Dynamite Deal : Trade Pact Could Backfire on Bush in the Rust Belt

Trade negotiators for the United States, Mexico and Canada appear ready to wrap up a deal on a historic North American free trade agreement, just as the electoral politics of free trade with Mexico seem to be shifting against President Bush.

The White House, desperate for an opportunity to showcase a Bush economic accomplishment in time for the fall election campaign, is pushing hard for quick agreement among the three countries, and may announce a deal as early as today, sources said.

For weeks, the Bush Administration has been hoping to be able to trumpet an agreement before the Republican National Convention begins Aug. 17.

Yet that strategy is now being questioned by political analysts, who contend the key battleground states in the presidential election are likely to be those in the industrial heartland where Mexican free trade translates--at least in the minds of many voters--into jobs lost and factories closed.

In states such as Michigan, Ohio, Illinois and Pennsylvania, which will gain special electoral importance for the Bush campaign if the President loses California, the free trade agreement could prove to be a tough political sell for the White House.

In fact, a recent poll by the Roper Organization found that only 42% of those surveyed in the Midwest supported a Mexican free trade pact, compared to 57% in California and the Far West.

“Free trade will help (Bush) slightly in California and Texas, but it hurts in the industrial Midwest, which is really going to be pivotal in November,” said Washington political and social commentator Kevin Phillips.

“Nationally, trade is not a cutting edge issue, but it can have an impact in specific areas like the Rust Belt, where people feel sure they will see a movement of jobs to Mexico,” Phillips said.

Added Karlyn Keene, a pollster at the Washington-based American Enterprise Institute: “This is an issue that could be explosive on the state level in the Midwest.”

Sensing a political opening, Democratic presidential nominee Bill Clinton has begun to attack Bush’s position on free trade, joining forces with congressional leaders who argue that the Administration has not pushed hard enough for tough environmental and labor provisions in the pact.

Clinton wants the Administration to provide assistance to American workers who lose their jobs, as well as require Mexico to clean up its disastrous pollution problems and find ways to prevent American firms from fleeing across the border to escape tough U.S. environmental enforcement.

For President Bush, the completion of a North American free trade agreement, designed to create a single market of 360 million consumers with a combined economic output of $6 trillion, has been a long-cherished goals.

As a result, after more than a year of virtually nonstop negotiations, the three nations have hammered out agreements covering a dizzying array of specific industries that are covered under more than 20,000 individual tariffs.

The pact is designed to gradually phase out those tariffs and other trade barriers between the three nations, while retaining existing trade protections against other countries.

The Bush Administration has argued that the agreement will not only boost the sluggish U.S. economy by creating hundreds of thousands of export-related jobs, but will also fuel a boom in Mexico, thereby reducing the flow of illegal immigration into the United States.

U.S. Trade Representative Carla Anderson Hills also stresses that the United States will get the better of the deal because its tariffs are already considerably lower on most goods than are those of Mexico.

But critics in organized labor and elsewhere have charged that the agreement will lead to the transfer of tens of thousands of jobs from the United States to Mexico, as U.S. corporations seek out a duty-free haven against high American wages and tough health, safety and environmental laws.

Environmental groups in the United States and Canada have also begun to weigh in against the way the Administration has handled negotiations, arguing that while Mexico has instituted tough new anti-pollution laws, it has not backed those regulations up with adequate funding for environmental enforcement.

For Clinton, free trade has been a sensitive issue all year. During the Democratic primaries, when he sought to distinguish himself from such protectionist challengers as Sen. Tom Harkin of Iowa, he was a strong supporter of the free trade negotiations.

Clinton even endorsed Bush’s request last year for Congress to give “fast-track” negotiating authority to the Administration.

But with the pact about to become a major issue in the general election campaign, Clinton has changed the tone of his remarks to distance himself from Bush.

Now Clinton appears to be siding with House Majority Leader Richard Gephardt (D-Mo.), a leading trade hawk and a critic of the Bush negotiating stance.

Gephardt, who ran for president in 1988 largely on a protectionist agenda, charges that the Administration is failing to address the environmental and labor consequences of free trade in the ongoing talks.

Just days after Gephardt gave a major speech in Washington on that issue, Clinton spoke out against the Bush negotiating stance for the first time last week.

“From everything we read, the treaty has a whole lot of things in it for people who want to invest money and nothing for labor practices (or) for the environment,” Clinton said.

“It looks like they’re going to take a dive and just go for the money and it’s wrong.”

Gene Sperling, economic policy director for the Clinton campaign, insisted Thursday that Clinton has not changed his position on free trade with Mexico, and that he has always reserved the right to object to a Bush-crafted agreement that did not address concerns about the environment and dislocation of American workers.

“Gov. Clinton was willing to support the fast-track negotiating proposal last year, because he thought the President needed to have flexibility,” Sperling said. “But he never supported the idea of giving (Bush) a blank check.”

But in fact, with Clinton and Gephardt leading the way, there seems to be a hardening of opposition to the agreement throughout the Democratic Party.

Today, the House is expected to vote to approve a resolution demanding that the Bush Administration deal forcefully with the environmental and labor issues in the agreement.

While that resolution, co-sponsored by Gephardt and Rep. Henry Waxman (D-Los Angeles), has no legislative force, it will serve to raise the visibility of the environmental and labor issues just as the White House is poised to announce a deal.

Now, leading Democrats argue that the environmental and labor provisions, rather than the more traditional trade provisions of the treaty, will make or break the pact when it comes before Congress--probably next year.

“So many people are concerned about their jobs, but I’m afraid the Administration will not address the issue of worker adjustment in this treaty,” said Sen. Max Baucus, (D-Mont.) a leading trade expert in the Senate.

The Gephardt-Waxman resolution will thus help stake out a Democratic alternative position on what the Bush Administration clearly hopes will become one of the key economic issues of the fall campaign.

Indeed, despite the mounting criticism, Administration officials have repeatedly argued that the free trade agreement will help, not hurt, Bush politically. They say it will underscore the way in which Bush’s foreign policy skills can aid the domestic American economy.

“I think everyone here believes that the free trade agreement will be nothing but a positive,” insisted a senior Administration official.

But since the White House first made that political calculation, the electoral map has tilted.

With Bush’s dramatic drop in the polls in recent weeks--especially his free fall in California--the emphasis of both the Clinton and Bush campaigns appears to have shifted from the border states that are likely winners in a free trade pact to the industrial Midwest, the most probable loser.

If for instance, Bush takes Florida and Texas but cannot hold California, analysts believe he must win states like Michigan and Ohio.

“And I don’t see how this agreement helps Bush in the Rust Belt,” said Baucus.

POLITICS AND FREE TRADE

“It will create 300,000 American jobs by 1995 and one of the largest free trade areas in the world. And free trade opens up the road, and on the open road American workers leave competition in the dust. Or, as my friend Arnold Schwarzenegger would say, ‘ Hasta la vista , baby.’ We are on the move and we’re going to keep it on the move.”--President Bush

“From everything we read, the treaty has a whole lot of things in it for people who want to invest money and nothing for labor practices (nor) for the environment. It looks like they’re going to take a dive and just go for the money and it’s wrong.”--Gov. Bill Clinton

LABOR, ENVIRONMENT AND FREE TRADE

The coalition of U.S., Canadian and Mexican environmental groups protesting the proposed North American free trade agreement has two main demands:

* Open the talks to the public.

* Include environmental and job issues in free trade agreement, not a parallel agreement to be negotiated separately.

ENVIRONMENTALISTS’ MAJOR CONCERNS

* That the agreement include guarantees to prevent Mexico from becoming a duty-free “pollution haven” for factories from the United States and Mexico.

* Whether the agreement will ensure that Mexico has the resources to devote to improving its efforts to enforce environmental safeguards.

* Whether the agreement will include provisions prohibiting any of the North American countries from lowering environmental standards to attract investment and jobs.

LABOR’S MAJOR CONCERN

* That the agreement will make it easier for U.S. based companies to move to Mexico and export products back to the United States while taking advantage of cheaper labor and less stringent workplace safety standards.