US-Mexico Trade Talks to Resume

IS this the ninth or will there extra innings?

The question hangs over the chief negotiators as they gather here this weekend for yet another round of talks on the North American Free Trade Agreement (NAFTA).

If President Bush wants NAFTA in his pocket before the November presidential elections, the United States, Mexican, and Canadian trade ministers have to sign the pact by Aug. 5. US law mandates a 90-day review period before Mr. Bush can sign off on NAFTA. But the treaty would not go into effect unless the US Congress ratifies it, which is not likely to occur until early next year.

"There's really no pressure to sign it now unless Bush sees some sort of electoral advantage," says Sydney Weintraub, a specialist in US-Mexico relations at the University of Texas, Austin.

But apparently Bush does see NAFTA as an advantage. At his meeting with President Carlos Salinas de Gortari at the major-league baseball All-Star game, Bush said the talks were in the ninth inning. At their convention next month, Republicans are expected to emphasize the jobs created by growing US exports, particularly to Mexico, under the Bush administration. Bush initiative

"NAFTA is one of Bush's major foreign policy initiatives. I think he'd like to be able to claim credit for it before the elections," says Doris Meissner, a Mexico expert at the Carnegie Endowment for International Peace in Washington.

But Mexican sources close to the talks indicate they are in no hurry to make this the last meeting. This may be a negotiating ploy. But the Mexican team is undoubtedly more relaxed with Ross Perot out of the presidential race. Mr. Perot opposed NAFTA, arguing that it would hurt US manufacturers. Since Gov. Bill Clinton supports NAFTA, there is less pressure to cut a deal.

Canadian Trade Minister Michael Wilson also indicated in a press conference this week that this may not be the last negotiating round. "We still have some difficult issues to deal with," Mr. Wilson warned.

For example, the 1988 US-Canada Free Trade Agreement defines a North American-made car as that with 50 percent of its value produced within the US or Canada. US automakers would like to boost local "rules of origin" to 65 or 70 percent. The Canadians and Mexicans prefer a lower figure so as not to discourage Japanese and European automakers from setting up factories on their soil.

Mexican auto-parts manufacturers would also like a longer lead time to build up their competitiveness before going head-to-head with the US and Canada.

In the politically sensitive energy arena, Mexico steadfastly refuses to allow foreign investment in oil production, exploration, refining, and retail gas sales. US interests in Mexico

US oil companies have pushed hard for an opening. In London this week, Mr. Salinas reiterated Mexico's stance against "risk-sharing contracts" but there are reports that Mexico is planning to allow performance contracts, giving foreign firms cash bonuses based on quantity and speed of oil extraction. It is not clear whether the US will back off from further demands.

Other issues to be resolved during the two days of talks include government purchasing rules, foreign-investment restrictions, and the contentious issue of how much tariff and quota protection Mexico will get (and for how long) for its core farm products such as basic grains, beans, and corn.