Warning on trade issued Democrats seek guarantees in pact


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 will 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 against 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, also will 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 TTC avoided any direct commitment to seeking punitive trade sanctions but laid down three principles that he said 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," Mr. Kantor said. "Something that is meaningless is a waste of your time and something the president will not agree to."

The free trade agreement, masterminded by President George Bush and adopted with reservations by President Clinton, would create a $6 trillion tariff-free market of 380 million consumers over the next 15 years.

Critics say the agreement would cost the United States jobs and worsen cross-border pollution as more U.S. factories headed south to take advantage of Mexico's lower pay and less stringent 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 say the agreement would 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. The Montana Democrat has proposed that the tripartite North American Commission on the Environment, created under NAFTA, should be able to investigate persistent violations and recommend sanctions.

The most outspoken opposition came from Sen. Howard M. Metzenbaum, an Ohio Democrat who fears that jobs in his state's auto plants would be lost to Mexico.

"I'm still deeply, deeply troubled by this entire enterprise," he said.

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