Pact Nothing to Fear, <i> Maquiladoras</i> Are Told : Trade: U.S.-Mexico free trade agreement has prompted worries even though it is two years away.

Mexican President Carlos Salinas de Gortari has assured maquiladora industry officials that a U.S.-Mexico free trade agreement will in no way lessen the importance of maquiladoras to Mexico’s economy or the favored treatment they receive there.

In a meeting last month in Mexico City, Salinas responded to fears expressed by officials of the National Assn. of Maquiladoras, a Mexican trade group, that a free trade agreement could somehow circumvent maquiladoras or make the plants less economically attractive.

Over the past two years, the Mexican government has greatly expedited the permit approval process in a bid to attract increasing numbers of foreign manufacturers. The tactic has been effective with Mexico’s 2,400 maquiladoras , which employ more than 400,000 people and generate $3.6 billion in wages, rents and other dollar payments, making it the second-largest source of foreign exchange.

Salinas told the maquiladora operators that the plants could assume a broader role and the government’s support become even stronger once the free trade agreement is in place, said Tony Ramirez, a member of the maquiladora association’s board of directors and vice president of Made in Mexico, a Chula Vista-based maquiladora consulting firm.

The plants could become the preferred “instrument” that U.S manufacturers will use to enter the Mexican market because the maquiladoras’ permit process is already well-oiled and in place, said Jose Luis Ascolani, the Tijuana chief of the federal Secretary of Commerce and Industrial Development.

Maquiladoras, the in-bond plants where foreign manufacturers have goods assembled with low-cost Mexican labor, are used mainly for the purpose of producing goods that are brought back for sale in U.S. markets. But the plants can sell between 20% and 50% of their goods in Mexico under certain circumstances, an attractive selling point for U.S. or Canadian companies looking to crack the Mexican market under the trade agreement umbrella.

Ascolani said the maquiladora industry has significant structural advantages to other forms of Mexican business ventures, including tax benefits and favorable customs treatment. Maquiladora operators do not pay taxes on capital equipment brought to Mexico, and pay Mexican income taxes only on the value added--typically just labor costs--in Mexico.

The question of what effect a U.S.-Mexico free trade agreement will have on maquiladoras is typical of the interest the accord is generating, despite the fact that an agreement is still two years away.

With increasing frequency, seminars and speeches are held in San Diego featuring government and business officials from both sides of the border who try to lay out the possible scenarios. In separate talks Feb. 7, Baja California Governor Ernesto Ruffo Appel and Don Abelson from the Office of the U.S. Trade Representative in Washington each gave their views to attentive crowds.

No matter that there was a huge element of guesswork in their discussions since the practical nuts and bolts of the accord have yet to be hammered out. Local businessmen such as W. F. Hay of San Diego seemed eager for whatever scraps of information they could get, and optimistic that, whatever its final form, the pact will be a boon to the local economy.

“We have high hopes that this agreement will be the best thing that could ever happen to us,” said Hay, president of San Diego Traffic Services, a transportation broker that manages freight deliveries to and from Mexico. Hay attended Abelson’s talk. “It’s a win-win-win situation for everybody.”

Ruffo Appel said in his talk that he is generally supportive of the accord but fears that some Mexican manufacturers are worried that the loss of the government’s protective tariffs will cause severe damage to some Mexican industries and jobs.

Losers in the United States could include retail operations in border cities that attract Mexican shoppers and which would suffer if U.S. chains are given the freedom to open outlets in Mexico.

And some U.S. farmers, including California avocado growers, could be hurt if the agreement allows for free movement of cheaper Mexican crops across the border. (Mexican avocados are harvested at the same time as the Californian fruit.) Cotton farmers in Texas could be hurt in much the same way.

Government officials such as San Diego County Supervisor Susan Golding worry that the roads and border crossings in border cities will be inadequate to handle the increase in vehicle traffic likely to result from the pact.

A city such as San Diego could become “the next Hong Kong,” a Golding aide said at Abelson’s talk Thursday.

But overall, the agreement is viewed as a good thing for San Diego if for no other reason than reduced trade barriers inevitably result in increased trade, said San Diego attorney Ron Pettis, a member of the Border Trade Alliance, a group of border-area businesses.

And any growth in trade with Mexico is bound to benefit border cities because of the general increase in demand for goods and services, said Dan Pegg, executive director of San Diego Economic Development Corp. Many of the U.S. companies that will be attracted to Mexico will want to locate operations as close to the border as possible for the obvious advantages of easier communication and transportation, Pegg said.

Steve Jenner, associate director of the Institute for Regional Studies of the Californias at San Diego State University, said some critical elements of the accord have yet to be worked out, particularly those concerning “rules of origin,” the regulations that determine what percentage of a product must be made in the United States or in Mexico for the goods to receive favorable trade treatment.

But Jenner said most of the local businesses he knows of “are excited about sales in Mexico, that they will be able to take market share from Mexican producers. Some will be creating new and different products” to try to exploit the Mexican market, he said.

Abelson said both governments are targeting January, 1993, for a trade agreement to go into effect. That may be optimistic, observers say, but a plan almost certainly will be in place by the time President Salinas de Gortari leaves office in 1994.

An agreement is expected to lower trade barriers and tariffs between the two countries and also include comprehensive rules on issues ranging from the environment and labor practices to transportation.