Benefits--and Costs--Seen for San Diego in Trade Pact : Border: Environmental and labor concerns must be weighed against economic gains, experts say.

The North American Free Trade Agreement would stimulate San Diego’s economy but increase the risk of more air and water pollution in the region, observers said Wednesday.

Although some economists were cautioning that the trade agreement announced Wednesday by the United States, Canada and Mexico is still a long way from reality, others worried about the San Diego region’s ability to cope with the huge increase in commerce that could result if the pact is adopted.

What is a near-certainty is that San Diego’s economy, particularly its service industry, would benefit significantly from the accord. Accounting, advertising, financial, engineering and legal professions stand to gain, as do construction-related companies as Mexico expands its roads, railways and ports to accommodate the expected increase in trade.

Border cities such as San Diego are in a particularly good position because increases in commercial and industrial activity are likely to be concentrated along the border until the roads and other facilities in Mexico’s interior are improved, said Paul Ganster, director of San Diego State University’s Institute for Regional Studies of the Californias.

But environmentalists warned that the growth of Tijuana as a manufacturing center could have dire environmental consequences for San Diego, which shares the same air basin and seacoast.

“I think it will have devastating environmental impacts for the entire border region,” said Diane Takvorian, executive director of the Environmental Health Coalition, a San Diego-based environmental advocacy and education organization. The high levels of air and water pollution that already exist in Tijuana would increase, she said, to San Diego’s detriment.

San Diego’s economic benefits could be stunted by the increased congestion at the San Ysidro and Otay Mesa border crossings, and by the region’s lack of adequate airport facilities, said UC San Diego economics professor James E. Rauch, an expert on international trade and Third World development.

The delays at the border, which often exceed an hour for motorists, could motivate some businesses to locate in Arizona or Texas, where the crossings generally are faster, Rauch said. The San Ysidro border crossing already is the busiest land port of entry in the world and will only become busier with the trade agreement, he said.

Pointing to the gridlock, one San Diego-Tijuana business group called Border Region Action Group recently proposed fee-only express lanes to facilitate business crossings, but the idea met with stiff opposition from the U.S. Customs Service.

“The deals that come out of the trade agreement are still going to be consummated with a handshake, and the border areas that have the greatest ease of movement will probably see the greatest benefit. You certainly can’t put San Diego at the top of that list,” Rauch said.

Border transit problems illustrate the lack of planning by San Diego and Tijuana regional governments for the day the free trade agreement becomes a reality, said Charles E. Nathanson, a UC San Diego sociologist and executive director of San Diego Dialogue, a public policy group concerned with San Diego-Tijuana business and government issues.

“There are long-term, major planning efforts together that we need to engage in, on water, energy, ports, rail transit, housing and financial services, that could make this one a very interesting and powerful region,” Nathanson said. “We are unprepared for the kind of growth we might see.”

The North American Free Trade Agreement, or NAFTA, announced Wednesday would create a trade zone populated by 360 million people. The bill still must be ratified by Congress, a process that is at least six months away.

Generally, tariffs on goods produced in the region would be eliminated over 15 years. Some tariffs would disappear upon ratification, while others, such as those on Mexican farm products entering the United States, would be phased out over time.

Organized labor has opposed the trade agreement, saying it will cause the loss of blue-collar jobs. Many Democrats, including presidential candidate Bill Clinton, have expressed opposition or reservations about the pact. San Diego Mayor Maureen O’Connor, a Democrat, supports the agreement.

Opposition to the free trade agreement is not limited to Democrats. U.S. Rep. Duncan Hunter (R-Coronado) says he opposes the agreement because it would hasten the flight of blue-collar jobs and cause “an erosion of the nation’s industrial base.”

The ratification process will be an “interesting battle,” said Ron Pettis, a San Diego attorney and chairman of the environmental committee in the Border Trade Alliance, a U.S. organization that advocates trade issues on behalf of U.S. border communities.

“The lines are being drawn between President Bush and his opponents,” Pettis said. “The bargaining may not be done. There may be more changes to what’s being presented.”

Asked which specific industries will benefit from the pact, some observers with a keen interest in the accord were reluctant to comment because some of the particulars of the agreement hammered out over a 14-month period by 200 negotiators have still not been made public.

“It remains to be seen who the winners are and who the losers are,” said Andrea Migdal, a San Diego attorney specializing in U.S.-Mexico business dealings. “Sound bites are hard to come by on NAFTA because it will have so many impacts on many industries, and terms of the agreement are not yet known. Deals have been made for industries that haven’t been made public.”

But few disputed the overall economic gain in store for San Diego if the pact is ratified. The creation of the trade zone is sure to boost Tijuana’s manufacturing base as more U.S. companies take advantage of low-cost Mexican labor. That in turn will result in more U.S. managers moving to San Diego and other border cities to help manage the plants.

Many U.S. manufacturers already have become familiar with the region after having set up maquiladoras, the foreign-owned plants that use Mexican labor to manufacture goods sold principally in the U.S. market. There are now 2,200 maquiladoras in Mexico employing more than 500,000 workers and producing $16.5 billion worth of goods yearly.

Tony Ramirez, vice president of Chula Vista-based Made in Mexico and a director of the National Maquiladora Assn. of Mexico, said the Mexican government has pledged to protect the maquiladora industry for at least seven years. After that, “even someone in my position doesn’t know how it’s going to shake out,” Ramirez said.

“The easy part has been reached with the agreement,” he said. “The most difficult part is yet to come.”