To avert disaster, Clinton needs a new NAFTA now

IT'S time for a different NAFTA. To avert disaster, the president should withdraw the proposed agreement before Wednesday's vote, go back to the negotiating table with the Mexicans and do what it takes to enlist sufficient support from his own party.

With the White House still at least 25 votes short, Mr. Clinton's current up-or-down strategy on NAFTA portends a donnybrook for both the president and NAFTA's congressional opponents. If NAFTA is defeated, Mr. Clinton and his party will suffer a self-inflicted wound -- and that doesn't have to happen.


For weeks, the administration has insisted that NAFTA is a test of Mr. Clinton's presidency; that if this version goes down, no fallback deal is possible and Mexico will pursue other options.

NAFTA has also been elevated into a test of U.S. diplomatic credibility, of U.S. hemispheric relations and of the future of global trade. These claims are inflated, but the administration's own tactics have now created a self-fulfilling prophesy.


The morning after a NAFTA loss, the press will pronounce a gravely wounded presidency and a turn toward isolationism. Foreign leaders will question Mr. Clinton's ability to deliver on commitments.

Ross Perot will be several feet taller. NAFTA supporters will be spared the need to defend its economic dislocations. The GOP, which provides most of Mr. Clinton's support for the trade deal, will have the bipartisan high road and a political free ride.

Congressional Democrats, however, will be excoriated for abandoning their president and turning their backs on "free trade." Both the White House and the press will demonize the labor movement -- Mr. Clinton's staunchest allies.

Some might conclude from this dire scenario that NAFTA's skeptics in Congress should swallow hard and support their president. But I conclude from Mr. Clinton's missing votes that this trade deal stands revealed as dubious economics and worse politics.

My recent conversations with several senior administration officials, House Democrats and labor leaders confirm the following: As late as August, a very different NAFTA scenario was under active consideration.

Rather than embracing the NAFTA negotiated by the Bush administration, President Clinton could have put his own stamp on it. A new NAFTA might have strengthened Mexican labor rights and phased in reductions of trade barriers, based not on the calendar but on progress in raising Mexican wages. It could have added a special border tariff earmarked to finance infrastructure and economic development in Mexico, as well as worker adjustment assistance in the United States.

This version of NAFTA would have had -- and could still have -- the support of better than half the labor movement, of House Majority Leader Richard Gephardt and at least 50 more House Democrats.

Though it has not been reported, labor leaders in confidential discussions last summer hotly debated whether to support an improved NAFTA or to oppose any NAFTA. The leaders of key industrial unions resolved to support Mr. Clinton if he could improve the deal.


This strategy, now sidelined, has two immense virtues. Politically, it cements Mr. Clinton's coalition rather than splintering it; a different NAFTA would communicate practical concern for wage-earners. Economically, it would define a U.S.-Mexico development alliance based on Democratic principles of economic security and rising wages rather than Republican principles of simple free markets.

White House aides confirm that this scenario was discussed. However, the White House rejected this path in favor of a more conservative NAFTA, heavily dependent on free-market ideology and Republican votes in the House and at odds with Mr. Clinton's most loyal congressional supporters.

White House strategists gambled that in the end, Mr. Gephardt and just enough House Democrats would back their president. Advisers associated with the center-right Democratic Leadership Council also saw in this strategy a nice way of courting business and weakening organized labor.

Unfortunately, they miscalculated. When trade negotiator Mickey Kantor returned from Mexico last August with trivial side deals on labor and the environment, Mr. Gephardt balked. Almost immediately, Mexican President Salinas offered a "unilateral" pledge to raise Mexican minimum wages. This, however, covers only 12 percent of Mexican workers. And the Salinas pledge backfired by convincing Mr. Gephardt that Mr. Salinas was indeed prepared to offer more than Mr. Kantor had sought.

Now the administration is making a final, fatal miscalculation: If we just keep raising the stakes, we'll get the votes. But the votes aren't there, and a do-or-die strategy compels the White House to insist that no fallback deal is possible.

In truth, opponents in Congress and key union leaders are appalled at the impending political calamity and eager to find a formula they can support. They would flock to a modified NAFTA instead of producing a lose-lose outcome for both the president and his usual congressional allies, not to mention the nation. A different NAFTA would make winners of all. Although the administration denies it, the history of U.S.-Mexico relations suggests that if this NAFTA cannot be passed, President Salinas would gamely return to the negotiating table to see what can be salvaged.


It would be far better to seek a different NAFTA now, with a different politics and a different economics, rather than trying to recoup after a humiliating and disabling defeat.

Robert Kuttner writes a column on economic matters.