DOES the North American Free Trade Agreement help or harm the environment? Evidence suggests that the trade pact among Canada, the United States, and Mexico has the potential to do both. In a new wrinkle in the effort to protect the environment, activists in all three countries are beginning to use NAFTA as a tool for spotlighting what they say are environmentally damaging policies and pushing their governments to correct them. This includes logging on federal lands in the US and the dumping of toxic chemicals into a reservoir in Mexico that has killed tens of thousands of migratory birds. But at the same time, initial reports from a watchdog group gathering data along the US-Mexican border indicate that industrial pollution there has gotten markedly worse - as many environmentalists warned would happen - since the treaty went into effect on Jan. 1, 1994. Working with nongovernmental organizations in Mexico, the US group Public Citizen has been monitoring known polluters, tracking the growth of manufacturing plants known as maquiladoras, and analyzing US and Mexican government reports on toxic releases and health problems. ''We started out looking for the good news, but were overwhelmed by how bad it was,'' says Lori Wallach, an attorney who directs Public Citizen's global trade program. ''We went to the high-profile ones and found that they weren't fixed, then we got the background information and found out that all along the border it's worse.'' Public Citizen's report on NAFTA and the environment is expected to be released in about a month. Meanwhile, the first challenges under NAFTA's environmental provisions are being posed. Activists are using NAFTA as a vehicle for exposing environmental problems in each of the three countries and pressing their governments to fix them. A 1994 side agreement to NAFTA established the Commission for Environmental Cooperation. Based in Montreal, the commission staff can investigate complaints brought by interested parties in order to ''enhance compliance with, and enforcement of, environmental laws and regulations.'' If blatant violations are found, trade sanctions may result. Logging in US Last week, on behalf of 28 environmental groups in the US, Canada, and Mexico, the Sierra Club Legal Defense Fund petitioned the commission to investigate the ''salvage logging'' of federal lands in the US. This is the harvesting of timber in areas that have been fire-damaged or where insect damage and disease threaten forest health. Under a special provision of a federal spending ''rescissions'' bill passed earlier this year, such logging is to be increased. And the new law suspends such environmental laws as the Endangered Species Act in order to expedite timber harvests. It also insulates such logging from administrative appeals or court challenges. US critics of the logging provision have maintained that such an important change in policy should have had a full congressional debate rather than being tacked onto a popular budget-cutting and disaster-assistance measure. And they add that it amounts to an end-run around important environmental laws like the Clean Water Act and the National Forest Management Act - especially the public's right to act under such laws. Now, they are looking to NAFTA to support these arguments. ''The logging rider leaves federal environmental laws in place,'' states the legal document submitted under the North American Agreement on Environmental Cooperation. ''It simply eviscerates effective enforcement of those laws. In addition, it eliminates opportunities for the public to participate in and comment on the [timber] sales and their environmental effects.'' In particular, these groups note, the salvage logging provision violates the environmental cooperation agreement's call for promoting ''transparency and public participation in the development of environmental...policies.'' Mexico's migratory birds NAFTA's environmental commission also is investigating the death of some 40,000 native and migratory waterfowl at the Silva Reservoir in Mexico's Turbio River Basin. According to the National Audubon Society, the Grupo de Los Cien Internacional, and the Centro Mexicano de Derecho Ambiental (the US and Mexican groups that submitted the petition), this was ''one of the worst bird kills ever recorded.'' First official reports blamed it on the one-time dumping of pesticides by four unknown individuals. But others say the problem is municipal and industrial pollution upstream from the Silva Reservoir, including local tanneries. ''One facility in particular ... manufactures chromium products used by the local tanneries and discharges wastewater directly in the San German Reservoir, upstream from the Silva,'' states the environmental petition. ''Directly behind the facility, within 20 yards of the San German, is a waste pile with an estimated 50 tons of solid waste - apparently from plant operations.... On several occasions, field investigators have observed a deep red, foul-smelling effluent flowing directly from one of these tanneries into the San German above the Silva.'' But it's not just the death of the birds at the Silva Reservoir that is a concern, according to this report: ''There is a very real possibility that whatever killed thousands of birds at Silva has affected thousands more that will survive to return to their summering ground. Thus, the unidentified toxin may remain a latent threat to persons who harvest birds during hunting seasons in Mexico, Canada, and the United States.'' Meanwhile, another environmental dispute soon may arise along the US-Canada border. The Montreal-based group Societe Pour Vaincre la Pollution (SVP) reportedly plans to file a petition with NAFTA's environmental commission charging that the US Environmental Protection Agency is failing to regulate the disposal of toxic waste at a General Motors plant along the St. Lawrence River. Activists in the US, Canada, and Mexico are using the trade agreement as a tool for reforming environmentally damaging policies at home.