dramatically reform taxes and the regulatory process. The result -- unleashing the region's entrepreneurial impulses, increasing wealth and expanding freedom -- will be worth the effort.