Brazilian trade. (New Business).

Mexico signed an agreement with Brazil to cut tariffs on agriculture and industrial duties, a step toward a trade deal with the Mercosur trade block.

Mexican President Vicente Fox and Brazilian President Fernando Henrique Cardoso signed the agreement in Brazil. "This is good for both countries. It's a first step, of several that will go further and further toward a free-trade agreement with the Mercosur," Mexican Economy Secretary Luis Ernesto Derbez told local press.

The agreement signed by the two countries will lead to the reduction of duties on more than 800 products, including light and medium trucks.

"We want to negotiate a free-trade agreement with you (the Mercosur), and negotiations will begin as soon as you are prepared," he said.

Mexico and Brazil are Latin America's two largest economies. The Mercosur members--Brazil, Argentina, Uruguay and Paraguay--began to discuss free trade in 1995, but negotiations have stalled several times, leaving the group far from true free trade. Brazil's agreement with Mexico could lead to new discussions, said analysts.

Mexican trade with Brazil totaled US$990.26 million in 1991 when the Mercosur was created, and reached US$2.69 million last year, according to the Mexican National Foreign Trade Bank (Bancomext).

Mexican exports to Brazil during the same period rose by 212%, from US$187.37 million to US$584.95 million.