THE WORLD FROM...Mexico City

Political changes in Washington and Ottawa are buffeting Mexican hopes for a free-trade agreement

IF there was any doubt here, it is now clear that the fate of the North American Free Trade Agreement (NAFTA) will not be determined by what happens in Mexico's smog-enshrouded capital.

The real battle is being waged in Ottawa and Washington. And there was ample evidence of that this past week.

Canadian Prime Minister Brian Mulroney's plans to step down in June sent tremors through the Mexican stock exchange. The business community is concerned that NAFTA may be held up because of the resignation.

The unpopular Mr. Mulroney is promising to push NAFTA ratification through the Canadian Parliament; legislative hearings began on Feb. 25. While it's a fairly safe pledge given the 10-vote margin Mulroney's Progressive Conservative Party holds, many party members will be weighing NAFTA's dismal image in Canada against their own re-election prospects.

"Hey, Jaime ... what do you think of Mulroney's resignation?," queries a political cartoon in the Mexican daily newspaper El Financiero. The next scene shows Mexico's Commerce Secretary Jaime Jose Serra Puche. One hand holds a briefcase, and the other is gripping an inner tube around his waist. Meaning: The NAFTA ship is approaching dangerous waters.

LAST week in Washington, three outspoken Mexican NAFTA critics had their day before a House subcommittee on small business. Adolfo Aguilar Zinser urged the US Congress to postpone NAFTA ratification so it could be an issue in the 1994 Mexican presidential elections.

Mr. Zinser, a political analyst at Mexico's National Autonomous University, said the Mexican Congress - dominated by the ruling party - would not truly debate NAFTA's implications when it meets in April. "The people of Mexico will see their future debated here in Washington while in Mexico NAFTA is taken as a done deal." Mexican ratification of NAFTA wasn't on a "fast track" but on a "supersonic track," Zinser said.

Meanwhile, President Carlos Salinas de Gortari and his US lobbying team attempted to blunt the critical salvos and sent a warning the day before the hearings to the Clinton administration via a Washington Post article, which was reprinted in several Mexican papers.

Mr. Salinas called the ratification of NAFTA "a test of the true willingness of the US to have a positive relationship" with Mexico and the rest of Latin America. If NAFTA were rejected, "the whole region as a whole would feel rejected."

It is certainly true Mexico is not alone in embracing the trade liberalization-privatization philosophy. On March 10, Mexico, Venezuela, and Colombia (known as the Group of Three) will hold another negotiating session to set up their own free trade pact. The pact, which sources say is 60 to 70 percent complete, is slated to go into effect next year.

But those talks are proceeding more pacifically than the NAFTA debate. On March 16-18, Mexican officials will be back in Washington to formally begin negotiations on the parallel legislation to set new labor and environmental standards, which President Clinton calls prerequisites to NAFTA approval. But privately, Mexican officials are somewhat disheartened that the Clinton administration appears to be giving little attention to NAFTA, leaving the field open to both Mexican and US Congressional critics.

Given the events of this past week, Mexico's Commerce Secretary may well be packing a flotation device on his next visit to Washington.