THE DIRTY LITTLE TRADE SECRET : Everyone seems to like the North America Trade Agreement-except the public

WASHINGTON — Respected leaders across an entire continent join together to guide their peoples to prosperity through increased economic integration. But angry voters resist, unpersuaded even in the face of a rare consensus between the political left and right. An important treaty suddenly runs aground, where once it had seemed assured safe passage.

That is Europe today. It could well be the United States by next spring.

Today, there is broad agreement on the virtues of a North American Free Trade Agreement. The United States and Canada already have a free-trade pact; the Administration has now negotiated a treaty with Mexico as well, which awaits ratification. NAFTA advocates include congressional leaders of both parties, virtually every major news organization, most economists--essentially every opinion-making segment of society. Two notable supporters are George Bush and Bill Clinton. However, there remains one dissenter from this far-reaching consensus: the American public.

Opinion polls conducted over the past two years have consistently found more Americans opposing the treaty than favoring it. What’s more, the opposition has increased over time. A July CBS-New York Times poll found that, by 2 to 1, a free-trade agreement with Mexico was considered a “bad” rather than “good”’ idea. The Gallup poll this month recorded a similarly low level of support. Republicans and Democrats, liberals and conservatives--all turn thumbs down.

To be sure, most Americans still know little about the proposed agreement with Mexico. But it would be a mistake to think this represents opportunity for NAFTA proponents--more likely, it represents the opposite. To date, the more people have learned, the less they support the treaty. Also, majority opposition has developed even in the absence of any criticism from nationally credible figures.

Voters’ skepticism about NAFTA is driven by three fundamental concerns: jobs, jobs and jobs. Always a critical issue, in today’s economy jobs is virtually the only issue. By better than 2 to 1, voters say they worry more about electing a President who wouldn’t protect U.S. workers from foreign competition than about one who would hurt consumers by restricting trade.

Free-trade advocates have implicitly acknowledged this reality by trying to sell the treaty as a job creator. However, only 16% of the public believes NAFTA will result in more jobs for Americans. The treaty covers some 2,000 pages, but for voters it boils down to two words: Goodby jobs .

Most people see trade imbalances resulting from foreign goods being cheaper than U.S. goods--a gap generated primarily by wage differentials. Mexican wages are extremely low--a fact well understood by voters. So they consider free trade with Mexico as inherently to America’s disadvantage. It will be hard to persuade them that poor Mexicans could ever buy enough U.S. products to create a net job advantage for the United States. Moreover, voters figure that many U.S. companies will be tempted to locate new jobs across the border, where they can pay wages one-tenth the U.S. level.

Treaty proponents also confront deep public doubts about whether elites will act to protect the economic interests of U.S. workers. The public perceives an indifference to domestic job losses from its leaders that it finds both maddening and mysterious. The nation is in economic decline--why won’t anyone do anything?

In this context, it seems curious that the GOP has been trying to pick a fight with the Democrats over free trade. Bush first attacked Clinton’s call for more aggressive collection of taxes on foreign corporations, saying this would discourage foreign investment. Then he assailed Clinton’s waffling on NAFTA--Clinton supports an agreement in principle, but has not taken a position on the Bush-negotiated treaty. Then, in his Detroit economic speech, Bush escalated further, calling for free-trade agreements with Eastern Europe, South America and other parts of the world. Many political analysts see this as a trap--designed by campaign chief James A. Baker III--with Bush trying to goad Clinton into wearing the dreaded “protectionist” label.

Perhaps. But it seems like the traps Wile E. Coyote sets every Saturday morning for the Roadrunner. The Republicans are playing with dynamite here, and if this “trap” is ever sprung, it will be they--not the Democrats--who end up at the bottom of a deep electoral canyon.

Americans find recent increases in foreign investment disturbing--a powerful symbol of U.S. economic decline. As for defending tax evasion by these foreign corporations--apparently Bush’s position--that would be about as easy as, say, defending furloughs for convicted murderers. Since relatively few Americans are inclined to say si to NAFTA, we can only guess at how unpopular eliminating trade restrictions with countries like Malaysia will prove to be.

On this issue at least, Baker appears to be more the strategic second coming of Gen. Custer than Gen. Sherman. But the Republicans have been saved from their folly by Clinton, who has no substantial differences with Bush on the trade issue--or at least none he has emphasized.

Why would two candidates locked in a heated race both end up on the wrong side of public opinion? A big part of the explanation lies in the enormous gap between elite and mass opinion on trade. A 1990 Gallup poll, for example, revealed 54% of the public in sympathy with general trade tariffs, while only one-third of their “opinion leaders” concurred. Other polls measuring both the general public and elites consistently show the public 20 to 30 points tougher on trade.

The strong free-trade views of American elites, including Bush and Clinton, are rooted in traditional economic theory. This holds that free trade, as a matter of definition, economically benefits all participants. For some, this view has hardened into a near-religious faith.

The public does not disagree with free-trade principles--in the abstract. But they approach the topic far more pragmatically. In recent years, they have seen trade expand, while U.S. wages have stagnated or fallen, and the manufacturing sector has shrunk. They have watched factories close, only to see the parent company open new plants in Thailand or Mexico. They have drawn the logical conclusions--and they want protection.

This sentiment is often and easily caricatured as xenophobia, or as selfish Americans unwilling to compete. But this is not accurate. Voters want other nations--especially Japan--to open their markets. And they don’t want to compete for jobs with people who earn $4 a day. But give them a level playing field, and they’re ready to suit up and play.

Americans actually appear surprisingly reluctant to blame other nations for their economic problems. They consistently say causes of U.S. trade problems are found more at home than abroad. They also believe the solution rests in improved U.S. competitiveness, not higher trade barriers--though there remains a role for barriers. To that end, they support increased attention to areas like education and job retraining. They believe success in the global marketplace lies in what first made America an economic power: the talent of its people.

This is not to make any exaggerated claims for the public’s sophistication in this area. They do not understand important complexities involving exchange rates and emerging technologies. But they have had to find their way in relative darkness here. Their leaders just keep repeating the free-trade mantra, while the economy continues its slide. All in all, the public has done a good job of developing a balanced view. In fact, elites could learn much from them.

They could also learn something from Europe. In policy terms, the Maastricht treaty provides a striking contrast with NAFTA. As Europe has moved toward integration, much attention has been paid to maintaining a social contract. They recognize free trade can indeed be good for everyone--if accompanied by common standards regarding wages, working conditions, the right to union representation and the social safety net. Then competition does what the textbooks promise: reward managers and owners for technical innovation, productivity improvements or just coming up with a better mousetrap. But that only happens if the low road--unsafe working conditions, lower wages, environmental degradation--is closed off.

The Europeans also understand that economic integration with developed nations is far different from integration with underdeveloped nations. In other words, Bulgaria is not Germany--and Mexico is not Canada. Unrestrained wage competition between the workers of wealthy and poor nations promises to lower the living standards of the former far more than raise those of the latter.

It is this enlightened approach that guarantees, in the end, the Maastricht agreement--or something like it--will create a unified Europe. European leaders may have moved too fast, or involved the citizenry too little in the process. However, while progress may be slowed, or the treaty changed, unity will come. Prospects for North American integration, however, are less certain.

If U.S. leaders displayed the same clear commitment to preserving their citizens’ standard of living, the public would show greater interest in expanding global trade. They might propose a slow lowering of barriers between Mexico and the United States--accompanied by efforts to upgrade Mexican labor and environmental standards, as well as real programs to retrain displaced workers here. Such a plan could win substantial support.

Unfortunately, it seems likely that elites will stay with their rigid free-trade stance, merely squabbling over details--as Bush and Clinton are--until the public shakes them out of their torpor. Which they just might. Harris Wofford, the political surprise of 1991, won his upset Senate victory in Pennsylvania in part by running against NAFTA. And Ross Perot, the political surprise of 1992, always got his best applause when decrying the export of U.S. manufacturing jobs. Political riches await those who mine this vein of economic nationalism.

NAFTA may well mark a turning point. It could still be ratified, of course, despite public opposition--unlike citizens of Europe, we won’t get to vote on it. But if a national debate unfolds, don’t bet on the treaty’s prospects. Even a handful of senators--working with labor and environmental groups--could organize massive public opposition. NAFTA may engender--and fall victim to--a true voter revolt. The tinder is there; it remains to be seen if a match will be struck.