Free Trade Negotiators Agree on Autos, Sugar : Commerce: Several issues remain as a pact among the United States, Canada and Mexico gets nearer.

U.S. and Mexican negotiators working on a North American free trade accord have reached agreement in principle on dealing with cars and sugar, trade sources said Wednesday.

The auto agreement would phase out a Mexican requirement that U.S. makers in Mexico export $2 worth of vehicles for every $1 worth they import.

The sources said the import curbs, designed to protect Mexico’s domestic car operations, would be phased out in 11 years.

In return, they said, the United States agreed that Mexico could phase out over 11 years a requirement that Mexican-made parts account for 36% of the value of any car made in Mexico.

The sugar agreement would allow Mexico to gradually increase its sugar exports to the United States--but only if it became a net sugar exporter.

To qualify for increased exports, the sources said, Mexico would have to stop importing sugar at the world price of 10 cents a pound and selling it to the United States at the artificially set U.S. price of 20 cents a pound.

Any increased U.S. quota for Mexico would likely come at the expense of quotas the Agriculture Department sets for other sugar-producing nations.

Until Wednesday, trade in cars and sugar were two of the remaining unresolved issues in the 13-month negotiations on a free trade agreement.

Still outstanding is an agreement on the percentage of domestic content needed in a car in order for it to be allowed to be sold among the three countries without duties.

The current free trade agreement between the United States and Canada stipulates 50% domestic content.

U.S. companies want that raised to 70% to assure that Asian auto makers opening assembly plants in Canada or Mexico cannot simply put cars together with overseas parts and bring them into the company as locally made.

Canada and Mexico want a lower domestic content level.

Other issues pending in the trade negotiations include opening Mexico’s oil and financial industries, a schedule on removing tariffs on agricultural products, and ending curbs on textile trade.

The senior negotiators for the three nations opened talks here Wednesday. Their trade ministers are standing by to step in if an agreement is near.

U.S. Trade Representative Carla Anderson Hills met with Canadian Trade Minister Michael Wilson and Mexican Commerce Secretary Jaime Serra Puche last weekend in Mexico City, and reported substantial progress.