Final details remain elusive in trade talks


WASHINGTON -- In these post-Olympics days, bureaucrats here seem to be shooting for their own kind of world record: They have been hours away from finishing a North American Free Trade Agreement for a week.

Trade officials from Canada, Mexico and the United States have been in the Watergate Hotel here since July 29. They have been busily agreeing to eliminate trade barriers, but the final compromises never seem to happen.

A U.S. official pointed out yesterday that President Bush was scheduled to return here this afternoon from Kennebunkport, Maine, and could announce a deal today if it was ready. Three other U.S. and Canadian officials said the deal could be ready today or tomorrow.

The many delays reflect the extraordinary number of details that must be settled in creating the world's largest and richest regional trading bloc. Some of these details will affect dozens of companies and thousands of workers.

None of these points appears to be a deal-breaker, but they do give the negotiations a political edge that makes the final pact difficult to achieve.

The beer industry, for example, employs thousands of people in all three countries and reaches into the refrigerators of millions of households, making it difficult to set a schedule for the lowering of tariffs.

The 1988 United States-Canada Free Trade Agreement mostly excluded beer because the Canadian industry fought successfully to retain provincial restrictions on imports. The same issue has come up again this year, compounded by a trade war between the United States and Canada over beer duties and by the difficulty of reducing Mexico's high tariffs protecting its beer industry.

Similar issues have delayed a final compromise on U.S. apparel imports from Canada. The issue has been narrowed to the question of the size of any increase in the current U.S. quota for duty-free imports across the nation's northern border.

Negotiators have reached general understandings on the two most politically sensitive issues in the talks -- the U.S. auto industry and the Mexican energy industry -- but squabbles over details are still blocking a final compromise.

A rough consensus emerged a week ago, for example, that a little more than 60 percent of the value of cars and trucks would have to be produced in North America to qualify the vehicles for duty-free treatment.

But no country wants to set the precise percentage until after the rules are set for calculating it.

Once the rules have been set, a process nearly finished last night, each country will be able to figure out the effects on its factories before setting the final percentage.

Mexico is resisting U.S. efforts to force Pemex, the Mexican state oil company, to award more contracts to U.S. and Canadian companies. In this case, too, part of the disagreement concerns a technical dispute: how to measure the value of contracts awarded to foreign companies.

That has snarled the question of how quickly Mexican state-owned enterprises should be forced to do business with foreign companies.

Because of these remaining stumbling blocks, of of which are likely to be solved in a single, broad political deal, participants in the talks do not know how much longer they will be stuck at the Watergate Hotel.

"I am so frustrated," said a negotiator who has been predicting an imminent deal for nearly a week. But when asked yesterday when a deal would be finished, he replied, "My best guess would be tomorrow."

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