A Presidential Election Year Is No Time to Talk Mexico Free Trade : Foreign Affairs: With U.S. workers losing jobs, Salinas would be wise to take Bush’s advice and wait till next year to negotiate an accord.

For Carlos Salinas de Gortari, ex-klansman David Duke and liberal Democrat Harris Wofford pose a common threat. Although they don’t agree on anything else, both oppose a free-trade agreement with Mexico. So do presidential contenders Patrick J. Buchanan and Edmund G. (Jerry) Brown Jr. This kind of political odd-coupling is making it impossible for trade negotiators to achieve their original goal of getting the pact signed early next year.

Saturday, the trilateral North American Free Trade Agreement was very much on Salinas’ mind when he went to Camp David to talk to President George Bush. Salinas has no higher priority than the successful negotiation of the trade accord, which would codify, in treaty form, his domestic economic reforms and guarantee his country permanent access to the North American market.

There is some financial urgency as well. Mexico’s swelling balance-of-payments deficit can be alleviated only by the foreign investment that a trade deal would stimulate. The Mexican political calendar is also problematic. Salinas will be fending off attacks in a dozen gubernatorial races in 1992, all certain to be scrutinized by U.S. congressional opponents of the trade pact, and engineering the transition to a new ruling-party standard-bearer in 1993.

Waiting until 1993 will be tougher still in Canada. Brian Mulroney is a committed free trader, but he is in Canada’s minority. On the provincial level, most Canadians are now governed by the social democratic opposition, which favors the abrogation of the 1990 U.S.-Canadian trade accord. Legally, Mulroney must call elections before November, 1993; politically, as the weakest prime minister in recent history, he cannot hold out nearly that long.

But Bush’s calendar is even less forgiving. The President must give Congress 90 calendar days’ notice before signing a foreign-trade agreement. As a practical political matter, that also means submitting a draft. After signing, Congress has 90 legislative days--about six months, usually--to ratify the accord. If trade negotiators succeeded, as they still think they can, in concluding their work within a couple of months, the congressional debate would coincide exactly with the presidential campaign.

And therein lies the problem: Even if Bush wins his reelection bid, his opponents could mortally wound his free-trade proposal while trying to defeat him. As a result, Democrats and Republicans in Congress are advising the President to put off the agreement until 1993, and that is what Salinas heard yesterday at Camp David.

It’s good advice. With a record $17 billion in hard-currency reserves and solid immediate growth prospects, Mexico can afford to hang on another year or two--providing that the business world can be persuaded that the negotiations remain on track.

Delay is not without risks, of course. Free-trade opponents are multiplying. Bush critics in both parties are attracted to the Mexican free- trade issue because it fits comfortably with the President’s biggest liability: the perception that he is preoccupied with problems abroad and inattentive to the needs of workers at home.

Forget that a free-trade agreement would help create a bigger market for U.S. goods than Japan--and one in which the United States would enjoy a growing trade surplus. Forget that a pact would give preferential sales opportunities to some of the same U.S. industries demanding protection: steel, textiles, auto parts. Depressed agricultural districts would also benefit: Wheat farmers in Nebraska, potato growers in Maine, Wisconsin dairy farmers could export freely for the first time to a contiguous market of 90 million.

But in the sound-bite simplifications of a U.S. presidential campaign, it would be fruitless to argue the case on its merits. Support for the trade agreement is potentially broad, but shallow; grass-roots opponents are well-organized and highly motivated. Fairly or not, the North American Free Trade Agreement is a target for activists disgruntled with Administration policies on worker retraining, environmental protection, immigration, foreign aid, tax policy and other issues. It is a surrogate for generalized economic discontent. “Trade,” recently remarked Sen. Carl Levin (D-Mich.), a critic of the proposed accord, “is a metaphor.”

In June, President Bush won negotiating authority from Congress not because he convinced voters of the need for such an accord, but because he still wielded tremendous clout as the victor of the Gulf War. A presidential sales pitch now, with Bush’s approval ratings falling, could be seen as belated and defensive at best, and at worst insensitively irrelevant to the needs of an economy in recession.

Accordingly, Bush and Salinas should begin now, subtly but firmly, to get the trade pact out of the U.S. presidential race. By delaying a draft agreement until 1993, trade proponents can defend it against campaign attacks by noting that its details are still being negotiated. Critics can still constructively influence the talks by demanding that the Administration deliver on its promise to protect displaced workers and the environment. After November, it will be possible to build the necessary bipartisan support.

The Salinas government’s greatest worry is that Bush will be beaten. A Democratic victory wouldn’t necessarily doom the agreement, however. Virtually any administration, Republican or Democratic, can be counted on to favor expanded trade and investment opportunities for U.S. business. The pivotal forces in the North American Free Trade Agreement debate are congressional Democrats who are not beholden to labor and whose districts, in many cases, would directly benefit from a more robust Mexican economy. The key committee chairmen--Sen. Lloyd Bentsen (D-Tex.) and Rep. Dan Rostenkowski (D-Ill.)--both seem genuinely convinced that a trade accord deserves support. But in an election year, it is unrealistic to expect Bentsen and Rostenkowski to ram through anything on the Bush agenda that is opposed by most congressional Democrats.

Mexico could still try for a quick agreement by simply caving in to U.S. demands. To make a real political impact, Mexico would have to accede to the protectionist resolution of such hot-button issues as rules of origin for autos (Detroit wants local content ratcheted up to 70%; Mexico defends the 50% levels set by the U.S.-Canada agreement) and the calendars for lowering U.S. barriers to politically sensitive imports (clothes makers and winter vegetable growers want a protracted phase-in of 15 to 20 years). Yet even that wouldn’t ensure success in Congress next year. And Mexico could hardly toughen its position the second time around; to the contrary, its initial agreement would be considered a point of departure for further concessions. The risks of rejection aren’t worth the gamble.

The Salinas government has been careful to assure investors that Mexico’s prosperity ultimately depends on sound economic management, not on a free-trade agreement. Still, if Congress voted down the North American Free Trade Agreement, the impact on Mexico could be devastating. Billions of foreign dollars might abandon the overheated stock market, followed by billions more in newly repatriated Mexican capital. Major business projects would be postponed or canceled. The peso would be destabilized.

Most critically, it would be a humiliation--”like a slap in the face,” said one Salinas aide--for the first modern Mexican leader to stake his program and future on an open alliance with the United States.

A free-trade defeat would also unnerve the rest of Latin America. As the first step toward Bush’s hemispheric free-trade proposal, the North American Free Trade Agreement is the cornerstone of the most constructive U.S. initiative toward Latin America since the Alliance for Progress. If Mexico’s bid for economic union is spurned, there would be little hope for anyone else in the region.

How, then, to keep the trade pact alive?

The answer may be in the great gray world of the General Agreement on Tariffs and Trade. Washington, Ottawa and Mexico City all proclaim fealty to multilateralism, and the revived Uruguay Round talks offer a graceful opportunity to slow down the free-trade negotiations while maintaining progress on trade liberalization. Negotiators could credibly contend that a GATT accord on farm subsidies, for example, would smooth the path toward free agricultural trade in North America. And getting a GATT deal through Congress next year would be about all the system could handle. If Canada, Mexico and the United States declare that GATT must come first, the prospects would improve immediately for a salable, successful North American Free Trade Agreement in 1993 or 1994.