NAFTA Set to Head South, Beyond Mexico

White House trade officials call NAFTA a "flypaper issue."

Critics toss all sorts of complaints at the North American Free Trade Agreement, and they stick.

And the attacks have multiplied in recent days, as President Clinton moves to give Congress a "comprehensive study" of NAFTA's operation and effects.

Further, the administration says it wants to expand NAFTA beyond the US, Canada, and Mexico to include Chile and other Latin American nations

The study on NAFTA effectiveness is still being put together and will appear around July 11, says Jay Ziegler, spokesman for the Office of the US Trade Representative.

It will include economic analyses by various federal agencies, as well as states, universities, and other experts, painting NAFTA as a successful commercial agreement, Mr. Ziegler says.

Hard fight for fast track

Both sides see a struggle ahead for "fast track" legislation, permitting the administration to negotiate trade deals with only an up or down vote by Congress.

In May, Mr. Clinton delayed sending a fast-track bill to Congress until September, giving White House officials time to mount a public-relations campaign in its favor.

"The battle has been joined," says Robert Scott, an economist at the Economic Policy Institute.

The Washington think tank is leading a coalition of six policy-research organizations that late last month issued a report charging that NAFTA has failed to perform as promised and should be repealed or restructured.

The coalition listed more than a dozen complaints, claiming NAFTA "created deep and probably chronic trade deficits for the US with its neighbors," weakened workers' rights and bargaining power, and increased environmental and public-health damage along the US-Mexico border.

One key charge: the 3-1/2-year-old treaty has depressed the real wages of American blue-collar workers by boosting imports from low-wage Mexico.

Treasury Deputy Secretary Lawrence Summers denied this charge in an April speech.

"To blame unemployment or to blame wage differentials primarily on international trade is something that is not supported by the evidence," he said.

Imports from low-wage nations, he argued, are small compared with the nation's total economy. Over the past 15 years, imports as a share of America's gross domestic product rose to 4 percent, a gain of only 1.5 percentage point.

But the AFL-CIO doesn't buy that argument. It promises to oppose NAFTA's expansion if it does not include "enforceable labor and environmental requirements."

Since Congress will unlikely pass legislation for that purpose, the national labor federation is "gearing up for a big fight," says Thea Lee, its assistant director of public policy.

The pro-NAFTA side is also stacking up ammunition.

The Council of the Americas, a business organization in Washington, says 21 studies of NAFTA's impact on individual states show more exports, jobs, and foreign direct investment, as well as environmental enhancements.

Nineteen states, the studies found, saw exports to Canada and Mexico grow more than 25 percent in the 1993-95 period. Three states - Kentucky, Louisiana, and Mississippi - enjoyed more than 75 percent growth in that period.

Trade out of balance

Critics counter that US imports from Mexico rose 82.7 percent and from Canada 41.1 percent from 1993 to 1996.

As a result, a US trade surplus with Mexico of $1.7 billion in 1993 became a deficit of $16.2 billion in 1996. America's deficit with Canada in 1996 rose to $22.8 billion. Critics say those growing deficits cost the US 420,208 jobs, the report says.

"NAFTA sets rules that encourage firms to bargain down wages and working conditions and to shift jobs to the areas of greatest exploitation," says a critical report from the Institute of Policy Studies, a Washington think tank.

In the House of Representatives, NAFTA passed by a margin of 18.

Since then, 10 of those voting in favor now support a NAFTA Accountability Act that would, in effect, require Mexico to improve its labor and environmental standards.

"The trend is our way," says Robert Naiman, a senior researcher at Public Citizen's Global Trade Watch, which opposes NAFTA expansion.