Democrats See Trade as Potent Election Issue

IF you thought George Bush was about to give away your job to Mexico, would you get involved in the 1992 election? Some Democrats hope the answer is, ``Yes, in a big way.''

President Bush supports a controversial treaty that would throw open America's doors to imports from Mexico, where factory workers earn less than $1 an hour. Such a treaty would be a ``potent force for ... prosperity,'' argues US Trade Representative Carla Hills.

But the deepening recession and the rapid loss of American jobs offer Democrats a tempting political target. As euphoria about the Persian Gulf war fades, Democrats believe economic issues, like the Mexican treaty, will again become paramount - and will give them the perfect weapon to slam the president.

In the United States, the Mexican treaty could push down prices for everything from autos to clothing to tuna fish. But it could also cause layoffs of auto workers in Detroit, textile workers in South Carolina, and tuna packers in California.

Democratic leaders, watching unemployment climb toward 7 percent, say the groundwork is being laid for what could be the biggest election upset of a popular president in modern times.

The recession is slashing corporate profits, throwing many small firms into bankruptcy, and putting thousands of working-class Americans onto welfare. Big Three auto output is sliding toward a 33-year low.

Long-term economic problems may be even worse. The government's debt has soared to $3.38 trillion. The trade deficit remains high. Japanese investors are buying everything from New York skyscrapers to Hollywood movie studios.

Working Americans are getting the worst of it, and Democrats say the middle class will be the key to the 1992 election.

``More and more of those people who make between $25,000 and $75,000 are finding their jobs gone, and they cannot replace them in this country,'' says former Democratic chairman Robert Strauss. ``They are paying tremendous taxes. They are getting squeezed.''

House Democratic leader Richard Gephardt also talks about jobs - particularly about the threat of Mexican free trade to US workers. Mr. Gephardt is demanding that the White House give assurances ``that American jobs will not be lost in droves'' if there is a treaty.

The congressman, who based his 1988 presidential campaign on the trade issue, notes that ``a bad deal is far worse than no deal at all.'' He suggests Bush's proposed treaty with Mexico may be ``the worst deal since the Red Sox traded Babe Ruth.''

Ambassador Hills disputes that. She explains that some US jobs already have moved south because of Mexico's low wages; but American workers, such as those at Deltec, a San Diego electronics maker, were ``retrained to fill higher-skill and higher-paying jobs,'' she says.

Robert Zoellick, a State Department counselor, says, ``The arguments about job loss just don't stand up to scrutiny.'' He cites a study prepared for the Labor Department that shows the pact could add 64,000 US jobs over 10 years.

Yet critics say a new treaty opening the Mexican border to free trade could hardly come at a worse time for many US workers. Even the strongest corporations, such as International Business Machines, are pruning staff because of competition from Japan, Germany, and other nations.

Mark Anderson, an economist with the AFL-CIO, says the administration is promoting a deal with Mexico as a happy ``win-win'' situation in which ``we all go to the seashore together.'' But with Mexico's working-age population due to double (from 31 million to 60 million) by 2020, he says millions of US jobs could shift south of the border.

Economist Rudiger Dornbusch, writing in the April 11 Wall Street Journal, defends a free-trade pact with Mexico as a deal that would cost the US only ``bad jobs.''

But treaty critics don't agree. They point to a new Ford Motor Company plant in Hermosillo, Mexico, which produces the Mercury Tracer and the Ford Escort station wagon. The Hermosillo plant, one of the most modern in the world, employs 2,100 Mexicans who can assemble up to 165,000 cars a year. As for quality, Ford officials note proudly that ``Car & Driver'' magazine pronounced the Mercury Tracer LTS built in Mexico one of the ``Ten Best'' cars in the world.

The most thorough study so far of the potential impact of the proposed treaty was completed in February by the US International Trade Commission. It found that free trade ``would benefit the US economy overall, but ... the benefits relative to the size of the US economy are likely to be small in the near to medium term.''

The study also found that ``the real income for unskilled workers in the United States is likely to decline slightly,'' while the incomes of skilled workers would rise.

However, some effects are unknown. For example, American auto workers might benefit - or might not - depending upon decisions by US automakers to move production to Mexico.

Other results are more certain. There will be ``significant harm to the US tuna industry, particularly to the cannery industry in California, and, to a lesser extent, to the canneries in Puerto Rico,'' the study says. US farmers who grow citrus fruit, winter vegetables, and other warm-weather crops will also experience losses, the study found.

Those losses might be offset by increased US exports to Mexico of products like chemicals, alcoholic beverages, corn, meat, and machinery, the study predicts.

Hills insists the White House is aware of the potential dangers, and will guard against them.

``We are sensitive to these concerns,'' she told the House Ways and Means Committee. ``Nothing we negotiate will be implemented overnight. We know that business, labor, and farmers on both sides of the border will need time to adjust. We will ensure that any agreement be phased in over time and ... protect against import surges.''

But Gephardt responded in a letter to the president:

``Relying on low wages ... to lure away high-paying American jobs will not save the Mexican economy - but it will further weaken the American economy.''

And that may make a potent issue in 1992, Democrats say.