COLUMN ONE : Can Mexico Clean Up Its Act? : Pursuing a free-trade pact, President Salinas has taken some dramatic steps on the environment. But laws are ignored, enforcement is weak and the problems are massive.

In the penthouse of the modernistic Pemex Tower one morning in May, two governments worked hard to orchestrate praise for Mexico’s new crackdown on pollution.

At the behest of the U.S. Embassy here, experts had traveled from California and New Mexico to lend their voices to the chorus. Mexico contributed city and federal regulators, as well as an official from the national oil monopoly.

The timing was hardly coincidence. The U.S. Congress was about to vote on initiating negotiations for a free-trade treaty with its southern neighbor. Strong opposition had surfaced on Capitol Hill, based in part on fears that increased industrialization would aggravate Mexico’s environmental crisis.

This gathering was meant to soothe. Mexico, each speaker noted to an audience of U.S. correspondents, was setting up its own tough controls.

But the message was undermined by the view out the picture windows on three sides of the room. The vista consisted solely of smog. Nothing was visible through the toxic gray haze, not even the sidewalk 45 floors below.

Now, with free-trade negotiations well under way, many legislators, activists and scholars on both sides of the border say they are more worried than ever about Mexico’s ability to conduct a significant cleanup, much less cope with an added burden.

Mixed signals from the Mexican government are less than reassuring, they say, and safeguards proposed by both countries are too weak. And they fear that Mexico could become a polluter’s haven--a sanctuary from the high costs of environmental regulations north of the border.

Never has the potential for ecological damage been so closely examined during trade talks, which traditionally focus on issues such as import quotas and tariffs. These negotiations are seen as a test case.

Mexican President Carlos Salinas de Gortari does not want environmental issues to scuttle the prospect of a $6-trillion market--the world’s largest--stretching from the Yukon to the Yucatan. In a recent barnstorming tour of California, he prominently mentioned the environment in every pitch he made for the trade agreement.

Salinas sees a trade pact as his best weapon for fighting Mexico’s nagging inflation rate, widespread unemployment, poverty and mounting trade imbalance. U.S. leaders say that a pact would open up lucrative new investment opportunities for U.S. businesses.

Spurred by a heightened environmental awareness at home and growing alarm abroad, Salinas has taken some dramatic steps to address the concerns.

In March, he shut down a government oil refinery in the middle of Mexico City, the most smog-choked metropolis in the world. The closure meant spending $500 million to dismantle the plant. Some operations also were halted at another 140 Mexico City businesses that were deemed to be polluters.

In September, Salinas unveiled a 10-point program to protect dolphins from his country’s tuna-fishing fleet.

Last month, the Mexican government announced that it will spend about $460 million along the border by 1994 to build new sewage and water treatment plants and hire more environmental inspectors.

But consider the problems Salinas still faces.

In northern Mexico along the nearly 2,000-mile border with California, Arizona, New Mexico and Texas, factories for years have dumped toxic wastes into canals and spewed hazardous fumes into the air. Most of the companies, known as maquiladoras, are U.S. owned.

They have lured hundreds of thousands to a region without adequate sewage treatment, leading the American Medical Assn. to brand the area “a virtual cesspool.” U.S. Border Patrol agents don rubber gloves to guard against infection whenever they frisk detainees wet from river crossings.

In Mexico’s midsection, cities, factories and farmers have diverted river water that feeds the nation’s largest lake, Chapala. This year, the lake has risen for the first time in a decade, but Chapala is still one-third of its original size. Once famed for its whitefish, it is too polluted to support any fish more delicate than carp.

In the mountains of Veracruz, creeks run brown with residue from coffee-processing plants. With international prices at their lowest level in 15 years, growers cannot afford to change to cleaner methods.

Still farther south and east, oil fields and refineries dump chemicals into the Coatzacoalcos River, which empties into the Gulf of Mexico, poisoning once-rich shrimp beds under the blackened waves.

Lush tropical forests are protected only on paper. Mexico loses more than 965 square miles of forests annually to cultivation, overgrazing and fire.

Why should U.S. residents care about the fate of Mexico’s environment under a free-trade system?

Mexico’s pollution does not respect boundaries. The people of Nogales, Ariz., know this firsthand. They inhale carcinogenic smoke from dump fires that have burned intermittently for years in their twin city, Nogales, Sonora. Beach-goers in San Diego County know too. They are warned against swimming at a state park where raw sewage flows north from Tijuana.

Free trade is expected to make relocation to Mexico much easier for U.S. firms. If lower pollution control costs make moving profitable, U.S. employees may be laid off.

Alternatively, some environmentalists believe that the United States will feel pressure to compete for business by weakening its own environmental laws.

Keeping Mexico poor is no solution, both governments say. Indeed, poverty and foreign debt force developing countries to over-exploit natural resources, accelerating degradation.

Even so, free trade is not seen as a quick fix. “The reality is (Mexico) will continue to have environmental problems for some time to come irrespective of what we do on trade,” said William K. Reilly, administrator of the U.S. Environmental Protection Agency.

“But the economic promise of free trade eventually will allow us to give a much higher priority to the environment,” he added. “It will also, I think, raise expectations on the part of (Mexicans) about the quality of life they will insist on.”

Many environmental activists agree, viewing the talks as an unparalleled opportunity to use economic leverage to force change. They see Mexico’s recent commitment of hundreds of millions to fight border pollution as a significant first step, though they are still wary.

“The amount of monies needed to do the job down there is many magnitudes higher,” said J. Michael McCloskey, chairman of the Sierra Club. “It will be interesting to see whether the money really flows or if this is one of the grand announcements that disappears into the mist.”

Enrique Flores, a meteorologist at the University of Guadalajara, thinks his country eventually will stop forcing companies to comply with tough new rules. “If Mexico tries to enforce environmental standards used in industrial countries,” he said, “companies will go elsewhere, to Thailand or Malaysia.”

For now, there are no mechanisms to ensure that a portion of the anticipated bonanza from free trade is earmarked for environmental protection. The National Wildlife Federation has proposed a so-called “green tax” on investment in Mexico, of perhaps 1%, to be earmarked for ecological budgets.

The extent of Mexico’s environmental commitment remains a question mark.

A case in point is the antiquated Mexico City refinery that was torn down amid great fanfare. It is being reassembled quietly in Salamanca, another industrial city to the northeast. No new pollution controls are planned.

When the United States banned Mexican tuna imports on the grounds that the fleet was killing more dolphins than allowed by U.S. law, Mexico filed a complaint accusing the United States of using conservation law as a mask for violating international trade agreements.

Mexico won its case in August before a panel of the General Agreement on Tariffs and Trade and then, after anguished howls from environmentalists, tabled the issue before it could be ratified. But there’s nothing to stop Mexico from resurrecting the matter.

The panel ruling was the first time that trade treaties came so close to preempting national environmental laws. “This has sent a shudder of fear through American conservationists,” EPA chief Reilly said.

Environmental organizations aren’t the only ones who see problems. Mexican authorities privately acknowledge that the competitive pressures of free trade will encourage domestic companies to cut costs at the expense of sound environmental practices.

And, as the developing world’s second-largest debtor nation, Mexico is also under pressure to reduce government spending.

Over the last decade, the federal budget deficit has been slashed from 16% of the economy to less than 1%, with cuts in social services, as well as the sale of government-owned industries to the private sector.

From this shrunken budget, now $78 billion, the government is paying $100 million for public relations to promote the free trade treaty.

It also has increased its environmental budget sixfold from 1990 to 1991. But that infusion of money brings the total to only $39.5 million a year, said Sergio Reyes Lujan, Mexico’s undersecretary for environmental affairs, whose office is part of a department known by its Spanish acronym, SEDUE.

SEDUE’s per capita environmental budget is 48 cents, compared to the EPA’s $24.40.

Even with recent and prospective hirings, manpower is spread woefully thin. This year, Mexico hired 100 inspectors to help enforce environmental rules, posting 50 in Mexico City and 50 at the border. That brought the number available to monitor the entire nation’s factories to 255. That is roughly the same number fielded by the South Coast Air Quality Management District, which regulates air quality in four counties in the Los Angeles area. Next year, Mexico expects to hire another 100 inspectors, bringing the total along the border to 200.

“I’m not reassured at all,” said Richard Kamp, director of the Border Ecology Project, based in Arizona. “They’ll need much more training than they’re getting. It’s like having 200 secretaries who are able to process paper.”

And so, though Mexico has been strengthening its laws--requiring environmental impact reviews and issuing technical standards for air, water and hazardous waste--many businesses flout the rules, apparently figuring that the risk of getting caught is lower than the cost of complying.

Even state-owned factories fail to pay attention to the new regulations. Officials preparing government steel and fertilizer works for sale to raise cash for the national treasury say they found that pollution control equipment had been so poorly maintained it no longer functioned.

“I’m concerned now and if it’s possible to be more concerned, I will be after (a free-trade agreement) is signed,” said Rene Altamirano, SEDUE’s director general of pollution control. “We can’t work any harder.”

He doesn’t know, he said, how many companies might move to Mexico or expand operations as a result of free trade. Nonetheless, Altamirano and his supervisor, Reyes Lujan, say they are confident that future growth under free trade would not further jeopardize Mexico’s ravaged environment. “New companies will have to meet the highest standards. They will have to be reviewed by us,” said Reyes Lujan.

But, he added, SEDUE has a staff of only seven to assess the environmental impact of an estimated 700 to 900 construction projects in 1992. Much of the work will have to be done by outside consultants, he said.

Politically, the Mexican government must avoid the appearance of responding to U.S. pressure on enforcement. Sovereignty is important in this nation, which lost half its territory to the United States in the 19th Century.

“Observing the same health and environmental laws is not under discussion,” Commerce Minister Jaime Serra Puche told the Mexican Congressional Committee on Trade in August.

Instead, President Salinas and U.S. President Bush called last year for a joint plan to improve the quality of the environment 60 miles on either side of the border.

But EPA officials involved in the process said the draft is little more than a list of projects that were already in the planning stages, mostly to gather information on the scope of air, water and hazardous-waste problems.

As the plan was being drawn up, EPA officials said, the U.S. State Department offered constant reminders that Mexico is a sovereign nation and cannot be told what to do. Proposals for binational inspections and for coordinating budgets were weakened or dropped.

“It doesn’t really look like a plan,” said Roberto A. Sanchez, an environmental expert at the Border College in Tijuana. “It looks like a book to avoid a plan.”

A revised plan is scheduled for completion before Presidents Salinas and Bush hold their next summit meeting, expected sometime in December.

Mexican and U.S. officials bill their latest environmental collaborations as an extension of the La Paz agreements, a series of initiatives begun in 1983, well before any talk of free trade.

The La Paz provisions met with mixed success. On the plus side, they are notable for their landmark attempts at fostering cooperation on several specific shared environmental problems.

One was known as “the gray triangle,” between Douglas, Ariz., and Agua Prieta and Nacozari in Sonora. There was one copper smelter on the U.S. side and another on the Mexican side. A third smelter was being built in Mexico.

Children in Agua Prieta timed their outdoor play by the U.S. smelter schedule. At sunset, as the wind shifted south toward Mexico and away from the U.S. monitors that checked emissions, they’d sniff the rotten-egg smell. Then they’d taste the bitter, chalky flavor. Finally, when they felt a tickle in their throats, they went inside.

After two years of pressure from local citizens, the smelters were included in the La Paz accords. As a result, one Mexican smelter installed $50 million in pollution-control equipment, another canceled expansion plans and the U.S. smelter closed down.

In another joint effort, a long-delayed international sewage treatment plant will be built in San Diego, but the governments are still haggling over money. The United States is contributing $100 million for construction. Another $60 million is needed, but Mexico has not said how much it will pay.

Meanwhile, EPA officials worry that toxic substances illegally dumped in the Tijuana River could reduce the plant’s effectiveness.

The La Paz accords also called for a joint contingency plan to alert communities across the border of hazardous spills and to coordinate responses.

But no one on the U.S. side was immediately notified when the Quimica Organica plant in Mexicali released a plume of mixed sulfuric and hydrochloric acid in July, 1990. Thousands were evacuated in Mexico. A 45 m.p.h. wind blew the toxic cloud northeast toward the border, less than 10 miles away. Fortunately, it dissipated in an unpopulated area. The EPA was not informed for months.

Another common concern among environmentalists is the current focus on the border and on Mexico City’s smog. All of the new SEDUE inspectors have been assigned to those two locations. Even Kamp, of Arizona’s Border Ecology Project, who lives near the smelters, says, “There are a million problems in Mexico more serious than the border.”

Other parts of the country may not attract the same environmental scrutiny. A Mexican stock analyst shrugged when asked whether pollution-control expenditures will affect the financial performance of mining companies. “Most mines are in remote areas,” he said. “No one will notice what they do.”

Lack of basic information and community involvement hampers the improvement effort. Mexico’s few environmental success stories have shown that both are important.

For example, last year after installing monitors, Monterrey officials learned that their air was laden with sulfur dioxide and lead. They used the data to pressure the government oil monopoly to substitute cleaner natural gas and diesel fuel, replacing the high-sulfur oil that powered most of the city’s factories. Sulfur dioxide levels dropped 80% that year. Factories emitting lead were forced to develop plans to control it.

Residents in the “gray triangle” say that they are the ones who are keeping the emission limits alive. While federal agencies of both countries accept smelter emission reports without question, local activists visit once a month.

“Years of experience mean that we can immediately identify that smell and the sensation in the throat,” said Gildardo Acosta, a member of the border group Enlace Ecologico.

In Tepoztlan, a picturesque town south of Mexico City, residents won a court order temporarily halting the construction of a scenic rail line from the capital to Cuernavaca. The government had neglected to get its SEDUE permit for the railroad. In August, nearly 1,000 townspeople celebrated in the main plaza under a banner declaring: “We Won’t Be a Trash Dump for Mexico City or Its Bedroom Communities.”

Much of the emerging activity is due to Salinas’ promise to democratize Mexico’s notoriously centralized government.

Environmental issues have become a part of Mexican political discourse. Environmental groups have proliferated since the early 1980s, forcing the long-entrenched Institutional Revolutionary Party (PRI) to respond.

But observers have one more troubling question. With all Mexican officials limited to one term, can they expect Salinas’ commitments to last when his six years as president end?

There are nagging doubts. “His word is absolutely not binding on his successor,” said Stephen P. Mumme, a political science professor at Colorado State University who has written extensively about border issues.

But Salinas maintains that ecological awareness will not wither away. “(There) is a new . . . environmentalist culture in Mexico,” he said. “It’s a very strong force (that will) make these policies permanent. They will not only come from the political will of a president, but mostly as a permanent demand from society.”

Free-Trade Agreements

A look at free - trade agreements and the proposal being considered by the United States, Mexico and Canada. * Free-trade agreements--what they are: Under a free-trade agreement, virtually all barriers to trade between participating countries are eliminated or lowered, including tariffs and other restrictions.

* How they are negotiated: Although negotiated by trade representatives appointed by the governments, other interests that would be affected are closely consulted, including business, organized labor and agriculture. Agreements by the United States must be approved by Congress. The North American Free-Trade Agreement must be approved by Congress, the Mexican Senate and Canada’s House of Commons and Senate.

* How a U.S.-Mexico-Canada pact would benefit the countries: Backers of a North American Free-Trade Agreement among the United States, Canada and Mexico say that it will offer benefits to each. For the United States, it will increase investment opportunities for U.S. businesses in Mexico and allow U.S. firms to step up manufacturing in Mexico where labor and other costs are lower. The same would be true for Canadian business, but on a smaller scale. For Mexico, a free-trade pact would infuse badly needed capital into the Mexican economy and provide jobs for Mexicans.

* Problems such a pact could create: Some Mexicans are suspicious of undue American influence over and dominance of their economy. Environmentalists in both nations worry that stepped-up industrialization could worsen environmental problems, despite assurances to the contrary by both governments. In the United States, organized labor fears that American jobs will be lost to cheaper Mexican labor. Mexican firms are concerned that without trade barriers and other protections, they will not be able to compete with U.S. firms.

Spending on the Environment

Per capita spending on environmental protection in U.S dollars.

‘89

EPA (US) Budget per person: $20.80

SEDUE (Mexico) Budget per person: $0.08

‘90

EPA (US) Budget per person: $21.60

SEDUE (Mexico) Budget per person: $0.20

‘91

EPA (US) Budget per person: $24.40

SEDUE (Mexico) Budget per person: $0.48

Source: Congressional Research Service, based on information obtained from EPA.