Free trade pact will produce winners, losers

NAFTA- the North American Free Trade Agreement- is on the front burner. Heads of state are engaged and there is a sense of urgency. President Bush must deliver an "action plan" to Congress by May 1, detailing the scope of the NFTA negotiations.

Then Congress has until June 1 to renew a "fast-track" procedure requiring a simple up or down Congressional vote - without amendments - on a negotiated agreement. But many in Congress are demanding expansion of the trade pact to include environmental and human rights issues.

Last week, Mexican President Carlos Salinas de Gortari met in Houston with President Bush and in Ottawa with Canadian Prime Minister Brian Mulroney.

The Salinas message: A more prosperous Mexico will create mobs in Canada and the U.S.

The evidence is compelling. Trade liberalization since World War II has sparked the most rapid economic growth in world history. Free trade is a tide that lifts all ships.

For U.S.- Mexican relations it is even more dramatic. Since 1985, when Mexico launched new economic reforms, U.S. exports to Mexico have more than doubled - from $12 billion to over $28 billion last year.

Using the U.S. Department of Commerce formula of 25,000 jobs for every $1 billion of exports, the increase in U.S. exports to Mexico created nearly 400,000 U.S. jobs. Salinas is correct: Rising property in Mexico creates jobs in the U.S.

The NAFTA will, of course, restructure economic relations among the three countries. There will be winners and losers. Some sectors benefit more than others.

U.S. firms that rely on capital, technology and know-how will benefit: automobiles, telecommunications, electronic chips, equipment manufacturers; especially energy and computers; and services, primarily construction and financial services.

Even agriculture will benefit - especially those sectors that are research and technology intensive, such as grains and livestock, where the U.S. has a strong advantage.

Even though wages are lower in Mexico, so is productivity. For example, Nissan's Cuernavaca plant takes twice as long to make a car as its factory in Tennessee. Where know-how and technology count, the U.S. will benefit.

Labor-intensive U.S. businesses will have a tougher time. That's where Mexico has an advantage. Affected industries include fruit and vegetable farmers and textiles. The beneficiaries: consumers in both countries and North American competitiveness in world trade.

NAFTA will have other benefits, including a reduction in illegal immigration. With rising prosperity in Mexico, people will not head north.

NAFTA- even larger and richer than the 12-nation European Community- will also strengthen our hand in international negotiations. This is crucial as we participate in shaping the new world order emerging in international commerce.

NAFTA is North America's ace-in-the-hole as we prepare for leadership in the 21st century. It's the best way to improve our quality of life, whether measured by economic, environmental or human rights values.