Mexico surprises Canada -- sells some oil, but not much

Canada has learned the hard way that geography counts for only so much in the new world of oil politics. And now Mexico has told Canada that even though it is a neighbor, it will get no special treatment when Mexico divvies out the oil from its newly tapped supplies.

In Canada for a three-day visit devoted to bilateral relations, Mexican President Jose Lopez Portillo had been expected to leave behind a signed industrial agreement highlighted by a commitment to export 100,000 barrels a day of crude oil to Canada.

This country badly needs more crude imports. As its own conventional reserves dwindle in the early 1980s, Canada will require net imports of up to 600,000 barrels a day.

Mexico, as a continental neighbor that shares Canada's preoccupation with the United States, is a natural place to look for additional supplies. To a degree, Canada and the US are competing for that Mexican oil.

But despite three days of ceremonial splendor and the initialing of a pact hailed as a landmark by Prime Minister Pierre Trudeau, Canada ended up with a promise of only half the crude exports it was expecting. Mexico agreed to sell it 50,000 barrels a day by year's end. Canadian politicians had been expecting 100,000 barrels, based on an agreement in principle reached in May 1979.

In the intervening year, much had changed in Mexico.

President Lopez Portillo had enunciated a national strategy to tie oil wealth to industrial development and to hold crude production to 2.5 million barrels a day so that mounting export revenues (expected to reach $8 billion this year) would not exacerbate the country's already-high inflation.

Internationally, the Mexican President had begun to convert his country's newfound oil muscle into political autonomy, refusing to follow Washington's lead on a number of important world issues in a way that has lent a bitter note to American-Mexican relations.

Thus, when he came to Ottawa, President Lopez Portillo laid out a tough nationalist position. He seemed to make little exception for Canada, North American neighbors or not.

"Let us promote our bilateral relations, but let us not seek to establish artificial entities based on a single factor -- the geographical factor, as important as it may be," he told assembled dignitaries and Canadian members of Parliament.

He stressed Mexico's unwillingness to drain its oil reserves -- now estimated as high as 150 billion barrels -- to prop up North American living standards.

"For an affluent society, the high levels of consumption of hydrocarbons, which some deem to be excessive, serve to sustain a very high standard of living to which we cannot aspire at the present time," President Lopez Portillo said pointedly.

The Mexican delegation shunned the use of a treaty, which Canada had once expected, to tie up the oil deal. Instead, the sale was part of an industrial agreement in which exports of crude were linked directly to Canadian sales of petrochemical, transportation, and other high-technology goods.

President Lopez Portillo and Prime Minister Trudeau, both with a metaphorical eye over their shoulder at the United States, seemed to play a delicate game on the question of possible trilateral economic cooperation among Canada, Mexico, and the US, an idea talked up by California Gov. Jerry Brown, President Carter, Sen. Edward Kennedy, and others.

In a joint communique, the Mexican and Canadian leaders said such an approach "would not serve the best interests of their countries."

But President Lopez Portillo's reaction was far stronger than Prime Minister Trudeau's mild disapproval. The Mexican President said the idea of a continental common market is "incompatible with Mexico's social and economic development objectives, [it] would entrench existing economic disparities" on the continent and imperil his country's "sovereign ability to decide on the application of its economic policies."

And if President Lopez Portillo had been seeking an expression of support from a North American neighbor to bolster Mexico in its increasingly fractious dealings with the US, Prime Minister Trudeau did not provide it.

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