Trade, security focus at "Three amigos" summit

GUADALAJARA, Mexico (Reuters) - Leaders of the United States, Mexico and Canada -- also known as "the three amigos" -- begin a summit on Sunday in Mexico to talk about simmering trade issues and the threat of drug gangs.

U.S. President Barack Obama, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon are gathering in Guadalajara for dinner Sunday night followed by three-way talks on Monday.

At the top of their agenda is how to power their economies past a lingering downturn, keep trade flowing smoothly and grapple with Mexican gangs dominating the drug trade over the U.S. border and up into Canada.

Obama's national security adviser, Jim Jones, doubted the leaders would announce major agreements, predicting the annual summit "is going to be a step in the continuing dialogue from which agreements will undoubtedly come."

Obama is expected to get some heat from Calderon to resolve a cross-border trucking dispute.

Under the North American Free Trade Agreement, Mexican trucks are supposed to be allowed to cross into the United States, but U.S. trucking companies say Mexican trucks are unsafe. Mexico imposed tariffs of $2.4 billion in U.S. goods in March after Obama signed a bill canceling a program allowing them to operate beyond the U.S. border zone.

U.S. business groups have been pressing the White House to resolve the dispute, saying the ban threatens to eliminate thousands of U.S. jobs. The White House says it is doing so.

CARTEL VIOLENCE

Canadian officials are expected to raise concerns about "Buy American" elements of a $787 billion economic stimulus program that they fear could shut out Canadian companies.

Canada is the United States' largest trading partner.

Michael Froman, a White House official, said the White House was talking to Canada and other nations "to try and implement the 'Buy American' provision in a way consistent with the law, consistent with our international obligations, while minimizing disruption to trade."

Obama has taken one potential sore point off the table: That he might be willing to unilaterally reopen the NAFTA treaty as he had talked about on the campaign trail last year.

Given the weakened economies of the three nations, he told reporters from Hispanic media on Friday, it is not the time to try to add enforceable labor and environmental protections to the treaty as some in his Democratic Party would prefer.

A few hundred protesters from environmental groups and leftist political parties marched in Guadalajara on Sunday to a plaza near the colonial-era buildings housing the summit.

Farmers demanded that beans and corn, staples of the Mexican diet, be excluded from NAFTA. "Producers like us lose out when cheap grains are imported from abroad and we can't sell (our crops)," said 54-year-old corn farmer Felix Camacho.

Some also demanded more U.S. support for Manuel Zelaya, the president of Honduras ousted in a military coup in June. Zelaya said in Quito, Ecuador, on Sunday, Washington has done too little.

"I think President Obama should explain why his measures have been so weak against the coup d'etat," Zelaya said.

U.S. officials have said they would like to see a Latin American solution to the Honduran crisis and have not listed it as a main issue in Guadalajara, but with the situation threatening to destabilize Central America it is likely to come up.

Another top issue at the summit is what to do about Mexican drug gangs killing rivals in record numbers, despite Calderon's three-year army assault on the cartels.

The death rate in Mexico this year from the violence is about a third higher than in 2008, and police in the United States and Canada have blamed Mexican traffickers for crime.

Obama has promised full support to Calderon. "He is doing the right thing by going after them and he has done so with tremendous courage," Obama said.

But Mexico complains that anti-drug equipment and training are taking too long to arrive and hopes the summit will move things ahead.

The leaders also promise a statement on H1N1 swine flu and will jointly address climate change as they prepare for major international talks in Copenhagen in December.

(Writing by Steve Holland; Additional reporting by Steve Holland and Anthony Boadle; Editing by Eric Beech)