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Mexico to replace Venezuela in trade pact

The Associated Press | May 22, 2006

Mexico to Replace Venezuela in Trade Pact

MEXICO CITY - Mexican officials said Monday they will seek a replacement for Venezuela after the South American nation decided to quit a trade pact. They said the move won’t affect the Mexican economy.

Venezuelan President Hugo Chavez on Sunday said his country would leave the so-called G-3 trade pact with Colombia and Mexico so it can concentrate on becoming a full-voting member of Mercosur, a bloc made up of Argentina, Brazil, Paraguay and Uruguay.

President Vicente Fox’s spokesman, Ruben Aguilar, told a news conference that Mexico in response will accelerate efforts to recruit a replacement for Venezuela. He mentioned Panama, which has shown interest in joining the pact.

Mexico has also expressed interest in talking to Ecuador and Peru about joining the 11-year-old trading bloc, under which the countries give one another tariff cuts.

"The withdrawal of Venezuela from the G-3 will have no economic impact for Mexico, nor any political impact," Aguilar said. But "yes, we do express our sadness at the attitude of the Venezuelan government."

The decision to abandon the G-3 was Chavez’s latest step to leave deals with countries that have free-trade pacts with the United States.

Chavez last month pulled out of the Andean Community trade bloc because Colombia and Peru _ two of the group’s four members _ signed free-trade deals with Washington. Chavez has said Colombia’s free-trade deal with the U.S. threatens to flood Venezuela with cheap U.S. imports that would harm local industries.

Mexico has strong trade ties with Washington as part of the North American Free Trade Agreement with Canada and the United States.

Venezuela and Mexico have been embroiled in a diplomatic spat since last fall’s Summit of the Americas in Argentina, when Fox criticized Chavez for opposing a U.S.-backed Free Trade Area of the Americas. Chavez responded by calling Mexico an "ally of the empire."

 source: Houston Chronicle