American Trade Pact For Neighbors, Good Economies Make Good Fences

THE BALTIMORE SUN

Anyone who spends more than a few hours in Tijuana, Mexico, will eventually come across a bunch of people waiting by the drainage canal along the U.S. border.

They are among the two million or so who cross the southern border illegally into the United States every year.

More than 97 percent are Mexicans, the victims of an economic catastrophe that has troubled Mexico for more than a decade.

When the time is right, they will race across the empty drainage ditch into a land of unbelievable riches. And in one day they can earn what it would taken them two weeks to earn in Mexico.

Such was the migratory pressure a few years ago that some congressmen suggested building an electrified fence along the 1,400-mile border. It was to be a deadly Berlin Wall, only in reverse.

Now, the trade ministers of Mexico, the United States and Canada are close to building a kinder, gentler fence.

The fence is called the North American Free Trade Agreement. According to its proponents, one of its principal virtues will be to reignite the Mexican economy, creating thousands of new jobs which, in turn, will stem the tide of illegal immigrants.

"We want to export products, not people," says Carlos Salinas de Gortari, Mexico's dynamic 43-year-old president who ended decades of Mexico's anti-Yanqui fear to embrace an agreement with a country that had tended to treat it like furniture.

The agreement may have other benefits as well. The free trade pact will be an important counterweight to the European Community and the Asian economic alliance centered on Japan.

Indeed, it will be the world's largest trading bloc, with 360 million consumers in a $6 trillion market. And it promises to become even larger if, as hoped, it joins the free-trade alliances now forming in the rest of Latin America.

As for the gringos, the Bush administration predicts that by 1995 it will produce 175,000 net domestic jobs directly related to the trade agreement and a million jobs indirectly related to it.

Although Bush campaign spokesmen deny the connection, it is probably no accident that negotiators were pushing to complete trade talks a few days before the Republican Convention, giving a boost to Mr. Bush's dwindling political fortunes.

The agreement would certainly be one of the president's major foreign policy achievements, even though it may prove to be a liability in a campaign in which the sluggish American economy is the central issue and protectionism is its threatening antidote.

Yet the agreement has the potential of being one of the most profound economic developments in this century, eventually uniting the entire Hemisphere in a single trading bloc with its self-sufficient supplies of oil, minerals, agriculture products, lumber and fish.

It could well be the force that finally breaks the protectionist sentiment that has paralyzed the Uruguay Round of trade talks and led to the formation of regional blocs.

But don't break out the Chilean champagne just yet.

The North American Free Trade Agreement still has a long way to go begore it takes effect, even though Gov. Bill Clinton supports the idea and its biggest opponents, Patrick Buchanan and Ross Perot, have bitten the dust.

In terms of the presidential race, the agreement is bound to be popular with conservatives, major corporations and banks -- most of which already have billion dollar investments in Mexico.

But it may be of marginal value -- if not actually damaging -- in the key states of California and Texas, where unemployment is high and concern is growing over the damage already caused by unrestricted industrial growth along the Mexican side of the border.

It also may have some appeal to Mexican-American voters who view the pact as aiding relatives they left behind. Others might contend that it will mean the loss of their marginal jobs to Mexico.

Unfortunately, only the insiders can say with certainty what exactly is in the free trade agreement. It is a thick book that will probably remain shrouded in mystery until a few days after the November presidential elections.

To have the details known at this point would risk a debate that could arouse protectionist sentiments, especially if, as the AFL-CIO predicts, it would mean a net loss of 500,000 jobs in 10 years and that the competition with Mexico will force America to weaken its labor laws and safety standards.

Edward Leamer, professor of management at the University of California at Los Angeles and author of a Mexican-financed critical study of the agreement's effects, says that it will accelerate the current trend of sending low-skilled jobs overseas while creating highly-paid jobs requiring techical skills.

"This will underscore the tragic failure of our education system, where dropouts can't compete against the low wages of someone in Indonesia," he said. "We need to educate our young people. Otherwise they can't get the highly-skilled jobs and will have nothing to do."

Environmental groups have also raised the fear that the pact will permit American business to run roughshod over Mexico's weakly enforced environmental laws. Some have suggested "a green tax" to cleanse the polluted border.

With the full text not public, the most likely scenario is that general outline will be presented to the public; President Bush will notify Congress of his intent to sign the mystery document within 90 calendar days and then campaign as Mr. Free Trade, arguing that 25 percent of the growth between 1986 and 1990 was due to exports.

If he is re-elected, the president will then sign the measure, make it public and begin negotiations with Congress over the implementing legislation.

This last phase may prove to be extremely tough since the Democrats are expected to add a host of qualifying bits of legislation to address the border cleanup, job retraining for displaced workers and other concerns.

Once the implementing legislation is finished, it will be sent to Congress, which will have 90 session days to approve or reject it without making any amendments. The final vote would be expected in late February or early March.

Another scenario is that Mr. Clinton will demand that Mr. Bush make the document public before the election.

Mr. Clinton has pronounced himself in favor of a free trade agreement with Mexico providing it protects "workers, farmers and the environment on both sides of the border."

Gene Sperling, Mr. Clinton's economic adviser, says the candidate cannot go further in his endorsement until he has seen the actual text.

"The Republicans have accused us of waffling on the agreement but they are asking us to buy a pig in the poke. Let's see what the agreement says," said a senior Clinton campaign official. "This is one of the most important agreements in our trade relations -- why can't the American public know what's in it?"

Actually the Democrats are probably just as well informed as President Bush about the contents of the document. Representative Richard A. Gephardt, the House Majority leader, HTC and other top Democrats in Congress supposedly have been briefed every step of the way.

"The problem most politicians have is that they favor the agreement but don't want to get caught in a protectionist whirlwind. It's best not to stir the pot," said a Democratic congressional aide.

One of the Mexicans' biggest fears is that the agreement will become a secondary issue if Mr. Clinton is elected president.

"We fear we will lose the momentum and that Clinton will become distracted by American domestic issues," said a senior official of the ruling Institutional Revolutionary Party in a telehone interview from Mexico City.

If there is a substantial delay, it will put President Salinas in a quandary and possibly jeopardize the keystone of his pro-American economic policy.

Under the Mexican political system, Mr. Salinas will name his successor in September 1993, thus paving the way for the successor's election as president in August 1994. But there is no guarantee the new all-powerful president won't try to back out of the trade deal or change it in some substanital way.

The only sure way for Mr. Salinas to prevent such a turnabout is for the trade agreement to be approved by all three countries no later than the summer of 1993.

Another cloud on the horizon is further north, where Canadian Prime Minister Brian Mulroney is preoccupied with a major constitutional crisis over Quebec and where his Conservative Party is deeply unpopular for backing a free trade agreement with the United States.

Should Mr. Mulroney fail to win in elections likely to be held next spring, it would open the door to two major opposition parties that are against the Mexican agreement.

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