Bush Expected to Announce Trade Accord

President Bush is expected to announce today that the United States, Mexico and Canada have reached an historic North American Free Trade Agreement designed to link 360 million consumers into a single, $6-trillion market, an unprecedented pact that is certain to profoundly transform the economies of the United States and its two neighbors.

After more than a year of intense and detailed negotiations covering more than 20,000 tariffs on virtually every product and service traded between the countries, bargainers for the three countries apparently were wrapping up their marathon talks in a Washington hotel Tuesday night. The Bush Administration had been pushing the negotiators to complete the talks quickly to allow Bush to announce a deal before the Republican National Convention.

While sources suggested that Bush would announce a trade agreement today at the White House, U.S. trade officials late Tuesday night sought to play down reports that an agreement is imminent.

“Contrary to press reports, negotiations continue this evening. . . . An announcement will be made when the negotiations are complete and a deal has been reached,” said a statement from the office of the U.S trade representative.

Among the final issues to be resolved were domestic content requirements for automobiles, contentious provisions covering apparel and textiles and government procurement rights in Mexico.

Bush Administration officials have been eager to trumpet the trade pact in the presidential campaign, in order to counter Democratic charges that Bush has failed to act decisively in economic affairs. The Administration also hopes the trade accord will underscore just how the President’s foreign policy expertise can benefit the U.S. economy.

“It looks like the President will have an announcement” today, one White House official said Tuesday.

The agreement, a cornerstone of Bush’s economic agenda, is designed to gradually phase out tariffs and other trade barriers so that goods and services can flow freely from Toronto to Mexico City by early in the next century. It represents a dramatic expansion of a free trade agreement the United States forged with Canada three years ago, and Bush has argued that the export boom that will result from the pact could create as many as 300,000 new U.S. jobs by 1995.

U.S. Trade Representative Carla Anderson Hills has also stressed that the trade pact will be a good deal for America because Mexican tariffs are now far higher on average than those imposed by the United States. The accord, she says, will level the playing field for U.S. firms, accelerating an ongoing boom in U.S. exports to Mexico.

In fact, Mexico is now America’s fastest-growing export market; exports there have doubled over the past five years to nearly $65 billion annually.

But critics, in organized labor and elsewhere, have argued that the agreement will lead to a massive shift of high-wage manufacturing jobs from the United States to Mexico, devastating a U.S. economy still reeling from the effects of a prolonged recession. In addition, environmentalists have warned that, unless Mexico is required to improve enforcement of its environmental laws, U.S. and Canadian multinational firms will flee to Mexico in an effort to seek a haven from tough anti-pollution rules.

Also, critics have complained that the negotiators bowed to pressures from large industries and labor unions in each of the three countries by working out special deals that will give extra trade protection for highly sensitive products and industries. In fact, while tariffs covering most products will be phased out over the next decade, other trade barriers for a broad range of agricultural products and other items with politically powerful constituencies will remain in place for as long as 15 to 20 years, sources close to the trade talks said Tuesday.

While Bush is expected to announce a tentative agreement at the White House today, he is unlikely to send the trade agreement to Congress for quick ratification. Most observers believe that Congress will not take up the issue until next year.

Leading Democrats have already begun to criticize Bush’s handling of the trade negotiations and have threatened to oppose the deal unless the White House deals more forcefully with the likely social and environmental consequences of the trade agreement.

Democratic presidential nominee Bill Clinton, who endorsed the free trade agreement early in his campaign, has recently begun to voice concerns about Bush’s apparent refusal to include specific provisions in the agreement to help U.S. workers who lose their jobs as a result of the trade pact.

He has also joined House Majority Leader Richard A. Gephardt (D-Mo.), a leading spokesman on trade, in complaining that the Administration has apparently not gone far enough to ensure that Mexico cleans up its massive pollution problems and improves enforcement of tough new anti-pollution laws.

“The Bush Administration has inadequately addressed environmental issues (in the trade talks),” Sen. Max Baucus (D-Mont.), charged in a speech Tuesday.

But sources close to the talks say that the Bush Administration has largely left the environmental and labor-related issues to be handled by separate, “parallel” negotiations with Canada and Mexico. Although the pact does apparently call for a tri-national commission to deal with environmental matters, the agreement to be announced today is not likely to include much detail on how Mexico will deal with its internal pollution problems.

And the Bush Administration is also not expected to announce today any special new programs to help U.S. workers who lose their jobs. Administration officials have repeatedly stressed that such details will be included in the enabling legislation covering the trade pact that will be sent to Congress next year, but that stance has left the White House open to continued criticism from Democrats that Bush is not addressing those concerns.

A White House announcement of a trade accord has been expected for weeks. But the talks had stalled over the past few weeks over a series of highly contentious and arcane special provisions that each nation wanted to include in the pact.

In fact, the negotiations have been heavily influenced by the political and economic clout of major industries in the United States, Mexico and Canada--many of which are represented on private-sector panels advising the trade negotiators.

What’s more, the agreement is certain to give special preferences to some corporations already operating in North America--advantages that in some cases won’t be available to overseas companies that set up shop in the region after the pact goes into effect.

One of the key stumbling blocks in the closing days of the talks, for example, had been the insistence of the U.S. auto industry that the agreement include tough new domestic content standards that would effectively limit the ability of Japanese car makers to take advantage of low-cost Mexican manufacturing operations to compete in the U.S. market.

Another obstacle was an argument over textile and apparel tariffs, and whether clothes made in one of the three countries--but cut from overseas fabric--could receive duty-free status. Canada was fearful of a provision limiting foreign fabric, since many Canadian-made men’s suits use European cloth and thus would not be competitive in the United States.