Canada, Mexico, U.S. achieve trade accord Pact forms largest free-commerce bloc

August 12, 1992|By Bert Robinson and Katherine Ellison | Bert Robinson and Katherine Ellison,Knight-Ridder News Service

WASHINGTON -- U.S., Mexican and Canadian negotiators sealed the terms of a historic pact yesterday to establish the world's largest free-trade zone, bringing three distinct cultures and 370 million people under a single economic canopy.

The White House scheduled a Rose Garden ceremony for this morning for President Bush to announce the The North American Free Trade Agreement. A similar ceremony is expected in Mexico City.

But the three trade ministers issued a statement last night saying they had not concluded a deal.

"Contrary to press reports, negotiations on a North American Free Trade Agreement continue this evening with all three ministers meeting," the two-sentence statement said. "An announcement will be made when the negotiations are complete and a deal has been reached."

When a deal is concluded is not a cut-and-dried issue, however, because lawyers will be sorting out final details for weeks, as they do on all international agreements. What matters is whether enough of the issues have been resolved to announce an agreement.

The White House notified key congressional committees yesterday evening that it thought a formal and final deal would be completed last night, while warning them that some details still were being worked out.

People involved in the negotiations said the trade ministers from all three countries reached the accord at 1 a.m. yesterday after 14 months of negotiations.

The agreement would transform relations among countries that have long used trade barriers to pursue growth at their neighbors' expense.

By linking economies that produce a total of $6.5 trillion in goods and services each year, the pact is intended to spur regional economic activity and raise living standards across the continent.

But increased competition among farms and factories across the trade zone could displace thousands of workers. That has made the talks controversial, and the controversy is likely to increase as legislators in the three countries consider the pact.

Most of the details have not been disclosed, but criticism from potential victims has already begun.

"I don't believe the American people will be fooled by the Bush administration's promises. This agreement means more U.S. job losses," said Mark Anderson, an international economist with the AFL-CIO.

In a key element of the pact, Mexico is expected to phase out tariff and other barriers to automobile imports over 10 years, and the United States would do the same over five years, although only cars with 62.5 percent North American content would receive duty-free treatment. The content requirement, a key for U.S. automakers, was among the last issues resolved.

The United Auto Workers union is expected to oppose the plan, partly because it fears that U.S. automakers would use the deal to shift more auto-manufacturing jobs to Mexico, where wages are significantly lower.

Auto manufacturers had hoped that the North American content percentage would be higher. Officials from the Big Three U.S. automakers had no immediate formal comment.

The trade deal is an issue in the U.S. presidential campaign. Mr. Bush has touted a free-trade zone that ultimately could encompass South America and the Caribbean, and help reinvigorate a listless U.S. economy.

His Democratic opponent, Bill Clinton, while expressing support for freer trade, said he fears that Mr. Bush would not provide enough worker retraining and environmental safeguards.

The debate over the proposed pact might be even more heated in Canada, where trade with the United States is widely blamed for a persistent recession.

In Mexico, however, newspaper columnists compare the destruction of trade barriers to the fall of the Berlin Wall, and President Carlos Salinas de Gortari can count on swift approval.

U.S. officials said any of the countries could, in theory, still back down but that none had given any indication that it would do so.

The last issue, resolved early yesterday, concerned the extent to which Mexico would open to U.S. and Canadian competition its contracts from government agencies and state-owned enterprises.

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