Ticket Fee to Finance Free Trade Pact May Be Dropped : Commerce: White House backs away from plan after complaints from GOP and travel industry. Scramble starts for new revenue sources.

Faced with a barrage of complaints from Republican lawmakers and the travel industry, the White House Thursday backed away from a plan to make up tariff revenue that would be lost under the North American Free Trade Agreement by doubling fees paid by air and sea passengers entering the United States from Mexico.

The Administration had proposed increasing the fees from $5 to $10. A revised plan now calls for increasing the fees by $2.50 per passenger. But White House officials and members of Congress made it clear that even that proposal could be redrawn or replaced with spending cuts or increases in other fees.

The decision leaves the Administration and congressional supporters of the trade pact scrambling for a financing arrangement that will not cost votes in the difficult campaign to gain House and Senate approval of the agreement.

Tariffs on goods entering the United States from Mexico average 2.5% and tariffs imposed by Mexico on U.S.-made goods average 10%. It is this revenue that would be lost, costing the U.S. Treasury $1.7 billion to $2.5 billion over five years, Administration officials say.

But the agreement’s supporters argue that sales to Mexico would increase because the removal of tariffs would bring lower consumer prices. This increase in trade, they assert, would lead to more jobs in this country, rather than the losses predicted by opponents.

They also project that government revenue from income taxes and other sources would climb by $10 billion under the agreement. The budget laws, however, do not allow this revenue to be counted against the income that is lost when tariffs are eliminated.

Meanwhile, reflecting the newly aggressive White House effort on behalf of one of the President’s most important initiatives, Clinton and his aides considered a variety of proposals to put more pressure on recalcitrant House members, particularly Democrats. The ideas included a televised address to the nation by Clinton, travel around the country and an appearance on CNN’s “Larry King Live” television program, a White House official said.

For the second consecutive day, Clinton sought to explain opposition to the agreement by linking it to fears stemming from the economic disruptions of the past decade.

“That agreement has become the repository and the symbol of all the accumulated resentments of our people for the 1980s--of all the people who lost their jobs and all the plants that moved overseas and all the times that all the workers in this country saw that their executives were getting pay raises four times in percentage terms what they were; three times what the profits were going up; that they could lose their health care in an instant; that they could have to start over in a moment; and that no one cared about them anymore,” Clinton said. “So they associate that with expanded global trade.”

The free trade agreement would eliminate tariffs among the United States, Mexico and Canada over a 15-year period. If approved by simple majorities in the House and Senate, it would go into effect on Jan. 1. The Senate is considered likely to vote for the agreement. But the result in the House, which is scheduled to vote first, on Nov. 17, is uncertain.

One longtime Republican observer of Congress said that vote-counters in Congress detected a new trickle of support for the pact.

“The people in the trenches say they’re picking up support. They’re saying it’s do-able,” he said.

Still, a survey by the National Journal’s Congress Daily, a faxed newsletter reporting on developments in Congress, indicated the difficulty of the task. In calls to 400 of the 434 members of the House--there is one vacancy--the newsletter found 128 members committed to voting for the agreement or leaning toward it. With 218 votes needed to win approval, this count leaves the Administration 90 votes short.

The White House disclosed earlier this week that it wanted to increase the passenger fees to make up revenue lost when tariffs are reduced. Under federal budget deficit-reduction laws, any loss in revenue must be met by a cut in spending or an increase in taxes or fees paid to the federal government.

Among the alternatives to an increase in the passenger fee would be a plan to strengthen enforcement of customs regulations and shifts in accounting procedures that would speed the flow of tax collections into the Treasury, officials said.

In another development, Administration officials and congressional sources said that the White House and Treasury are nearing completion of a financing plan for a North American Development Bank, which would help small companies hurt by the agreement. A White House official said that funds may be redirected to the bank from the Small Business Administration or other government units.