PERSPECTIVES ON NAFTA : A Good Deal, Twisted by Bad Politics : Why are congressional Democrats defying their President with arguments that don’t add up economically?

Last week, Jay Leno wandered out of his studio to ask people on the street what they thought about the North American Free Trade Agreement. Thought about it? Hey, they had hardly heard of it. A typical response went: “Nafta? How do you spell that?”

As Leno discovered, Americans aren’t lying awake worrying about NAFTA.

All of which makes the strident opposition of so many congressional Democrats mystifying. They’re not only against it, they’re also determined to defeat it and humiliate President Clinton, who backs the agreement. Hello, anybody home? Yes, George Bush originally negotiated NAFTA, but he’s gone to Texas; Clinton is your guy. The opposition is all the more perplexing because the case against NAFTA is so weak.

What we’re being told is that free trade with Mexico would devastate the U.S. economy. With its low wages, Mexico would unleash a flood of cheap imports into our markets. There would be a mass exodus of U.S. factory jobs, as hordes of American companies fled across the border. “Save Your Job, Save Our Country: Why NAFTA Must Be Stopped--Now” is the book by Ross Perot and Pat Choate that captures the worst fears. Many unions make similar arguments.

All this is scare talk. To understand why, you need to grasp NAFTA’s basics. They boil down to three propositions.

* Contrary to anti-NAFTA rhetoric, the trade agreement would probably boost U.S. jobs. But the impact on jobs--good or bad--would be small.

The idea that Mexico will hijack our industrial base is a myth. “If this fear were realistic, it would already have happened,” says economist Gary Hufbauer of the Institute for International Economics. Mexico’s wages have long been lower than ours, and most of its exports already enter our market without any tariff. (The average tariff: 1.9%.) If companies were going to flee, they would have done so years ago. They haven’t fled for lots of reasons: American workers are more productive than Mexican workers; Mexico’s transportation and communications systems are less efficient; U.S. companies need to be close to U.S. customers.

Our economy is 20 times the size of Mexico’s. Mexico simply isn’t capable of flooding us with cheap goods. Nor can it absorb enough of our exports to generate dramatic U.S. job increases. Still, most of the import barriers that would come down under NAFTA would be Mexico’s against our products. Its tariffs average about 10%. This is one reason most experts think NAFTA would initially raise U.S. exports and jobs. Recent experience is encouraging. Since the mid-1980s, Mexico has unilaterally cut its steep tariffs and quotas. U.S. exports soared from $12 billion to $41 billion a year between 1986 and 1992; a $5-billion trade deficit became a $5-billion trade surplus.

* NAFTA is an exercise in enlightened foreign policy--an effort to make Mexico richer and, thereby, a better neighbor.

Both Bush and Clinton bought this premise of NAFTA, which is the brainchild of Mexican President Carlos Salinas de Gortari. For Salinas, NAFTA represents a way to consolidate radical changes in Mexico’s economic policies. He has tried to dismantle elaborate economic controls. Many state-owned companies have been sold. Tariff reductions have been dramatic. The goal is to spur economic growth by creating a climate that attracts investment and opens Mexico to global competition.

So far, Salinas has enjoyed modest success. Since 1989, Mexico has lured about $42 billion of new foreign investment. Meanwhile, its economy has grown consistently for six years, a contrast with the stagnation of the early 1980s. NAFTA would make Mexico’s low tariffs and relaxed restrictions on foreign investment harder to undo by encasing them in a treaty. Salinas’ economic policies have also had a political edge. Trying to cooperate with the United States, he has abandoned Mexico’s traditional anti-American rhetoric.

* If NAFTA works, huge gains for the United States would emerge gradually over 10 or 15 years.

A prosperous, stable and democratic Mexico would be a better neighbor than a poor, unstable and undemocratic Mexico. Higher economic growth would ultimately reduce illegal immigration into the United States. Mexicans could stay home and get jobs. It would be easier to cooperate with Mexico on issues ranging from the environment to drug traffic. Finally, a more prosperous Mexico would help some mature U.S. industries. Autos are a good example. Mexico has about eight cars per 100 people; we have about 57 per 100. A richer Mexico would buy more cars, and many of these would be U.S. models.

The obsession with jobs obscures what NAFTA is really about: the remaking of Mexico. Some U.S. industries would lose under NAFTA, others would gain. But the potential losses are tiny compared with job disruptions that are caused by business cycles or new technologies. The real cloud over NAFTA, says Mexican political scientist Jorge Castaneda, is that it might not remake Mexico. Mexico might not attract ample foreign investment. Joblessness might rise, because inefficient Mexican firms can’t withstand foreign competition. Salinas’ modest political reforms, designed to end one-party rule, might stall. Corruption, as Castaneda notes, remains widespread.

But NAFTA is the gamble that Mexico’s leaders have made, and no one has advanced a better idea. The question for Americans is whether the alternative--conducting Mexican relations without the agreement--is good policy. It isn’t. Defeating NAFTA might stunt Mexico’s economic development. It would also represent an enormous setback to U.S.-Mexican relations, because the leaders of Mexico have staked so much on NAFTA.

The alarmism about jobs is actually an assault on the President’s authority to make foreign policy. The economic logic against NAFTA is as weak as the political logic. Congressional opposition is a wrecking operation. It has little popular appeal. Jay Leno knows this, but do congressional Democrats?