Mexico Free-Trade Pact Faces Hard Sell in Congress : Politics: The issue is seen as a test of the President’s postwar muscle. Protectionist opposition has surged.

Only a few months ago, the prospect of a broad free-trade agreement between the United States and Mexico seemed a political cinch.

Washington had been pressing Mexico for years to liberalize its restrictive trade policies. The United States had negotiated a free-trade accord with Canada that was benefiting both sides visibly. And the 27-member Texas congressional delegation was actively pushing the proposal. So, when Mexico showed its willingness to talk last year, negotiators in Washington and Mexico City could hardly wait to begin.

But today, even before the talks are in full swing, the free-trade agreement is in trouble and has become a major rallying point for protectionist interests that seemingly had been dormant for more than a decade.

California fruit growers hate the idea, fearing it will give Mexican farmers, whose labor costs are lower, a price advantage. Organized labor contends that the pact would drain low-skill jobs from U.S. industrial cities. Environmentalists are upset, warning that American firms would move to Mexico to escape tougher U.S. anti-pollution standards. And consumer groups say the pact could undercut U.S. health and safety laws.

The surge of opposition--which has caught the White House off balance--promises to set the stage for one of this year’s most closely fought legislative battles. The first key vote will be in early May, but the debate is likely to continue through the 1992 elections.

Many Democratic political planners and candidates see the coming confrontation as an opportunity to revive the class-warfare strategy that party stalwarts used to bloody the Administration in last autumn’s budget fight. In March, the Democratic National Committee adopted a resolution condemning an unrestricted U.S.-Mexico free-trade agreement as a “disaster for workers in both countries.”

“This is the most powerful political issue Democrats could have if you want to paint the Republicans as representing big business,” said Democratic consultant Frank Greer. “What you’re really talking about is standing up for American economic strength and American workers.”

The congressional showdown next month may also provide one of the first clear indications of how much the Gulf War has strengthened President Bush’s ability to demand his way in dealing with the Democratic Congress. Winning authority to pursue an agreement with Mexico “is essential for Bush because he has to have some content to fill in his vision of a new world order,” conservative economic consultant Jeffrey Bell said.

The diplomatic stakes for Mexico and the United States are enormous. Mexican President Carlos Salinas de Gortari arrives in the United States on Sunday to begin the unusual step of campaigning for the trade pact. He is scheduled to meet with Bush in Houston. The trade talks are expected to be the No. 1 issue on their agenda.

Next month’s vote in Congress will not be a direct referendum on the free-trade agreement itself. Instead, lawmakers will vote only on whether to renew the President’s authority to continue the negotiations under a “fast-track” legislative procedure, which would virtually prohibit the lawmakers from amending the trade accord when the pact comes up for approval.

Proponents fear that, without such a safeguard to protect it, virtually any major trade agreement would be nibbled to death. Administration officials say the fast-track vote is effectively a proxy for the trade accord itself. Rejection of the fast-track procedure by either the House or the Senate could kill the current talks.

The proposal for a free-trade pact with Mexico faces a much bumpier road than the agreement reached in 1988 with Canada. The U.S.-Canadian accord dealt with economies that were far more similar in everything from wage scales to government regulations.

But that is not the case with Mexico. Average wages there are only about one-seventh of U.S. levels, worker benefits are minimal and enforcement of environmental and worker safety regulations has been unenthusiastic at best. Many experts say there is no precedent for eliminating trade barriers between two countries that have such a huge gap in wage levels.

Supporters see the imbalances between the two economies as evidence not of unfairness but of new opportunity. “It’s a perfect marriage between technology and capital on one side and labor and markets on the other side,” former Arizona Gov. Bruce Babbitt said. Babbitt and other proponents of the pact expect the increase in trade to spur economic growth in both countries.

And they project other sweeping benefits--including an eventual rise in Mexican living standards that will diminish the wage gap between the two nations, expand the market for U.S. exports and--importantly--alleviate the push by Mexicans to seek jobs in the United States. “The most important impact may be . . . the disasters we avert with a free-trade agreement,” said Philip M. Burgess, president of the Center for the New West, a Denver-based think tank.

But opponents contend that fair trade is fundamentally impossible between two such different economies, no matter how many tariffs are erased. Rep. Esteban E. Torres (D-La Puente), for one, sees nothing but disadvantages to both sides. “There will be large-scale job flight to Mexico,” Torres said, but “it will leave Mexico out there in a very vulnerable position to (companies) relocating to take advantage of their low-wage market.”

And many lawmakers are beginning to reflect growing misgivings among their constituents. Rep. Terry L. Bruce (D-Ill.) warns that thousands of jobs in his state’s auto parts industry could be threatened by increased competition from Mexico if U.S. companies move their operations there.

Bruce said that “it’s difficult to explain about the long-term benefits” of a trade accord “when people see their jobs disappearing. You see the short-term drawbacks of unemployment, but you don’t see the benefits until the long term.”

Although these kinds of gritty local interests will dominate the congressional free-trade debate, the trade fight may well turn into a major partisan issue if more hawkish Democrats have their way. The party flirted with a protectionist trade strategy through much of the 1980s, culminating in the unsuccessful drive by Rep. Richard A. Gephardt (D-Mo.), now House majority leader, to launch a presidential bid based partly on the trade issue.

But some party strategists fear that the Gephardt approach, which has met defeat at the polls several times, could brand Democrats as economic and military isolationists--particularly in the wake of last January’s congressional vote on the use of force against Iraq, which most Democrats publicly opposed.

“There’s no question the Democrats have a very difficult call on this,” said Rep. Robert T. Matsui (D-Sacramento), who has not yet declared his position.

In the end, however, the debate in the House and Senate may be regional more than ideological. Opposition is greatest among legislators from the industrial Midwest and Northeast, while those from the West--particularly along the Mexican border--generally support the pact.

California’s political leadership is divided. Although Republican Gov. Pete Wilson and Democratic Sen. Alan Cranston both support the agreement, GOP Sen. John Seymour remains on the fence, largely out of concern for a treaty’s impact on the politically powerful agricultural sector. “I just don’t think it’s right that agriculture in California take the big hit for this one,” Seymour said in March.

Other California lawmakers with agricultural constituencies, including Democratic Reps. Gary A. Condit of Ceres and Richard H. Lehman of Sanger, both from the Central Valley, have expressed similar reservations. Fearing the loss of manufacturing jobs to Mexico’s lower wages, several other California Democratic U.S. representatives--including Pete Stark of Oakland, George Miller of Martinez and Leon E. Panetta of Carmel Valley--also have declared their opposition to the treaty.

Just what impact a free-trade accord would have still isn’t certain. In an analysis earlier this year, the U.S. International Trade Commission concluded that the additional economic growth spurred by such a pact would more than offset the losses in most states, including California. However, the benefits would fall on skilled labor, but the nearly three-fourths of the work force classified as unskilled would suffer a “slight decline in real income,” according to the study.

With at least one-third of the House by some counts still genuinely undecided, the struggle may hinge on the Administration’s willingness to broaden the negotiations to include issues raised by opponents.

In early March, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) and Rep. Dan Rostenkowski (D-Ill.), who is chairman of the House Ways and Means Committee, sent Bush a letter urging him to guarantee that talks would address the disparities between the two countries in environmental and occupational safety regulation, as well as workers’ rights.

Generally, the Administration has resisted such calls, but, with the May vote fast approaching, the White House is sending somewhat more accommodating signals.

And the Administration may have to make other concessions to guarantee passage of the fast-track authority, particularly in the House. As the price for their support, representatives from agricultural areas are demanding long transition periods before tariffs on Mexican goods are fully removed, as well as the continuation of product safety standards that effectively bar such commodities as avocados. Also, they want to guarantee a continuing supply of Mexican labor for U.S. growers.

Many supporters worry that the Administration has not moved aggressively enough to allay these concerns. “There are a number of people (in Congress) who are tacitly in favor of the agreement, but they want some political cover, and the Administration has not been terribly helpful,” said William T. Archey, vice president for international affairs at the U.S. Chamber of Commerce.

All these calculations are complicated by the fact that the fast-track authority would also apply to the broader Uruguay Round of global trade liberalization negotiations--which have drawn an entirely different array of legislative opponents. With opponents of both the global trade talks and the Mexican negotiations linking arms against the fast-track authority, “you will have a very difficult time passing it,” said Rep. Charles W. Stenholm, (D-Tex.), a key member of the House Agriculture Committee.

Despite these hurdles, many observers believe the President’s soaring poll ratings will eventually carry him to victory in May but with decidedly more loopholes and exceptions than the Administration would prefer. And legislators say even that isn’t guaranteed unless supporters of the pact step up their efforts.

“The Bush Administration is just assuming that the President’s popularity will win this vote,” said Rep. Bill Richardson (D-N.M.), a longtime supporter of the free-trade accord with Mexico. “But they are underestimating the great strength of the opposition. I worry that they think President Bush can pull this agreement out of a hat.”