Mexico Sees NAFTA Talks at Impasse : Trade: Internal document suggests discussions could be suspended over U.S., Canadian lawsuit stipulation.

Talks on the North American Free Trade Agreement are at a “breaking point,” an internal Mexican government document shows.

The document--an advisory to Mexican negotiators in Washington from the Trade Ministry--blames the apparent impasse on pressure by the United States and Canada for the right to sue Mexico in its own courts for noncompliance with proposed environmental safeguards.

“The pretension of the United States and Canada to include the possibility of suing Mexico in its own courts attacks the concept of sovereignty and is as such inadmissible,” says the document, which was obtained by Reuters. “It is in fact a breaking point.

“On express instructions from (Trade) Minister (Jaime) Serra (Puche), this is absolutely rejected as being an invasion of sovereignty,” the document says.

In a press statement sent out late Wednesday, the Trade Ministry confirmed it “will not accept any scheme that any of the other two countries or a tri-national entity can take the Mexican government to Mexican courts to resolve controversies on environmental or labor issues.”

The internal document says Mexico is seeking options that would assure a transparent, speedy and just method for resolving such disputes.

Trade ministers from the United States and Canada have said they may meet today in Ottawa to attempt to conclude talks on NAFTA side deals on environmental and labor issues.

But a Mexican trade ministry official, speaking on condition of anonymity, said the breaking point referred to in the document means the talks might be suspended indefinitely if the sovereignty issue is not overcome.

“If there is no agreement on this beforehand, or if at least they don’t reach some kind of understanding, it is even in doubt whether the Ottawa meeting will take place,” the official said.

But if the issue can be overcome, he added, the Ottawa meeting could clinch an agreement.

Mid-level negotiators and translators are currently working in Washington on the side accords to the main NAFTA treaty, which would link the three countries in a free-trade zone with 360 million consumers.

The trade ministers have been in repeated telephone contact since Monday, when face-to-face talks broke up without any resolution on the key sticking point.

“Sanctions (are) . . . still the main issue,” a Canadian official said earlier, referring to the disagreement over how to ensure compliance with the side deals.

Mexico objects to the U.S.-Canadian position because allowing the two countries to sue Mexico in its own courts would contravene clauses in the 1917 constitution safeguarding national sovereignty.

U.S. Trade Representative Mickey Kantor, however, insists sanctions be wielded against persistent violators of environmental and labor laws.

Kantor, Serra Puche and Canadian Trade Minister Thomas Hockin have held repeated, fruitless sessions over the last two weeks trying to break the sanctions impasse.

Kantor is due to go on vacation Friday, narrowing the window of opportunity for the ministers to strike a deal.