Mexico Will Seek Free Trade Pact With the U.S. : Central America: President Salinas wants provisions for migration of workers. But senators oppose any European-style common market.

President Carlos Salinas de Gortari will seek a free trade agreement with the United States and Canada that includes provisions for migration of workers, he told Mexican senators Tuesday.

His remarks followed Senate recommendations--based on three weeks of hearings--that Mexico negotiate a free trade agreement with the United States. Senators, however, rejected the possibility of a European-style common market as a threat to Mexico’s sovereignty.

Salinas listed market access, reciprocity and recognition of the rights of Mexican workers in the United States as major components of the Mexican negotiating stance in proposed free trade talks. He did not specify the type of labor-flow arrangements that Mexico would propose, but he appeared to be referring to legal and illegal immigrants.

However, a Western diplomatic source was skeptical that provisions covering immigrant labor--one of the most sensitive issues between the United States and Mexico--could be part of a trade agreement.

“Labor is very difficult to negotiate, even in Europe,” he said. “I don’t think you could get that. (The U.S.) Treasury (Department) favors freer movement of labor, but the Labor Department does not.”

Nevertheless, Mexican officials, including Commerce Secretary Jaime Serra Puche, have said they want the subject of labor on the table in any talks with the United States, and the Senate agreed.

A free trade agreement “would facilitate the stable and permanent flow of Mexican goods and services--including labor--into (the United States),” Senate President Maximiliano Silerio Esparza told Salinas in presenting results of the hearings on international trade strategy.

Salinas requested the hearings, which ended Saturday, after published reports here indicated that U.S.-Mexico trade talks were already under way in Washington.

The Senate’s recommendations cleared the way for more intense discussions and a possible preliminary agreement when Salinas meets President Bush in Washington next month. The senators also called for a transition period to allow Mexican industry to adjust and invest to meet the added competition that such an agreement would permit.

Salinas said the recommendations resulting from the hearings will provide the framework for trade negotiations. “Our relationship with the United States is the most complex and difficult, but it also offers the most opportunities,” he said.

The United States accounts for 68% of Mexico’s foreign trade, and Mexico ranks third among U.S. foreign markets. Mexico is fifth among countries that sell to the United States.

The relationship with the United States even figures into Mexico’s Pacific Rim strategy as outlined by the Senate.

“Recognizing the symbiotic relationship between the United States and Japan, we should be able to insert ourselves in an advantageous way in what will be the most important economic relationship of the third millennium,” Silerio Esparza said.

Mexico’s proximity to the United States should attract more Asian investment here, he said. He also urged further development of Mexico’s Pacific Coast ports and of the Pacific Rim potential of maquiladoras-- factories concentrated in the U.S.-Mexico border region that assemble mainly U.S.-made components into products aimed at the U.S. market.

Mexican interest in a free-trade agreement was sparked by the country’s increased emphasis on exporting and the repercussions of the U.S.-Canada free-trade agreement, which was signed last October.

A Mexican Commerce Department study found that the U.S.-Canada agreement could increase Mexican textile exports by up to $123 million a year and steel exports by $17 million annually because Mexico has textile and steel agreements with the United States that are likely to give Mexican products entree to Canada. However, it indicated, the overall effect on Mexico will be negative because Canada and the United States are likely to buy from each other some products that they previously bought from Mexico.

“That is why Mexico must find a mechanism for better access to the U.S. market,” Serra Puche said in a recent talk with foreign journalists.

Both the Commerce secretary and the Senate report mentioned concerns about Mexican companies’ access to the U.S. market--concerns raised this spring when Mexican cement makers were accused of dumping their product in the United States.