Agreement on Free Trade Edges Closer

THE goal of a comprehensive North American free-trade community embracing Canada, Mexico, and the United States moved slightly closer this past week here, as the three nations held their first direct talks in the US at the ministerial level.Still, as noted by US Trade Representative Carla Hills, the Seattle round, while "very important," is only an early part of what will be a difficult negotiating process in putting together a "North American Free Trade Agreement." Trade officials on 17 committees representing the three governments are now seeking to identify the precise details that could someday create the world's largest combined trading zone - a community larger in population and wealth than the combined nations of the European Community, who are merging their overall economic systems next year. Although far less sweeping than what is happening in Europe - where actual economic integration is underway - a North American free-trade agreement would be historically and economically important, says Robert Aliber, a professor of international trade and finance with the University of Chicago's graduate school of business. At best, the elimination of continental trade barriers might help generate jobs and promote growth, although, Professor Aliber notes, there could be some layoffs of workers as factories shifted production elsewhere, such as to Mexico. "The agreement would be far more important to Mexico," in terms of generating growth, "than to the US and Canada," given their far larger economies, he says. "The US gains would be largely political," Aliber says, since the very idea of Washington sharing a free-trade policy with Mexico is already winning favor in many parts of Latin America. The trilateral talks earlier this week here didn't produce any major surprises. No draft accord was reached, although few trade experts had anticipated one at this early stage. Delegates for the three sides accepted the reports of their working committees that are exploring what Ms. Hills calls the main "overarching" issues - such as removing trade barriers, protection of intellectual rights, trade in services, investments, and trade in goods. The first meeting was held in Toronto in mid-June. The Seattle meeting thus comes two months later. Between now and Oct. 26, when delegates will meet in Zacatecas, Mexico, a series of meetings will be held throughout the US to monitor public concerns. Indeed, if there was any unexpected element here, it was perhaps in the intensity of the opposition; some of that criticism spilled out onto the streets, in small public protests. Labor, environmental, and social-action groups say that a free-trade agreement might drive high-paid industrial jobs to low- wage Mexico, reduce North American workers' health standards, and increase continental pollution. Somewhat similar concerns were voiced in Canada prior to adoption of the US-Canada free-trade pact that began implementation on Jan. 1, 1989. "There's no question that negotiators will eventually put together a [free-trade agreement]," says Rick Bender, executive secretary of the King County Labor Council, representing union members in the Greater-Seattle area. But, says Mr. Bender, "We've [i.e., organized labor] got a shot" at either blocking congressional approval of such an agreement or at least helping to determine its final content. President Bush wants to have a pact drawn up by the end of 1991 and placed before Congress for approval next year. Assuming that an agreement is eventually reached, the three nations of North America would create a trading bloc of 365 million people and an annual economic output of $6 trillion. Opponents particularly dislike the "fast-track" process agreed to by Congress earlier this year. Under the approach (which was also used to win approval for the US-Canada trade pact), the Bush administration can negotiate and complete an agreement with Mexico and Canada and then submit it to Congress with a ban on amendments.