Talking trade: Donald Evans promotes more Mexico-U.S. business ties. (Spotlight).

More than three decades ago, U.S. Commerce Secretary Donald Evans began his working life roughnecking on an oil rig for Texas energy company Tom Brown Inc. Ten years later, he headed the firm as Chief Executive Officer.

When he was sworn into office as a public servant on January 2001, he left behind life in the private sector. But energy issues are still at the top of his agenda, and in a June visit to Mexico he addressed the question of private investment in Mexico's ailing power sector.

"I believe letting more of the private sector into energy will bring enormous benefits without affecting the nation's sovereignty," Evans said at a forum organized by the AMERICAN CHAMBER/MEXICO.

Energy analysts argue that a growing population and expanding economy will mean major power shortages in Mexico by 2005. Evans said US$60 billion is needed to modernize the energy sector and provide for the nation's growing power needs.

As well as meeting with Economy Secretary Luis Ernesto Derbez to discuss trade issues, Evans had a special meeting with Energy Secretary Ernesto Martens to discuss the power question. Energy analysts expected the agenda to include multiple service contracts (MSC) that the Mexican government might give to private operators to exploit natural gas reserves in the northern Burgos Basin.

Last year, the U.S. government said it was interested in increasing Mexican energy imports as a way to offset its own expected power shortages. U.S. President George W. Bush pointed to natural gas as one of the possible energy import commodities.

Representatives of top U.S. companies accompanied Evans on his Mexican visit.

The main obstacle to U.S. firms interested in investing in Mexico's energy sector is the nation's Constitution. Articles 27 and 28 severely limit the involvement of foreign companies in all power industries, which are considered to be matters of strategic national interest. But, amendments to the Constitution would require a two-thirds majority in Congress.

IRONING OUT DISPUTES

Evans said that in the meeting with Derbez, who he called his "trusted friend," the secretaries hammered out deadlines to resolve Mexico-U.S. trade disputes.

"As someone who worked in the private sector, I believe in results. I don't like issues that stay on a list forever," he said.

Trade disputes over sweeteners, tuna, cement and trucks were discussed, Evans said.

Derbez said the two agreed to a three-month limit on resolving the cement issue and had agreed to settle the tuna dispute by the end of the year. The cement issue stems from anti-dumping duties U.S. authorities have applied to Mexican cement since 1990. The tuna dispute centers on a U.S. court ruling barring Mexican tuna from receiving the dolphin-safe label, an action that effectively eliminated it from U.S. markets.

Neither official indicated when the more sticky sweetener dispute might be resolved, but Evans hinted that a deadline had been set. Mexico wants to increase the amount of sugar it exports to the United States, while U.S. corn producers want to up the amount of corn syrup they can sell in Mexico.

However, Evans said U.S. farm subsidies, which critics say are helping U.S. food products undercut Mexican competition, were not discussed.

"The farm subsidies are within WTO (World Trade Organization) limits of US$19 billion a year," he said.

Evans concluded that the few trade disputes that exist between the two countries are outweighed by the rewards of increased U.S.-Mexico trade, which rose to US$270 billion in 2001.

Also at the AMERICAN CHAMBER/MEXICO forum, the U.S. Trade Development Agency signed grants for a total of US$1.158 million with the governors of Puebla and Veracruz, and the development group Intermodal Mexico. The grants will fund studies that will assess the feasibility ofproposals to modernize the Puebla cargo airport, expand the port of Veracruz and improve the nation's transport infrastructure.

Ioan Grillo is a freelance writer and a finance reporter for a Mexico City daily.