Today, NAFTA; maana, Europe! say Mexico traders

President Zedillo and EU push pact for freer trade and less dependencyon the US.

Nobody relishes being at the weak end of a lopsided relationship. So, after decades of relying heavily on the United States for an export market and for financial help in a pinch, Mexico is casting its hopes across the Atlantic.

Under the North American Free Trade Agreement (NAFTA), most of Mexico's exports go to the US, and Mexico was rescued during its 1995 peso crisis by Washington.

Now Mexico is pushing hard for a free-trade agreement with the European Union (EU).

The presidency of Carlos Salinas de Gortari is remembered for breaking ideological taboos to sign NAFTA.

President Ernesto Zedillo wants to be remembered as the president who diversified Mexico's commercial and political partnerships.

Seeking an accord with the EU on free trade "is the most important foreign policy initiative of the Zedillo presidency," says Augustn Gutirrez Canet, dean of international studies at Mexico City's Universidad Iberoamericana.

"Mexico would be foolish not to take advantage of being neighbor to the largest and most dynamic economy in the world, but at the same time the overconcentration of our economic ties with the United States is not healthy," says Mr. Gutirrez.

Concluding a free-trade agreement with the EU "will be the cornerstone of a more balanced international relationship in Mexico's globalization process."

Central America represents a small part of Mexico's trade. But Mexico already has agreements with Nicaragua and Costa Rica. It is expected to complete an agreement with Guatemala, El Salvador, Honduras, and Panama in June.

The EU and Mexico began formal negotiations toward a free-trade agreement last November, after having discussed the idea since 1995. Recently President Zedillo said that the talks were going very well, and that an agreement by the end of the year looked possible.

But that was before last month's abrupt resignation of the EU's full executive commission, causing a crisis that analysts say could delay EU business like the Mexico negotiations.

The EU is banking on Mexico as its showcase entry into the growing Latin American market. As a sign of the importance it gives Latin America, the EU will attend a summit with Latin countries in Rio de Janeiro in June - similar to the first Summit of the Americas, held in Miami in 1994, which launched the idea of an all-Americas free-trade zone by 2005.

"Mexico is an important part of the EU's strategy for Latin America," says Mario Lpez Roldn, a Mexico specialist at the Institute of European-Latin American Relations (IRELA) in Madrid. "The European countries have lost considerable presence in the region, but they aim to win it back, first with the accord [with Mexico]."

The focus of interest in the Mexico-EU negotiations has been on economic aspects, but analysts emphasize that it will actually be a three-legged agreement - with political and cooperation chapters joining the free-trade element. And that, they argue, will make this accord more complete and far-reaching than NAFTA.

As an indication of how badly Mexico wanted an agreement with the EU, the government broke its tradition of keeping trade and political issues separate - as largely occurred with NAFTA - and bowed to European requirements for a "democracy clause" in the political agreement. That opens the door to the EU's oversight of Mexico's progress in areas like democratization and human rights.

MANY Mexican politicians who consider themselves more in tune with European-style economic and social policies - than with traditional American market economics and a bootstrap social vision - also laud the political and cooperation agreements as a protection against an overbearing US model.

Zedillo's acceptance of a political chapter in Mexico's partnership with the EU had nothing to do with ideology, say observers. "If anything [Zedillo} has been a mirror of US policy," says Gutirrez.

Still, the agreement opens the way to greater European influence in Latin America.

"The global accord will give the opportunity to diversify the political influences" in the region, says Mr. Lpez in Madrid. "Europe's weight in Latin America is going to grow in the next century."

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