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Mexico, U.S. Near Trade Agreement

October 8, 1987

MEXICO CITY (AP) _ The United States and Mexico are putting the finishing touches on a trade agreement that will create a mechanism for resolving trade spats between the two countries and set the stage for fresh discussions of more troublesome issues.

The agreement could be completed within 30 days, a Mexican trade official said.

The official, who spoke on condition of anonymity, characterized the proposed pact as ″one step more toward a good trade relation between Mexico and the U.S. ... It will help increase trade between our two countries.″

The United States is Mexico’s largest trading partner, while Mexico ranks third with the United States, after Canada and Japan. Last year, the United States exported $12.4 billion worth of goods to Mexico and imported $17.6 billion from its southern neighbor.

The final version of the agreement will not be nearly as sweeping as the recently proposed free-trade accord between the United States and Canada, which calls for an elimination of all tariffs and most other trade barriers between the two countries by 1999.

Instead, the U.S.-Mexico agreement will consist of a permanent framework permitting either country to request discussions within 30 days of a trade dispute, officials said.

This mechanism will give both sides a quicker way to resolve trade conflicts than going to the General Agreement on Tariffs and Trade, the world’s main multilateral trading system.

Mexico joined GATT last year as part of President Miguel de la Madrid’s efforts to revive and modernize the economy. More than 90 countries are members of GATT.

The Mexican trade official said that without a formal discussion process, neither the United States nor Mexico is required to acknowledge the other party’s trade concerns.

″Now,″ he said, ″whenever some matter is presented, ... the other party either could agree to call a meeting about the subject or just say forget it.″

An economist following the negotiations said the agreement will allow both sides ″to talk on troublesome areas (so) we can try to get quick reaction ... before they grow and fester into something that’s far more serious.″

Further support came from the United States-Mexico Chamber of Commerce, which has 230 American and Mexican corporate mambers. ″This is a very simple and practical way for solving problems,″ said its director, Guillermo Ramos Uriarte.

The agreement will be accompanied by a letter listing six areas that hamper trade between the two countries and calling for fresh negotiations of those issues within 90 days of signing.

Mexican trade officials are unhappy with U.S. quotas and restrictions on Mexican textile, steel and agricultural products, while Americans complain about Mexican restrictions on foreign investment and a lack of protection for intellectual property rights, such as patents and copyrights.

The side letter, the Mexican official said, ″is the first step that materializes the consultation scheme.″

The last formal discussions on the agreement were held Aug. 17 in Washington, D.C. Since then about a half-dozen exchanges - by telephone or cable - have been conducted, analysts said.

The wording of the countries’ trade relationship in the main agreement is believed to be holding up a final accord.

Once the final wording is negotiated, the agreement is expected to be signed by U.S Trade Representative Clayton K. Yeutter and Mexican Commerce Secretary Hector Hernandez.

The signing, though, could be delayed until the next meeting of Presidents Reagan and de la Madrid, which could be held early next year.

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