Mexico Trade Pact Shuns Environmental Issues : Policy: Congress wants tough pollution standards, but the Administration believes that would be counterproductive.

The Bush Administration’s top environmental official warned Monday that the White House will not agree to environmental concessions that Congress is seeking in a forthcoming U.S.-Mexico free-trade pact.

While the pact may ban the import of certain pesticides and other chemicals, Environmental Protection Agency Administrator William K. Reilly said, it probably will not seek to remedy pollution along the border or force Mexico to tighten its environmental standards.

“I think (those concerns) don’t belong in the free-trade agreement,” Reilly said at a breakfast session with The Times’ Washington Bureau. “To the degree that we put them there, we will find it’s difficult to be very specific about precisely what it is we want to have happen.”

It would be hard, he added, to force the Mexicans to comply.

Reilly’s comments drew an immediate reaction from Capitol Hill, which has scheduled a crucial vote next month on whether to authorize continuation of the talks.

Rep. Robert T. Matsui (D-Sacramento), a member of the House Ways and Means Committee, which deals with trade issues, said Reilly’s remarks will have a “profound impact” on next month’s vote.

“Bill Reilly has a lot of credibility,” Matsui said. “If he of all people in the Administration says that there is a problem, that’s going to have an impact.”

The trade talks with Mexico are one of President Bush’s top economic priorities, representing a crucial step toward his goal of establishing a free-trade zone that extends from Alaska to the tip of South America. At a time of growing protectionism worldwide, supporters argue that such an alliance is this country’s best hope of competing with trading blocs that are forming in Europe and Asia.

In a letter last month to Bush, Congress’ two most powerful leaders on trade issues--Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) and House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.)--noted that the talks raise “legitimate concerns that, in our judgment, should be addressed in a meaningful way.”

Among those concerns, they wrote, are the disparity between the United States and Mexico “in the adequacy and enforcement of environmental standards.”

If the two countries establish a free-trade zone without requiring Mexico to toughen its environmental policies, opponents insist, that will only encourage industry to move operations south of the border, where it can escape the enormous costs of complying with U.S. standards.

They warn that the agreement could worsen Mexico’s already serious pollution problems, which even now spill across the border in the form of foul air and water.

But Bush argued Monday that a free-trade agreement is the best means of ensuring a cleaner environment in both countries. “Only through economic growth will Mexico obtain the resources necessary to address its tremendous environmental needs,” Bush said in a speech to the Assn. of General Contractors.

Reilly agreed Monday, describing the free-trade agreement as “an unprecedented opportunity to ratchet up the standards of environmental protection for 85 million people.”

He warned that environmentalists who oppose the negotiations “could wake up the day after (defeating the free-trade agreement) and find that the environment is in very bad shape and likely to stay so in much of Mexico, as a consequence of a failure to get the resources that free trade might have made available.”