For Bush: No Mexican Standoff


When President Bush goes to Houston for the Republican National Convention next month, he hopes to have in hand a new North American Free Trade Agreement embracing the 370 million people of the United States, Canada and Mexico. Trade ministers for the three nations are expected to reach the handshake stage tomorrow. Initialing at the presidential level could come soon thereafter.

This would be a major foreign policy achievement for Mr. Bush, who along with Mexican President Carlos Salinas de Gortari has made formation of the world's largest regional trading bloc a top priority. As an added bonanza for the GOP, the trade agreement splits the Democrats, with presidential nominee Bill Clinton a cautious supporter and the strong protectionist element in his party (including organized labor) vigorously opposed.

In political terms, NAFTA is popular all along the U.S. southern tier from Florida to California, including Mr. Bush's Texas, his hand-picked site for the GOP convention. The trade agreement resonates less well in Rust Belt states; just a few days ago, Smith Corona announced it was closing its last U.S. typewriter assembly plant in New York state and moving 775 jobs to low-wage Mexico.

As in any competitive transaction, there will be winners and losers if the North American Free Trade Agreement is ratified and goes into operation next year. While it gets a mixed reception in this country and is regarded with great suspicion in Canada, it is seen in Mexico as the liberating road from Third World to First World status. This vision, astutely promoted by President Salinas, has broken down the insular, protectionist mentality that has kept Mexico poor and a source of trouble.

In seeking to move tariffs down to zero, reduce restrictions on investment and protect patent and trademark rights, NAFTA is in the best tradition of the free trade movement that has energized U.S. policy since the New Deal. But it is not without its down side and its dangers. If the agreement helps divide the world into rival blocs -- North America versus the European Community versus a Japan-led Pacific Rim -- it could lead to trade wars and undermine hopes for a new, worldwide General Agreement on Tariffs and Trade (GATT).

Were Congress to judge NAFTA against classic free trade standards, the agreement would pass muster even if it contains elements of managed trade. Unfortunately, especially in a recession, the proposed pact is more likely to come under the hostile scrutiny of legislators with parochial and protectionist views. So a President Bush or a President Clinton will have his work cut out for him in seeking ratification next year.

No country in the world has greater social and political impact on the United States than Mexico. If this impact is to be beneficial over the long run, steady progress must be made to eliminate the huge, unsettling economic disparities north and south of the Rio Grande. On this ground alone, NAFTA deserves support.

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