(FORTUNE Magazine) – THE SHOWDOWN is finally at hand. In mid-November the U.S. Congress will give either a thumbs up or a thumbs down to the controversial North American Free Trade Agreement. With the vote too close to call, NAFTA's proponents and detractors are waging frantic last-minute campaigns to win support among the dozens of legislators still sitting on the fence. NAFTA knockers, led by billionaire populist Ross Perot, proclaim loudly that passage would spur a new wave of U.S. layoffs and foster widespread environmental degradation on both sides of the border. Fear of NAFTA-related job losses helped elect Canada's Prime Minister Jean Chretien and, along with Democratic defeat in recent U.S. state and local elections, gave waverers on Capitol Hill yet another reason to vote no. Is this anxiety justified? Absolutely not. Worse, it stands the truth on its head. Almost every objective study of the treaty's potential impact has concluded that this deal will be good for U.S employment, exports, and the environment. ''We've got the facts,'' President Clinton told NAFTA supporters at a recent White House rally and trade fair. ''They've got the fear.'' He's right. Here are the facts.

-- NAFTA will create more jobs than it destroys. Perot likes to claim the pact could cost ''millions'' of U.S. jobs. Rubbish. He gets the number this high by assuming that while NAFTA will have no positive effect on Mexican growth and U.S. exports, it will entice virtually every labor-intensive U.S. company, including high-wage, high-skill businesses, to pack up and move south. Says trade expert Gary Hufbauer of the Institute for International Economics: ''This assumption is the economic equivalent of catapulting Noah's ark to Mars.'' Yes, eliminating U.S. tariffs will cause some job losses in low-wage, labor- intensive businesses that have thrived, or survived, because of protection. Among them: straw brooms, peanuts, sugar, frozen orange juice, and cheap glassware. But the total will be relatively small, and the pain will be eased by a phase-out of existing tariffs (some over 15 years) and by a new federal program to retrain displaced workers. More important, tearing down various made-in-Mexico restrictions on imports and wiping out high Mexican tariffs -- they average 11%, vs. 4% in the U.S. -- will more than offset those losses by boosting exports and jobs in high- skill, high-wage American industries. The winners will include telecommunications, computers, autos and auto parts, trucks, construction equipment, and financial services. The conclusion reached by most reputable calculations is that NAFTA would deliver modest net gains of up to 200,000 U.S. jobs over the next three to four years. That's no windfall -- it roughly equals the number of net new jobs the U.S. currently produces every month -- but it's welcome news, and it sure suggests that the ''great sucking sound'' Perot claims to hear is mainly his own hot air.

-- Low Mexican wages will not prompt a mass exodus of U.S. manufacturers. NAFTA critics like to draw gasps by claiming that the gap between U.S. and Mexican wages is a shocking 10 to 1. Not true. The Bureau of Labor statistics says the difference is more like 7 to 1 -- and even that's misleading, because it simply compares hourly wages. Factor in the real costs U.S. businesses would face -- among them, higher training expenses and productivity one-eighth that of U.S. factory workers -- and the true labor bill is already about the same on either side of the Rio Grande. High Mexican shipping and inventory costs will also continue to make it more efficient for many U.S. industries to serve their home market from American plants. Example: The Office of Technology Assessment estimates a car that costs $8,770 to build in the U.S. would cost $9,180 to make in Mexico and ship back. Executives at Freightliner, the North American truck-making arm of Daimler-Benz, estimate it costs 17% to 24% more to build a truck in Mexico, vs. the States. With truly open borders, some U.S. manufacturers will likely follow the lead of GM, AT&T, and Xerox, which are already shifting some Mexican production to more efficient U.S. plants. European and Asian companies may also decide to supply this giant free-trade region by setting up shop in the country with the biggest market and the most productive workers. BMW and Mercedes-Benz have announced plans to build automotive plants, not in Mexico but in South Carolina and Alabama. Won't anyone move south? Sure, but many of these businesses will be the kind of low-wage, labor-intensive firms that long ago fled the U.S., mostly for Asia. Zenith has already shifted some TV assembly from Taiwan and Ireland to Mexico. As other consumer electronics, semiconductor, and apparel manufacturers follow, that too will be good news for U.S. companies and workers, who will have a much better shot at supplying and servicing plants an hour away in Tijuana rather than 17 hours away in Thailand.

-- U.S. exports to Mexico will boom. Since 1987, when Mexico began opening its economy to foreign trade and investment, U.S. exports there have tripled. In 1992 the U.S. enjoyed a $5.3 billion surplus with its neighbor to the south, vs. a $2.1 billion trade deficit in 1990. Over that period, Mexico's GDP climbed 3.5% a year, roughly twice the U.S. rate. If this growth accelerates, as most forecasters expect, America's trade surplus with Mexico should continue to swell. In addition, NAFTA is filled with provisions that give U.S. companies a decided edge over foreign competitors in this burgeoning market. To qualify for duty-free treatment in Mexico, steel must be melted and poured in the U.S. or Canada. Similarly, textiles must be made from fiber and yarn woven in those countries, and 62.5% of autos must have North American-made parts and components. Says Clyde Prestowitz, president of the Economic Strategy Institute in Washington: ''Such provisions will tend to lock in the current situation where 70% of Mexican imports come from the U.S.'' Who will lead the surge? In 1994 alone, U.S. automakers expect to ship 60,000 extra vehicles to Mexico. That should add $1 billion to exports and provide employment for an additional 15,000 Americans. Down the road, Boeing estimates NAFTA will lift Mexican aircraft purchases by 25% over what they would be without the pact -- which translates into roughly $2 billion in extra sales it hopes to fill. On a smaller scale, Zenith, America's last home-grown TV maker, is already expanding its Melrose, Illinois, plant to ship more picture tubes to Mexico.

-- NAFTA is good for the environment. You'd never know it by listening to radical environmental groups like Greenpeace, but Mexico has some of the most stringent environmental protection laws around. Indeed, they were fashioned after America's. The problem has been lax enforcement, particularly along Mexico's badly polluted border with the U.S., where water and ground pollution are particular problems. By speeding growth, NAFTA would help generate the resources needed to pay for tougher policing. Both countries are committing up to $8 billion for cleanup. Says Fred Krupp, executive director of the Environmental Defense Fund, one of six major environmental groups backing NAFTA: ''For the first time, freer trade means greener trade.'' ULTIMATELY, the stakes in this debate go well beyond specific industries' gains or losses. What's at issue is the nature of U.S. society after the end of the Cold War. NAFTA's opponents believe the time has come for America to turn inward, cling fearfully to past gains, and build walls against outsiders. Their triumph, for example, would doom the already troubled GATT trade negotiations. NAFTA's passage would affirm that the U.S. still believes in the link between expanding world trade and global peace and prosperity, and is confident enough to attempt to lead the world into a new era.

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