Mexico's President-elect Felipe Calderon met Friday with Brazilian President Luiz Inacio Lula da Silva and top officials to discuss boosting bilateral auto trade and Mexico's entry into a South American trade bloc.
Calderon also met with Brazilian Trade Minister Luiz Furlan and Foreign Minister Celso Amorim. In addition to trade, the two countries discussed Mexico's possible entry into Mercosur, which includes Brazil, Argentina, Paraguay, Uruguay and Venezuela.
But Brazilian negotiators said that Mexico's entry would imply a free trade deal with the bloc, which Mexico hasn't yet agreed to. In 2003, Mercosur and Mexico signed a deal to give preferential treatment to 800 traded items.
Brazil's main export to Mexico is light vehicles. Local media say Brazil will insist on a 30 percent cut in Mexican import tariffs, which Mexican authorities have refused largely due to a persisting trade deficit with the South American nation.
In the first eight months of this year, Brazil posted a US$2.1 billion (euro1.65 billion) trade surplus with Mexico, representing about 7 percent of its total trade surplus for the period.
Brazil posted a trade surplus of US$3.22 billion (euro2.54 billion) with Mexico last year.
Brazil and Mexico have maintained an agreement to reduce import tariffs in the auto sector since 2002. Under the plan, the two countries are scheduled to lift tariffs entirely in 2007.
Furlan and Calderon also discussed technology transfers of ethanol vehicle production to the Mexican auto industry and the completion of an existing auto trade program between the two countries, according to the trade ministry.
Calderon said he also wanted to explore the possibility of closer cooperation the country's state-owned oil company Petroleos Mexicanos, or Pemex, and Brazil's government-controlled Petroleo Brasileiro SA, or Petrobras, for deep-water exploration in the Gulf of Mexico.
Brazil is the world's second-largest ethanol exporter, after the United States.