"In our view, they were not duly signed and there was no meeting of the minds," Luis De La Calle, a trade official at the Mexican Embassy in Washington, told sugar growers at their annual meeting here.

Both sides agree that the North America Free Trade Agreement (Nafta) currently allows Mexico to ship 25,000 tonnes of low- import-duty sugar annually into the US market. But there is sharp disagreement over what is supposed to happen in 2000, which is year seven of the Nafta pact.

US government and industry officials insist that a 1993 side letter agreement negotiated by the Clinton administration with Mexican officials allows Mexico to ship only up to 250,000 tonnes of sugar starting that year.

But it is Mexico's view that it has access to ship all of its annual surplus sugar production into the UnitedStates, as stipulated in the Nafta text negotiated by the Bush administration, De La Calle said.

The issue has emerged as a sticking point between the two Nafta partners after US exports to Mexico of high fructose corn syrup, a sugar substitute used in soft drink production, began a dramatic upsurge in October 1996.

At the request of the Mexican sugar industry, the Mexican government launched an investigation and imposed stiff temporary anti-dumping duties on US HFCS shipments in June 1997, followed by permanent high duties in January 1998.

In response, the US government and the Corn Refiners Association (CRA) has charged Mexico with violating its obligations under both Nafta and the World Trade Organisation.

In February, CRA requested a Nafta dispute settlement panel to examine the issue. The Clinton administration supplemented that action by beginning dispute settlement proceedings under the WTO and launching a Section 301 investigation under US trade law that could lead to U.S. Sanctions onMexico.

Mexico's preference would be negotiate a solution addressing both Mexico's desire for more access to the US market and the concerns of US HFCS producers, rather than fight the issue out under Nafta and the WTO, De La Calle said.

But CRA President Chuck Conner told the sugar group that Mexico has unrealistic expectations.

The United States restricts overall sugar imports under an annual quota shared by about 40 nations, including Mexico. A greater share for Mexico would cut into the shares held by the other quota holders.

"I believe the US government is willing to go beyond the bounds of today's levels and attempt to open the US market for some of Mexico's sugar surpluses," Conner said.

But Mexico expects "the US to throw out its GATT legal sugar programme and abandon all of our traditional suppliers of sugar. This is not going to happen," Connor said.

US corn refiners, working through the US trade representative's office, recently offered "some new and creative" proposals to help Mexicomanage its sugar surpluses.

"In exchange, we ask simply that Mexico honour its Nafta commitments," Conner said. "To date, those offers have fallen on deaf ears."

Conner estimated that Mexico could have 1 million tonnes of surplus sugar production this year, in addition to another 550,000 tonnes reportedly in stocks.

While both the US corn refining industry and the U S government are sympathetic to the Mexican industry's sugar problems, there are limits to what can be done, Conner said.

Mexico's demand that the HFCS and sugar access issues not be considered separately is another way of saying that they want their access to the US sugar market to equal US access to the Mexican HFCS market, he said.

It's impossible for the United States to agree to that, Conner said.

But De La Calle charged allowing unlimited access for US HFCS to enter Mexico while restricting Mexican sugar imports to Mexico undermines the intent of Nafta, which was to create a "customs Union" in sweetener trade.

Not surprisingly,US sugar producers do not want Mexico to be export sugar into the United States to deal with an influx of HFCS.

US sugar farmers went through a painful adjustment in the 1980s, when US soft drink bottlers switched from sugar to HFCS. They don't want to shoulder that burden again for Mexican sugar producers, said Jack Roney, Chief economist of the American Sugar Alliance.