US, Mexico Near Free-Trade Agreement

TALKS to establish a North American free-trade zone dragged Saturday, and were to continue Sunday, but trade sources said there was progress in the difficult final stages of negotiations.

"There's no press announcement (of a conclusion to the talks) planned for [yesterday]," a spokeswoman for United States Trade Representative Carla Hills said, adding that expectations were for talks to continue through Saturday and to resume Sunday.

The Bush administration said last week that final details were being worked out on the North American Free Trade Agreement (NAFTA) that would enfold Mexico into an existing free-trade zone between the United States and Canada, and an agreement was anticipated soon.

Congress then must approve the pact for it to be implemented.

Trade sources said progress has been made on the most contentious issues, including setting the domestic content requirement for automobiles to receive duty-free treatment, tariff reductions, and establishing a system to settle disputes among the three trade partners.

The complex, 13-month talks resumed Saturday morning after most negotiators took a break Friday night, and the Canadian, Mexican, and US trade ministers attended a baseball game in nearby Baltimore.

US trade sources did not comment on reports that talks were hung up by Mexico's effort to reserve all contract work for its companies from the huge national oil company Pemex.

While energy trade negotiations have been limited by protective Mexican laws, Ms. Hills has said the pact should offer opportunities for companies servicing the oil industry.

Environmentalists said a US House resolution passed unanimously Thursday was the impetus for an apparent agreement to strengthen environmental safeguards by establishing NAFTA arbitration panels that would take precedence over General Agreement on Trade and Tariffs panels in environmental disputes.