US, Mexico aim to keep small trade issues small

Not all trade disputes need the kind of major free-trade agreement reached recently between the United States and Canada. There are many day-to-day issues that, without attention, can grow into contentious disputes. Officials from the US and Mexico are hoping to ease many such tangled trade issues, from patent protection to textile imports, that often snarl neighborly commercial relations.

Through an agreement signed last week in Mexico City, both nations hope to dampen the feuding-neighbor image through a more structured method of dealing with bilateral differences. Until this new pact, called the Bilateral Commercial Framework Agreement, there were no formal avenues to discuss and resolve daily trade problems.

``There may have been many issues that [Mexico] wanted to talk about but we didn't,'' and vice versa, says Tim Bennett, a US trade official who was instrumental in the negotiations. At best, discussions were ``ad hoc,'' he says.

A component of the pact seeks to ease that problem by allowing either nation to request consultation on any trade or investment issue. Once the request is made, a so-called cooling-off period is established and working groups can examine the particular issue.

The pact, which does not need congressional approval, is only the first step. Both governments now have 90 days to launch broader trade negotiations, which must include agriculture, steel, and textiles, as well as other issues that are frequently in contention.

Although the Bilateral Commercial Framework Agreement is seen as a step forward for the two countries, its scope is more limited than the still-unratified US-Canada trade pact, which calls for lifting most tariffs and barriers between the two nations by the year 2000.

``Mexico wasn't interested'' in a Canada-type agreement, says Mr. Bennett. Noting that Mexico's tough nationalistic rhetoric has been backed up with tight controls on imports and investments, the nation could not suddenly open its borders.

``Economically and politically, it wasn't ready,'' he says. The north-south trade negotiations, however, are ``an evolving process,'' he adds.

The Bilateral Commercial Framework Agreement, however, could still be a boon to US-Mexican trade by allowing both nations a better organized and more efficient avenue for trade, analysts say.

``The agreement is like a picture frame. You can add pieces later'' as they arise, says Guy Erb, a bilateral-trade expert who has been privy to the discussions.

Both nations hope to benefit from such a pact. Mexico, which exports about 60 percent of its goods to its northern neighbor and subsequently imports 65 percent of its products from the US, has sought a more formal way of dealing with its largest trading partner.

Meanwhile, the US would like to use the pact to deal with issues that have nettled US companies, including intellectual property protections and foreign investment in Mexico.

``We've been pushing the Mexicans to liberalize their trade as much as possible,'' with limited success, a US Commerce Department official said during the mostly secret bilateral talks.

While Mexico joined the General Agreement on Tariffs and Trade in August 1986, the bilateral pact is seen as another good opportunity to further advance these open trade issues.

US investment in Mexico - particularly the stiff restrictions placed on it - had been a principal stumbling block during the on-again, off-again talks.

Initially, Mexico wanted to leave out references to investment, arguing that the document should not deal with specific issues that would be taken up in later meetings. The US, however, wanted a promise that investment would be dealt with once the agreement was complete.