Here's an idea whose time was coming along fast, and which arrived on the very day Saddam Hussein invaded Kuwait: A free-trade pact with Mexico. What do these things have in common? Why, oil, of course: Mexico has the world's eighth largest reserve of crude oil.

As its good neighbor, the United States would like to help the Mexicans pump more of it out of the ground, and stronger trade ties would make that easier to do.With Mexico moving speedily toward a more market-oriented economy, a free-trade pact makes even more sense.

A trade-liberalizing treaty with Mexico would encourage investment by the United States and other nations in a country rich in natural and human resources, but poor in development.

The idea has been simmering in Washington and Mexico City for at least a year. It gained impetus from the Free Trade Agreement signed with Canada in 1988, and from an even more comprehensive reduction of economic barriers scheduled to unite 12 European countries in 1992.

The European Community's effort would create a unified economy larger than that of the United States, but a North American bloc including Mexico and Canada (which would be invited to join the talks) would translate into considerable economic clout that the EC could not ignore.

Such a deterrent might be necessary if the EC threatens to adopt protectionist policies in its trade relations with the rest of the industrial world.

President Bush has asked Congress to authorize him to negotiate a trade pact with Mexico similar to the trade pact with Canada.

Of course, the differences between Mexico and the United States are greater than those between the United States and Canada, so an effective pact will be that much more difficult to achieve. Which is all the more reason to authorize these talks as soon as possible.