Free Trade Pact Is Shaky

Tough US demands dim trade prospects across borders

AS American and Mexican negotiators begin formulating "side agreements" to the North American Free Trade Agreement (NAFTA), the weight of political opinion in Washington is quite pessimistic about the agreement's chances for congressional approval.

That sentiment on NAFTA in the House of Representatives is currently at least 2 to 1 against shows that the Clinton administration's renewed support for free trade is only the initial down payment on a very expensive political tab. Will President Clinton pay the price?

Roughly three-fourths of newly elected members of the House and Senate explicitly opposed NAFTA in their campaigns. In a series of surprisingly candid interviews, United States Trade Representative Mickey Kantorconcedes that NAFTA is in trouble politically. But he also asserts that he can satisfy the objections of members of Congress.

Mr. Kantor's optimism and seeming willingness to commit publicly to deliver on innumerable promises may be part of the larger problem facing NAFTA.

When former Trade Representative Carla Hills began the long and difficult NAFTA process, one of the first rules she established was that the negotiations would occur in private. She correctly acknowledged that the talks could not succeed if the particulars of the US agenda were discussed with members of Congress and the press before they were presented to the Mexican and Canadian representatives at the bargaining table.

Kantor, on the other hand, seems happy to discuss details of the three-sided agreements in appearances before Congress and with the press, apparently as part of a larger strategy to manage the process through the media. In general, he has conducted one of the most frank and open discussions of US-Mexico relations given by an American official in many years. But his candor troubles always-reticent Mexican government officials and NAFTA supporters, who rightly wonder what Kantor really has in mind if he is

so willing to discuss the US shopping list for the side agreements.

Ms. Hills was charged with negotiating an agreement, which would then be sold to Congress by President Bush.

Kantor's assignment is much broader and arguably far more difficult, if not impossible. In practical terms, he must hold difficult talks with Mexico and Canada while conducting detailed negotiations with members of Congress, environmental groups, labor organizations, and hundreds of state and local entities.

The scale of the task facing former lawyer/lobbyist Kantor is illustrated by his calls for basic changes in Mexican law and legal procedures. A number of members of Congress have demanded major alterations in Mexican legal practices in order to ensure that both NAFTA and side agreement provisions are enforceable.

Significantly, Kantor has already backed away from an earlier pledge to give the trilateral commissions envisioned in the trade agreement supra-national authority to resolve disputes and enforce rules. He apparently understands that the issue of how Mexico's legal system works (or fails to work) inevitably leads to political questions that cannot be answered within the narrow confines of NAFTA.

But without the fundamental changes that House Leader Richard Gephardt (D) of Missouri, other members of Congress, and even Kantor himself have called for, there can be no effective enforcement of any NAFTA provisions that require specific action on the Mexican side of the border. If these concerns are not dealt with, astute observers believe, NAFTA is dead.

THE reasons behind such pessimism are more complex than the question of simply enforcing labor and environmental rules. One of the more revealing developments in the NAFTA process has been the emergence of the term "upward harmonization," which essentially means that Mexico must change its laws and regulations in order to raise its internal regulatory environment to the same level as that prevailing in Canada and the US.

The term "upward harmonization" is pejorative and suggests, some say correctly, that Mexican regulatory standards are inadequate, a fact which is causing much friction inside the Mexican government. Most observers, even Mexicans, would agree that our southern neighbor needs to make significant changes in its legal system, yet the tone of the American demands is condescending and even inflammatory. The drive for "upward harmonization" originates with the environmental movement, which is unlikely to be mol lified by pretended "solutions" to Mexico's basically dysfunctional legal system.

The fact is that Kantor has promised to include in the side agreements basic legal and political changes inside Mexico that he simply cannot deliver. "We are going to insist that we have some changes in the Mexican judicial system to make sure people have access to that system, that due process is followed, and that administrative decisions can be appealed in court," Kantor has said. No American can fulfill this promise, say sources in Mexico.

One Mexican politician with close ties to the government of President Carlos Salinas de Gortari says Kantor "is promising what he cannot deliver, what no one can deliver. How can Kantor publicly tell members of Congress that he will produce changes in Mexican law when we cannot possibly begin such a process now? The [Mexican] president's term is effectively over now, and we have elections next year. Thus, I cannot imagine when Salinas could make the legal changes that Kantor requires, even if he were inc lined to do so."

Kantor will not be able to obtain and/or demonstrate the changes necessary to satisfy Congressional critics, and the agreement will either be shunted aside or voted down the House, Senate, or both. Aides in the Clinton White House confess their worry that the president may not be willing or able to see NAFTA through Congress.

By September, when supporters of NAFTA hope to see the agreement moving toward a positive vote in Congress, Mr. Clinton may be on the defensive politically and embroiled in a many-sided legislative fight. In these circumstances, the White House might prefer to see the trade agreement go down to defeat rather than spend dwindling political capital and presidential popularity to attempt to rescue it.

Kantor and other members of the Clinton administration have said repeatedly that they will walk away from NAFTA unless the necessary changes are made. Putting aside their reassuring rhetoric about supporting free trade with Mexico, perhaps letting NAFTA gradually fail was always Clinton's intention.