CANADIAN PRIME MINISTER TO SIGN TRADE PACT IN MEXICO CITY TODAY

CANADIAN PRIME MINISTER TO SIGN TRADE PACT IN MEXICO CITY TODAY

Canadian Prime Minister Brian Mulroney is to sign a major trade pact in Mexico City today that will be similar to a recent framework agreement between the United States and Mexico.

The agreement being signed by Mr. Mulroney and Mexican President Carlos Salinas de Gortari will cover such sectors as agriculture, petrochemicals and environmental technology.Last January, a Mexican government delegation to Canada made a strong pitch for increased Canadian investment in and trade with Mexico.

Mexico is Canada's largest trading partner in Latin America, with two-way exchanges totaling C$1.8 billion (US$1.5 billion) in 1988.

The Mexican authorities last year substantially liberalized their rules restricting direct foreign investment. Non-residents now can acquire control of private sector enterprises in Mexico as long as the investment creates employment, brings in new technology and does not exceed US$100 million.

Earlier this week, Fernando Solana, Mexico's foreign secretary, said his country is eager to develop closer ties with Canada as a means of counterbalancing trade relations with the United States.

"There are few countries that are key to Mexico, and one of them is Canada," he said.

Herminio Blanco, the Mexican undersecretary of trade, suggested a North American trading pact could be a powerful bloc.

"Canada, the United States and Mexico could offer good competition to any bloc formed around the world," he said.

Mr. Blanco added that the United States could provide the technology; Canada, the raw materials; and Mexico, the labor, in a bloc that could compete with the Pacific Rim and Europe.

In Ottawa, Michael Hart, a trade negotiator, predicted Canada will be part of a trilateral free trade agreement with Mexico and the United States within 10 years.

He said Canada should be part of such an accord, or else it would see benefits under the existing U.S.-Canada free trade agreement erode as the United States turns more of its attention southward.