For a time, Mexico wasn't a country. It was a threat -the "giant sucking sound" of industries moving south to reap high profits on low wages.

Today, the No. 1 exporter of cars and trucks to the United States is no longer Japan. The new champion hascreated 28,000 high-paying jobs at border plants rushing to supply American car buyers.

Mexico, right? No, it's Canada.

Canada's auto strike forced General Motors to idle more than 19,000 workers in the United States and Mexico - and made many Americans take notice that the Great White North looks a lot more like Detroit.

Almost three years into the North American Free Trade Agreement, which many feared would send the U.S. auto industry to Mexico, free trade is having the opposite effect of what was expected.

To prove it, look south again.

Mexico - which most Americans believe is gaining jobs through trade, an Associated Press poll showed -steadily slashed its auto manufacturing work force until 1996, and replaced those jobs with $1-an-hour employees on piece-work assembly lines, known as maquiladoras.

And the United States actually gained jobs in the auto industry, though not the higher-paying jobs everyone wants.

Canada has just a 10th of the population of the United States; it is far from the minds of many Americans

(only 38 percent of those polled by the AP guessed that Canada was gaining jobs).

``Everyone ignores Canada, and we like that,'' said Dennis DesRosiers, a Canadian auto industry consultant in Richmond Hill, Ontario outside Toronto. ``It means we can ship millions more vehicles to the United States than we buy, and not get beaten up like the Japanese.''

In fact, Canada has doubled the number of cars and trucks it exports to the United States since 1989. Last

year, it sold $11.1 billion more in vehicles to the United States than it bought.

But auto tariffs were lifted long before NAFTA - in a trade agreement that was anything but free. The 1965 agreement known as the Auto Pact set the stage for the industry's climb. It effectively erased the border between the United States and Canada, and eliminated tariffs on automotive products. In exchange, U.S. automakers agreed to assemble a car in Canada for each one they sold there. This excess capacity was quickly put to use when car sales took off in 1994.

By June of this year, Canada employed almost 60,000 workers assembling mostly U.S. parts into motor

vehicles - about 85 percent of which were exported to the United States, DesRosiers said. ``You could say we're shipping parts to Canada and buying back assembled vehicles,'' said Bill Moller, an international auto trade expert and former business professor at the University of Michigan.

But wasn't that supposed to happen in Mexico, where labor is cheap?

It turns out Canadian labor is low-cost, too - one-third less than in the United States - and the quality and productivity are equal or better than that of the United States.

Automakers save at least $200 for each car they make in Canada because of its national health care plan, which offers for free most of the medical care that U.S companies buy for their employees. GM spends about $5,000 per year to provide each current and retired employee with health care, and less than $1,000 per current Canadian worker.

Canada's cheap dollar - worth about 74 U.S. cents - allows the dollars of U.S. manufacturers to go farther.

Billions of dollars in government loans and other subsidies in the 1970s and 1980s also helped companies choose Canada - for plants in Bramalea, Ontario and St. Therese, Quebec.

``With government subsidies and national health care, the Canadian government and taxpayers have bought assembly plants,'' said Sean McAlinden, a researcher at the University of Michigan's Office for the Study of Automotive Transportation. Canada says that it has stopped providing incentives, and that companies such as Honda and Toyota are now locating there without any help. And GM says that its production in Canada is high because the large models it builds there - such as full-sized pickups, Pontiac Firebirds and Chevrolet Monte Carlos - happen to be hot sellers.

``Canada just happens to be at the right place at the right time,'' said James P. Womack, a consultant and former director of the International Motor Vehicle Program at the Massachusetts Institute of Technology.

Mexico would like to be in Canada's place, anytime.

Employment in Mexico's auto industry has dropped since it was opened to foreign competition in 1989. NAFTA, put into effect Jan. 1, 1994, didn't stop that. By 1995, Mexico had lost 13 percent of the 137,000 auto manufacturing jobs, when foreign competition wiped out Mexican parts suppliers.

One year after NAFTA, the peso collapsed and auto sales plummeted 70 percent. Now, the recovery is on. The cheap peso is expected to boost Mexican production by Nissan, Volkswagen and the Big Three to a record 1.2 million vehicles this year, about 85 percent of which will be exported to the United States, according to Ciemex-Wefa, a Mexico City consulting group.

This year's increase in production will bring Mexico back the auto jobs it has lost since 1989. But new equipment and more efficient production mean fewer workers are needed to produce more cars.

In other words, Mexico's low wages aren't low enough to save manufacturing jobs from the latest technology.

The lower peso, however, has brought Mexico 27,000 new jobs in the low-paid, low-skill maquiladora sector, assembling mostly foreign components - items like wiring and electrical systems for motor vehicles - for export to the United States, according to Mexico's National Statistics Institute.

The pay: about $1.26 an hour, $2 with benefits. This is, of course, far less than workers would be paid in the United States. But American auto workers have their own complaints.

At first glance, they should be happy. There are more U.S. auto workers - 933,000 last year - than any time in the last 15 years. This year, for the third straight year, production in the United States, like Mexico and Canada, is expected to hover at or near historic highs.

Automakers boast that trade agreements allowed them to win back a share of the U.S. market they would have lost to cheaper Asian and European cars. Sending some jobs to neighboring countries to keep costs down, they say, saves the majority of U.S. auto jobs in the long run.

``In the mid-1980s they assumed that the U.S. wouldn't have much of an auto industry anymore,'' said Mustafa Mohaterem, GM's chief economist, who lobbied heavily for NAFTA. ``So you're not just holding on to traditional jobs, you're adding to them.''

But for U.S. workers, higher wages do not accompany the rise in jobs. The proportion of high-paid assembly jobs has shrunk, while parts jobs - which pay $8 to $10 an hour less and offer far fewer benefits - are rising.

During the last production peak in 1985-86, when manufacturing was at similar levels, assembly workers made up about half of the industry's work force. Now, they make up only about 40 percent. In Canada, they make up slightly less.

``NAFTA is a win situation in the long term for the industry's competitiveness, but it's not a windfall for

U.S. workers,'' said Jim Metayka, an auto analyst with J.D. Power and Associates. ``The pressure to keep reducing the cost of labor to produce a car is going to continue.''

The deficit in automotive trade with Canada is unsettling to the United Auto Workers. But the union is reluctant to criticize its Canadian counterparts, who have achieved national health care and other benefits the American union wants.

``They consider the Canadians their allies in the fight to preserve jobs and high wages against auto companies which have spread their production across the globe,'' McAlinden said.

``Besides, it's a fair game with Canada, which has a high standard of living and buys a lot of U.S. cars.''So why do people blame Mexico - or Japan - and not Canada?

``There's a double standard,'' said DesRosiers, the Canadian auto analyst. ``It's OK for GM, Ford and Chrysler to run a deficit with Canada, but it's not OK for Honda, Toyota and Mazda to have one with Japan.''