WASHINGTON -- Key Democratic senators warned the Clinton administration yesterday that a new round of negotiations with Mexico and Canada, opening here today, could decide the fate of the North American Free Trade Agreement (NAFTA).
Unless strong new guarantees on environmental and labor law enforcement are obtained from Mexico, the legislators said they would oppose the plan to create the world's largest free-trade zone.
In the negotiations, U.S. Trade Representative Mickey Kantor will seek to meet their demands for financial penalties on persistent Mexican violators without imposing the sort of outside interference that would offend Mexico's keen sense of national sovereignty. Canada, less a target of U.S. concern, will also participate in the talks.
Mr. Kantor, who listened to the blunt congressional warnings at a hearing of the Senate Environment and Public Works Committee, acknowledged that the importance of the new talks, saying: "We are prepared -- if we don't get good, tough, supplemental agreements -- not to bring the NAFTA to this Congress."
But he also said: "This doesn't have to be a lose-lose situation. It can be win-win . . . I am skeptically optimistic." Careful not to show his hand on the eve of negotiations, he avoided any direct commitment to seeking punitive trade sanctions but laid down three principles that will guide the U.S. team in crafting side-agreements on the environment and labor:
* The new supplemental agreements must "have real teeth" and contain serious commitments.
* They "must break new ground in finding ways to raise worker standards and environmental protection."
* The overall goal must be to raise prosperity throughout North America.
"We want to come back with something meaningful. Something that is meaningless is a waste of your time and something the president will not agree to," said Mr. Kantor.
The free trade agreement, masterminded by President George Bush and adopted with reservations by President Clinton, will create a $6 trillion tariff-free market of 380 million consumers over the next 15 years.
Critics say the agreement will cost the U.S. jobs and worsen cross-border pollution as more U.S. factories head south to take advantage of Mexico's lower pay, safety and environmental standards. It could also give Mexican companies, able to avoid the regulatory restraints and costs faced by U.S. companies, an unfair competitive edge, the critics say.
Supporters contend that it will boost the entire North American economy and lead to a net increase in U.S. jobs after initial short-term dislocation in some industries.
One after another, Democratic members of the committee put Mr. Kantor on notice yesterday that their support was conditioned on his ability to tighten Mexico's environmental and labor standards and guarantee their enforcement in a country known for its administrative laxity and judicial corruption.
Sen. Max Baucus, chairman of the committee and a major force on international trade in the Senate, said enforcement was the key to his support for the agreement. He has proposed that the tripartite North American Commission on the Environment, created under NAFTA, should be able to investigate persistent violations and recommend sanctions.
"If we don't address environmental enforcement, we will have an incomplete agreement, an agreement that I, for one, will not support," said Senator Baucus. "No enforcement. No NAFTA."
The most outspoken opposition came from Sen. Howard M. Metzenbaum, the Ohio liberal Democrat who fears the loss of jobs from his state's auto plants to Mexico.
"I'm still deeply, deeply troubled by this entire enterprise," he said. "Unless we are diligent and negotiate tough -- and I mean really tough -- side-agreements, this trade agreement will cause widespread job losses in this country. . . . Without significant change, NAFTA will do more harm than good."
Mexican President Carlos Salinas de Gortari has outlined three principles that will guide his negotiators at the talks: Any side agreements have to make economic sense; they should not contradict the overall text of NAFTA; and they should not impinge on Mexican sovereignty.
Apparently seeking to avoid a confrontation on sovereignty, Mr. Kantor indicated yesterday he would press for stricter Mexican enforcement of that country's own laws. As a model he will use the principles already outlined in NAFTA for the domestic enforcement by Mexico of intellectual property rights. These include administrative and judicial measures.
The negotiators also will discuss how to pay for the environmental clean-up of the U.S.-Mexican border, estimated to cost $5 billion to $12 billion. Mexico has committed $450 million to the cleanup, and senators yesterday wanted to know where the Clinton administration planned to get the balance of the funding.