COLUMN LEFT : Sour Notes in Free Trade With Mexico : Harmonize policies to protect U.S. workers and consumers.

Seduced by our own free-market propaganda, the United States risks negotiating a free-trade agreement with Mexico that undermines our environmental and labor standards. Our domestic market is not “free”: We increase the minimum wage, knowing it will cost some jobs; we restrict industrial emissions, knowing some firms may go under. As President Bush candidly told the Polish Parliament last year, “Even in an economy as productive as ours, we still debate how to regulate the private sector without discouraging innovation, how to balance workers’ needs and industrial efficiency.”

A free-trade agreement with Mexico could sabotage our domestic-policy balance. We negotiated free trade with Canada, but its wages and environmental controls are similar to our own. Mexico’s lower minimum standards invite firms to leave the United States, mainly to escape domestic regulation.

This is already happening as the United States and Mexico gradually drop trade barriers. For example:

--Los Angeles furniture manufacturers employed 63,000 workers until 1988, when the South Coast Air Quality Management District prohibited emissions of paint-solvent hydrocarbons. Forty manufacturers then moved to Mexico. With no requirement to install spray chambers, Tijuana furniture plants produce smog--some of which, in a “free-trade” irony, drifts back into California.

--The Salton Sea contains 100 industrial chemicals traceable to factories in Mexico, which are beyond the reach of the Environmental Protection Agency.

--Produce imported from Mexico contains residues of DDT, banned on U.S. farms. A free-trade agreement that liberalizes agricultural trade without regulating Mexican pesticide use would undo years of environmental reform.

One cause of hunger, homelessness and illness among America’s working poor has been declining wages in manufacturing industries, partly provoked by threats of U.S. firms to move to Mexico. Most U.S. companies that move to Mexico do so because of low wages. Hourly Mexican wages of 60 cents near the border draw garment and electronics firms escaping California’s $4.25 minimum.

If a free-trade agreement left Mexican labor standards unchanged, its workers would remain impoverished (their real income fell 50% in the 1980s), and the downward pressure on American wages would continue.

To escape these dilemmas, “harmonization”--requiring that imports from Mexico be made with minimum labor and environmental standards equivalent to our own--should be our negotiating goal. If Mexico chose to exempt its domestic production, it could do so.

Would harmonization remove Mexico’s reason for seeking the agreement--to lure U.S. investment? It would slow manufacturers’ rush to exploit Mexico’s workers and environment, but it would not deter those seeking legitimate “comparative advantages”--the availability, skills and diligence of Mexican workers; access to inexpensive land, natural resources and the purchasing potential of Mexico’s 80 million consumers. Some free-traders claim that unless we accept the substandard wages in Mexico, firms will move to Asia instead. This is exaggerated; among Mexico’s attractions are proximity to U.S. markets and low transport costs.

Agreements encouraging U.S. manufacturers to roam the world for low wages are bad policy. Our fiercest competition comes from the likes of Germany and Japan. Undistracted by low-wage temptations, these nations focus on product innovation, technological advance and work-force education. Mexico’s low-wage option will dilute incentives for American manufacturers to improve productivity.

Finally, a free-trade agreement should include extensive debt relief to offset harmonization’s negative effects on Mexico. Debt relief would expand Mexico’s economy without undercutting the wages and benefits of its workers or those of U.S. workers. Real Mexican incomes could rise to precrisis levels, moving toward harmonization by market mechanisms. New funds for domestic investment could make Mexico less reliant on runaway American shops. And debt relief would increase Mexico’s appetite for American imports, creating the trans-national prosperity that free trade purports to stimulate. Mexico’s annual obligation to set aside $7 billion for debt service costs 150,000 jobs in America’s export industries.

With harmonization and debt relief in the package, all Americans and Mexicans could welcome free trade.