MercoPress. South Atlantic News Agency

Mexican president proposes free trade agreement with Brazil

Calderon is on the last leg of three country visit to South America

Mexico's President Felipe Calderon has said he will propose a free trade agreement with Brazil. “Trade enriches economies,” said Mr Calderon during a meeting with business leaders in Sao Paulo.

Calderon began on Saturday a three day visit to Brazil, when he will meet President Lula da Silva and visit oil firm Petrobras.

“I offer to put the idea [of a trade agreement] out there before different industries, and political and social groups,” said Mr Calderon.

Brazil and Mexico are Latin America's largest economies. The two nations are responsible for around 70% of all economic activity in the region. However

Mexico's economy has been hard hit by the recession and more recently by swine flu. The US slowdown has meant less money is being sent home by migrant workers, and Mexican exports have fallen.

Mexico sends 80% of its exports to the US, so has been particularly exposed to the US fall in consumer spending.

President Calderon also called for Mexico’s state-run oil monopoly Petroleos Mexicanos to form a “close collaboration” with Brazil’s Petroleo Brasileiro SA in all areas, including operations.

With such a partnership, Pemex, as the company is known, could turn falling oil production around and could expand production, Calderon said in an e-mail copy of a speech.

“It’s in the interest of the Mexican government to strengthen the mechanisms for scientific, technological, academic and operational cooperation between Petrobras and Petroleos Mexicanos” Calderon said.

Two years earlier, at the beginning of his six-year administration, Calderon had discussed more cooperation with Petrobras when he lobbied Mexicans and the Congress to pass an energy reform bill to help Pemex tap deep-water crude deposits.

Calderon’s energy reform plan, which called for more private investment in the oil industry, was rejected and ended up mostly as a tax cut to Pemex and a board with independent members.

Pemex’s oil production dropped to 2.63 million barrels a day in the first six months this year from 3.38 million barrels per day on average in 2004.