House Leaders Reveal Demands on Trade Accord : Mexico: Gephardt says the Democrats want a border tax to fund job retraining and environmental enforcement.

WASHINGTON — House Majority Leader Richard A. Gephardt (D-Mo.), the Democratic Party’s leading spokesman on trade matters, proposed Monday that a “transaction tax” be placed on goods moving across the U.S.-Mexico border to pay for environmental enforcement and job retraining efforts as part of a North American free trade agreement.

In a major address timed to influence the nearly complete trade negotiations between the United States, Mexico and Canada, Gephardt mapped out the provisions he said must be included in the trade agreement for it to win support of the Democratic leadership in Congress.

At the same time, he assailed the Bush Administration’s handling of the talks, arguing that U.S. negotiators have failed to live up to their earlier pledges to Congress to push for tough environmental and labor guarantees in the trade agreement.

Gephardt, who has frequently been briefed by the Bush Administration on the status of the talks, claimed that the U.S. negotiators have “thus far paid scant attention” to such sensitive issues as “trans-border pollution, worker adjustment and labor and human rights.”

However, U.S. Trade Representative Carla Anderson Hills has insisted that the labor retraining and environmental issues were very much part of the trade talks and probably would be included in legislation implementing the pact.

Hills, however, has questioned the tax on U.S.-Mexican trade, saying “it doesn’t make any sense” to add a tariff to an agreement designed to break down barriers to commerce. She said money for environmental protection and worker retraining should come from general funds, not a special tariff.

Gephardt said the trade agreement as now designed does not include any mechanism to pay for the cleanup of Mexico’s pollution problems, or to improve the country’s weak enforcement of its environmental laws. In addition, he said, there is no provision to compensate American workers who lose their jobs when companies move operations south of the border.

Such measures, Gephardt insisted, must be in the trade agreement for it to be approved by Congress.

But Gephardt noted that “our trade negotiators have said these issues are primarily the responsibilities of others--the private sector and the free market--or will be dealt with later.”

“With time running out on the negotiations, these are the questions which must be resolved before the President signs the agreement. . . . If they are not resolved, a (trade) agreement would do little more than ratify the status quo on both sides of the border, and that would be unthinkable.”

Other leading Democrats also made it clear Monday that they support Gephardt’s stand.

Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.), a leading Democratic spokesman on trade in the Senate, said a trade pact “must be accompanied by a firm commitment (on) worker retraining, protection of the environment and border infrastructure. . . . In my judgment, Congress is unlikely to approve any agreement unless these issues have been adequately addressed.”

Gephardt said that his proposed border transaction tax would make it possible to finance environmental and labor protections without requiring Congress to pass any new taxes on Americans. But Gephardt, who publicly called for the transaction tax for the first time Monday, acknowledged that he is not yet certain how large it should be.

An aide later said that Gephardt believes it probably will have to be larger than that suggested in an earlier proposal by Sen. Max Baucus (D-Mont.), who called for a transaction tax of 0.5% of the value of all cross-border merchandise trade.

Gephardt’s speech came just as negotiators for the three countries were making a final push to complete the yearlong trade talks, which are designed to create a single market of 360 million consumers. The negotiators failed to hammer out a final deal in talks in Mexico City on Saturday and Sunday, but are expected to hold another bargaining round next weekend.

The Bush Administration, frustrated by its inability to push its domestic agenda through Congress and eager to point to an election-year accomplishment in the economic arena, apparently is hoping that it can announce a deal before the Republican National Convention in mid-August.