THE NORTH AMERICAN FREE TRADE AGREEMENT, OR NAFTA, had been negotiated during the Bush Administration. The pact, which would tear down most trade barriers between the U.S., Mexico and Canada, was unpopular with labor unions and many workers, who believed it would create an exodus of American manufacturing jobs to Mexico. Ross Perot agreed, claiming in a memorable sound bite that American jobs would drain south to Mexico “with a giant sucking sound.” Environmentalists also opposed the treaty, believing it did not clamp down hard enough on Mexico’s deficient safety and pollution regu-lations.

As a “new Democrat,” Clinton had a long-standing commitment to eliminating trade barriers as a way to boost growth. In fact, it was one of the centrist positions that aligned younger Democrats with Republicans. Still, Clinton had refrained from endorsing the agreement until late in his presidential campaign and had not pushed it once in office. Now he decided to support it strongly, though it would place him in opposition to labor, a key constituent of his party.

Once the President picked up NAFTA’s banner, the enormous importance he placed on the pact made its passage a defining test of his power. ‘[he lines were drawn. Perot traveled the country, denouncing the pact in rallies of his United We Stand America organization. Odd, makeshift alliances were for ed. Ralph Nader, Jesse Jackson and Pat Buchanan lined up with Perot. Clinton signed up all five living ex-Presidents to endorse the agreement and also enlisted a host of bipartisan supporters, including longtime Chrysler boss Lee Iacocca and conservative talk-show host Rush Limbaugh. Mainstream economists, while siding with the President, believed the free trade pact would have only modest economic effects, and would most probably result in a small net gain of American jobs.

Then the President surprised everyone: he invited Ross Perot to debate Vice Pres-ident Al Gore on NAFTA. Commentators, even his own advisers, felt Clinton had stumbled by offering Perot a platform. “There hasn’t been enough oxygen for Perot, and now we’ve gone and given him a whole lot more,” said one White House aide. But Clinton had his reasons. Polls showed Perot’s support slipping badly. The White House felt that by reminding people that Perot was the voice of opposition to NAFTA, the Administration might garner support for it.

An oxygen-depleted Perot was delighted, and a deal was struck for a single, 90- minute Gore-Perot debate on Larry King’s TV show. The Administration’s gamble paid off. Gore debated like the newspaper reporter he once was, hammering Perot with facts, even stealing a page from the billionaire’s book and presenting him with a framed picture of Hawley and Smoot, the congressional architects of the 1930s tariff that crippled the U.S. economy.

Perot, who began the debate by arguing about the ground rules, was increasingly stymied, annoyed, and impolite. A TIME/CNN poll taken after the debate showed that only 18% of those surveyed thought Perot had won, vs. 47% for Gore. In one stroke, the White House had not only successfully defended its policy, but had deflated its most nagging critic.

The following week the House passed NAFTA by a vote of 234 to 200. A majority of Democrats voted against the treaty; a strong majority of Republicans voted with the President. Clinton had embraced a treaty fashioned by Republicans, defeated a majority in his own party, and taken on a key segment of his support, organized labor, in the name of a “new Democrat” cause. It was the biggest win of Clinton’s presidency, and it promised that his year of living dangerously might pay off as he faced his next great domestic challenge: building a centrist coalition to pass a plan to restructure health care in America.

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