WASHINGTON -- House Majority Leader Richard A. Gephardt declared his opposition to the North American Free Trade Agreement yesterday, delivering a major blow to the administration's chances of getting the controversial treaty through Congress later this year.
President Clinton insisted that Mr. Gephardt's opposition does not doom the treaty.
"It doesn't help, but I don't think it's fatal," said the president, who opened his campaign for congressional approval of forming the world's largest free trade zone, made up of the United States, Canada and Mexico, at a White House ceremony last week.
Mr. Gephardt, who supported the administration budget package earlier this year, said he would vote against the treaty because it poses a threat to the jobs, standard of living and environment in the United States.
"Under this agreement we will not be doing the best for our people -- we will reduce our abundance," he said. "And, drawn down by the lower wages in Mexico, our standard of living will continue to stagnate or decline."
To blunt that argument, Labor Secretary Robert B. Reich said the administration will propose a major overhaul of unemployment compensation to help any worker whose job is lost because of NAFTA. Mr. Reich told the Senate Finance Committee yesterday that the changes would emphasize retraining and job counseling, rather than simply providing income replacement for a few months.
But worker retraining may not be enough to satisfy the growing chorus of congressional critics.
Mr. Gephardt, the second-most-senior Democrat in the House, wields considerable political influence on Capitol Hill on trade issues, and observers credit him with being able to swing as many as 20 undecided votes against the agreement. In a vote as tight as the NAFTA balloting is shaping up to be, this could be a decisive margin.
"I wouldn't say it's dead on arrival," said Gary C. Hufbauer, a trade analyst with the Institute for International Economics. "But it's on life support at this point. This really makes it difficult for the president to get it through."
With David E. Bonior, the majority whip, leading the Democratic opposition to the treaty, Mr. Gephardt's decision means that two of the party's top three officers in the House are against Mr. Clinton on NAFTA.
House Speaker Thomas S. Foley, who supports the treaty, said that Mr. Gephardt's concerns were "valid" and that they simply had "an honest disagreement." He said members would base their votes not on trying "to please the leadership" but on what they consider the best interests of their constituents.
Mr. Gephardt's power rests on his reputation for moderate and considered reasoning, and yesterday he took almost an hour at the National Press Club to explain his decision, which all but ended an intensive effort by the Clinton administration to overcome his misgivings.
The administration is willing to allow the treaty's implementing legislation to be used to address the concerns of wavering members over the future of the citrus industry in Florida or the sugar industry in Louisiana, but it was unable to accommodate Mr. Gephardt's demands for a radical revision of the treaty.
William Daley, the administration's NAFTA "czar" charged with ushering the trade pact through a balky Congress, shrugged off Mr. Gephardt's opposition. "It signifies one vote from Missouri is against you," he said. "This is just beginning."
Mr. Gephardt was careful yesterday to voice his support for Mr. Clinton, pledging to be "by his side" on health care and education reform, Russian aid and other issues.
"On this issue, as it stands, however, I must part company," he said.
"I will participate actively in this debate."
He said he opposed the treaty on these grounds:
* Economic. NAFTA would "exacerbate our worst economic problems: disappearing jobs and declining incomes," Mr. Gephardt said. "A conscious decision has been made in Mexico to keep wages artificially low to continue to attract investment. That hurts their people. It also hurts our people by attracting our jobs to Mexico and putting downward pressure on our wages and by preventing Mexicans from becoming good consumers of our products."
* Environmental. The treaty might bring "marginal" improvement to the polluted U.S.-Mexican border region, but there is no funding mechanism for paying for the cleanup, Mr. Gephardt said. Mexico has failed to enforce its environmental laws, and U.S. companies have moved there to take advantage of the lower standards, he said.
* Financial. The federal government would lose $3 billion from tariff revenues once all trade barriers with Mexico are dismantled under the agreement, and this would have to be recovered through higher taxes or spending cuts. The administration also would have to fund the border cleanup and pay for the retraining of displaced workers. Mr. Gephardt estimated that the total cost of NAFTA would be $30 billion to $40 billion over the next ten years.