Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, October 19, 1995                   TAG: 9510190003
SECTION: EDITORIAL                    PAGE: A-10   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

FREE TRADE

The U.S. economy's success increasingly depends on exports. For a much longer time, though, it has depended on mass consumption of household goods. In decades when new households form and birth rates swell, people buy homes, cars, appliances and other things for their young families.

That's not what the next decade promises. Baby Boomers, now middle aged, have more siblings than children. The cohort of first-time buyers of durable goods is shrinking.

What has this to do with Latin America? Well, the above analysis implies rising demand in the United States for health, retirement and financial industries serving the aging boomers - but excess capacity in the production of durable goods. For manufacturers, the likely outlook is for shrinkage, slowdown, unemployment.

That's the outlook, rather, if we fail to take full advantage of new markets in the Third World, especially Latin America. There, in the next decade, hundreds of millions of young adult consumers will be entering their household-forming years and becoming first-time buyers of durable goods. Demography there, as here, is economic destiny.

As Mexico's economy continues to improve, protectionists have no case in arguing that recent problems with the peso discredited NAFTA. Aside from helping to consolidate economic and political liberalization elsewhere in Latin America, expanding free trade would mean more markets for U.S. businesses. That would mean more and better jobs for U.S. citizens.