North American leaders defend free trade

By Deborah Charles and Jeremy Pelofsky

NEW ORLEANS (Reuters) - North American leaders defended their 14-year-old free trade agreement at an annual summit on Monday amid criticism in the U.S. presidential campaign that the pact costs American jobs.

On the first of a two-day summit held in New Orleans to showcase the city's rebirth, free trade was at the forefront for U.S. President George W. Bush, Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon.

The 14-year-old North American Free Trade Agreement has come under fire by presidential candidates amid concerns that the United States is in or is headed for a recession.

"I assured the prime minister that I'm a strong advocate for free trade. I believe it's in our nation's interest that we continue to have a free trade agreement," Bush said after a meeting with Harper.

After his initial talks with Bush, Calderon acknowledged the fierce debate over trade in the U.S. election. But he argued NAFTA was not all bad, noting that opponents to the deal do not realize how many jobs have been created and how much immigration from Mexico has dropped as a result of the treaty.

"I stress this issue because recently NAFTA has come under criticism and I do not believe that people are realizing how many benefits NAFTA has brought both to the United States and Mexico," Calderon said through a translator.

Trade issues have been in the spotlight in the U.S. race for the White House as Democrats Barack Obama and Hillary Clinton have appealed for labor backing by promising to renegotiate or even abandon the unpopular NAFTA, citing the loss of roughly 3 million U.S. manufacturing jobs since 2000.

Obama and Clinton are vying for the Democratic nomination, with the winner facing Republican John McCain in the November presidential election to replace Bush. Their opposition to NAFTA has caused concern in Canada and Mexico and threatened other pending trade deals.

In a speech later to business leaders, Bush urged Congress to approve free trade pacts with Colombia, South Korea and Panama. "It's about time America sets aside petty politics and focuses on doing what's right for the United States," he said.

Aside from reaffirming their commitment to free trade, analysts expect few concrete results from the "Three Amigos" summit -- in part because Bush is leaving office in January.

"The political environment's not terribly conducive to any big progress," said Leonardo Martinez-Diaz, a Mexico expert at the Brookings Institution. "The Mexican president already knows that Bush can't deliver, given his lame-duck status."

NEARLY $1 TRILLION IN THREE-WAY TRADE

Canada is the United States' largest trading partner and Mexico ranks third. Trade between the three countries last year totaled $930 billion and is expected to reach $1 trillion by the end of this year.

Canada and Mexico are the largest sources of imported energy to the United States, and Canada is the largest supplier of foreign oil.

Harper said he and Bush had discussed border and trade issues in their initial discussion. "We made considerable progress on some things," he said, without elaborating.