Mexico's stance precludes an agreement on investment pact with Japan

Japan and Mexico have run aground in their negotiations toward a pact aimed at shoring up the flow of investment across the Pacific.

At issue is the basic question of whether Mexico should give Japan the same investment privileges granted to its free-trade-agreement partners, such as the United States, Canada and the 15-nation European Union, based on the principle of "most favored nation."

The North American Free-Trade Agreement among Mexico, the U.S. and Canada went into force in January 1994. Mexico is heavily dependent on its giant northern neighbor, the U.S., for economic growth. Apparently to diversify its trade and investment partners, Mexico also concluded a free-trade agreement with the EU earlier this year. The Mexico-EU agreement became effective July 1.