IN A WAY that no president has done for many years, Mr. Bush is beginning to elevate the United States' interest in Latin America and its prosperity. Through his offer this week of free trade agreements and debt reduction, he gives the Latin and Caribbean countries a real chance for faster growth with, incidentally, an explicit emphasis on environmental protection. His ideas will go on the agenda of the economic summit meeting of the seven big industrial democracies, about to be held in Houston, where he will press the other six to give the Latins the same kinds of concessions that they are about to extend to Eastern Europe.

In the 1980s American concern for the countries to the south was obsessively focused on Nicaragua, to the exclusion of other and larger subjects. Americans provided help to the Latins in managing their enormous foreign debts, but most of that help was at a purely technical level, and a bit too much of it was left to the commercial banks that are the creditors. Now Mr. Bush is asserting a much broader American commitment to a region where poverty is greater than it was a decade ago.

For the first time, Mr. Bush is talking about reductions in the debts that Latin and Caribbean countries owe not to banks but directly to the United States government. There was something slightly slippery about the previous position, in which the administration leaned on the banks to write off some of their loans while refusing to discuss its own. While the amounts will not be large compared to the total debt, reductions here can be highly influential -- particularly because they will be contingent on economic reforms that in turn will attract private investment from abroad. That is happening now in Mexico. The Mexicans deserve much of the credit for this turn in American policy, for they are demonstrating that these good ideas will work.

But the most powerful agent for change here is Mr. Bush's proffer of free-trade zones, opening American markets to Latins who open theirs to this country. That's a prospect with immense social and political implications. In the past the Latins have generally run closed economies, protecting monopolies that generate great wealth for a few people at the top and great poverty for the rest. Grossly unfair distribution of income undermines democracy and helps explain the frequent collapses into rule by strong men and military juntas. Opening up these economies will be bad for the monopolies but very good for the middle class and the people trying to climb into it. If Mr. Bush can draw Latin America into a great zone of open and unrestricted trading, he will bring new strength to more than just the development of their economies.