N. AMERICA TRADE NEGOTIATORS WORK AT FLESHING OUT TEXT

N. AMERICA TRADE NEGOTIATORS WORK AT FLESHING OUT TEXT

The chief negotiators for the North American Free Trade Agreement were working feverishly here Wednesday to flesh out a proposed provisional text that would cover all sectors of the historic pact.

Despite continuing differences between the United States, Mexico and Canada in such areas as anti-dumping rules, energy, and rules of origin governing automobiles manufactured in North America, sources close to the negotiations report that gaps are starting to be filled in missing chapters.Following the meetings here, the trade ministers of the three countries will meet in Chantilly, Va., on Sunday and Monday to make decisions likely to determine whether a North American free-trade pact can be signed this year.

The Ottawa meeting could yield an all-important chapter on agriculture, where progress has been held up because of the prolonged deadlock at the Uruguay Round of the General Agreement on Tariffs and Trade.

GATT is the Geneva-based organization that sets rules on world trade.

"The negotiators are working on a draft text on agriculture that would be at least consistent with the principles of GATT, as was the 1988 U.S-Canada Free Trade Agreement," sources said.

Over the past few days, there has been progress in the discussions on textiles, with the United States accepting in principle to replace an existing quota system with tariffs on imported Mexican textiles, the sources confirmed.

A UAW spokesman described the recent strikes in Matamoros as "part of the normal give and take of collective bargaining."

In Washington, however, a U.S. trade official denied that the United States is considering converting quotas on imports of Mexican textiles into tariffs, a process known as tariffication. A Canadian trade official in Ottawa also denied the statement.

Tariffication has been suggested for the liberalization of agricultural trade in the Uruguay Round of trade talks, but has never been considered for textiles, the U.S. official said.

On the energy front, Mexico is not budging from its hard position, based on the Mexican constitution, prohibiting private ownership in the oil industry.

But sources indicated that Mexico could be prepared to open up the petrochemical sector to foreign investors under a North American deal.

The talks to create a free-trade area of 360 million people in North America have reached a critical phase, as the negotiators strive to reach an agreement in time for Congress to approve it before it adjourns for next November's elections.

At their session in Ottawa on Tuesday and Wednesday of this week, the chief negotiators - Julius Katz for the United States, Herminio Blanco for Mexico and John Weekes for Canada - were striving to complete a consolidated text to be reviewed by the three trade ministers meeting in the Washington area this Sunday and Monday.

This will be followed in two weeks time by a week-long meeting in Dallas of all 19 working groups of the North American Free Trade Agreement, or Nafta. Then in March, the Bush administration is expected to make a key political decision on how quickly to press ahead for any Nafta deal by this year.

"The momentum is building up and the negotiators are working very constructively," declared Juan Gallardo, president of the powerful trade umbrella, Coece, which represents all Mexican industry in the North American talks.

"North America has to respond with things moving at an incredible speed worldwide, with Western Europe and the Pacific basin integrating," he said.

Rather than referring to regional economic blocs, Mr. Gallardo said he preferred to talk in terms of "competitive areas built on production-sharing and industry consolidation."