Sharp Disagreement Voiced on Proposed U.S.-Mexico Free-Trade Pact : Commerce: At San Diego hearing, the plan is painted variously as a bonanza and an ecological nightmare.

Businesses, environmentalists and other groups drew clear lines of division Wednesday over a proposed free trade agreement linking the United States, Mexico and Canada.

“The whole retail industry wants to compete on the world market without being held hostage to quotas and duties,” said Joseph Tomaselli, executive vice president for merchandising for Mervyn’s, a department store and strong proponent of relaxed trading regulations. His comments were made during a public hearing Wednesday in San Diego.

“It will mean more toxic dumping and more health problems,” countered Ruth Duemler, a San Diego-based conservationist representing the Council of Environmental Organizations, an umbrella advocacy group that opposes the expanded free trade agenda.

The daylong hearings, which are to be continued today, provide a glimpse of the kind of polarization likely to grow in intensity and rhetorical flourishes as negotiations among the three nations begin in earnest next month.

Although supporters view the prospective accord as a bonanza for the entire region’s economy, critics see a formula for runaway pollution, unchecked exploitation of cheap labor, large-scale economic displacement and massive layoffs in all three nations.

Presiding over the hearings--which also will be held in Houston, Atlanta, Washington, Cleveland and Boston--is an interagency committee composed of representatives from various federal agencies, among them the departments of Commerce, Agriculture, Labor, Treasury, State and the Environmental Protection Agency.

President Bush called for the hearings in what officials characterize as an effort to elicit public viewpoints in shaping an accord. But detractors say the forums mostly amount to lip service that will have little impact on the agreement, the parameters of which are already taking shape.

“This whole exercise is a sham,” stated Craig Merrilees, San Francisco-based director of the Fair Trade Campaign, which seeks environmental and social justice safeguards as part of any trans-border pact.

The complex trilateral talks are expected to produce a formal accord by early 1993. Under current “fast-track” provisions, the White House will present the package to Congress, which will be charged with voting on the proposal but will be unable to amend it.

A free-trade agreement, in principle, would sweep away restrictive tariffs, duties and other impediments to international commerce among participating nations, thus opening vast new markets. In reality, however, there would still be considerable regulation of trade and labor.

In anticipation, many U.S. firms have already begun to look south to Mexico’s expanding consumer population.

“We’d love to open some stores in Mexico,” said Donald G. Fisher, chairman and chief executive officer of The Gap, the clothing chain.

Others, including segments of the giant California agricultural industry, are less sanguine, fearing that lower labor and production costs south of the border could flood the U.S. market with Mexican produce and other goods. Many farmers and other potentially affected producers are lobbying for continued protection from low-cost imports.

“With out labor-intensive crops, we just won’t be able to compete with Mexico,” said Graydon Hall, manager of the Imperial Valley Vegetable Growers Assn.

In Mexico, too, there is worry that a flood of U.S. imports could severely harm certain sectors, among them subsistence bean and corn farmers--the bedrock campesinos whose interests were central to the Mexican Revolution.

Other U.S. industries have voiced concerns about protection of copyrights, trademarks, patents and other so-called “intellectual property.” U.S. Rep. Esteban E. Torres (D-La Puente) argued for strict guidelines ensuring that products being marketed under a free-trade system would be largely North American in origin, and not from Japan or elsewhere.

In addition, several speakers expressed fear that existing infrastructure in the U.S.-Mexico border region will be unable to absorb the expected growth.

In the United States, much of the debate has focused on the possibility that heightened trade could translate into environmental degradation, particularly in the U.S.-Mexico border region. Several speakers called for greater ecological safeguards.

“We feel the plan put forward to date by President Bush is very general and has large environmental gaps that need to be filled,” said Michael Gregory, director of Arizona Toxics Information, an environmental advocacy group that has worked on border issues.

However, a representative of Gov. Pete Wilson, although noting the importance of ecological regulation, said the pact could be extremely beneficial for California at a time of economic austerity.

“Simply put, a North American Free Trade Agreement presents this state with a major economic opportunity,” said Ira H. Goldman, Gov. Wilson’s trade representative, who noted that California exported almost $5 billion worth of goods to Mexico during 1990, a 12% increase from the previous year. “Economic growth in California is dependent on export expansion.”