Mexico, Five Neighbors Plan Free Trade Pact : Commerce: The countries will work toward a regional bloc in Central America.

Ministers from Mexico and five Central American countries Thursday signed an agreement to work toward establishing a regional free trade zone by 1997.

“With the signing of this treaty, the rules are defined for bilateral negotiations between (Mexico) and the five Central American nations for a free trade agreement,” said Mexican Trade Minister Jaime Serra Puche.

The accord is expected to lead to Mexican treaties on free trade with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

Serra Puche said the action reflects President Carlos Salinas de Gortari’s plans to open the Mexican economy.

Mexico last week joined Canada and the United States in the creation of the North American Free Trade Agreement.

U.S.-Mexican trade accounts for more than two-thirds of Mexico’s external commerce, whereas trade with Central American accounts for less than 1%.

Serra Puche said Thursday’s treaty will bring political benefits in addition to increased trade. “Without any doubt, the implementation of free trade will be accompanied by political stability in all our countries,” he said.

The five Central American countries have a combined population of 30 million, just over a third of Mexico’s 85 million inhabitants. Nicaragua and El Salvador are struggling to achieve peace after long civil conflicts, while fighting still goes on in Guatemala.

Nicaraguan Economic Minister Julio Cardenas said earlier this week that Mexico’s negotiations with Costa Rica and Nicaragua were in advanced stages. The two countries hope to have free trade accords with Mexico next year.