Japan and Mexico, racing against the clock ahead of President Vicente Fox’s visit to Tokyo, extended talks late into the evening Tuesday to hammer out a free trade agreement.

The night before Fox’s arrival, the two camps were still at loggerheads over whether to eliminate tariffs on pork, according to an official who briefed reporters.

With Japan insisting on protecting its 10,000 pig farmers, pork has become the most contentious issue, although others also remain on the table.

Foreign Minister Yoriko Kawaguchi, trade and industry minister Shoichi Nakagawa and agriculture minister Yoshiyuki Kamei were in and out of meetings all day with Mexican Economy Minister Fernando Canales, who arrived in Tokyo on Sunday.

After the ministers took a break a little past 6 p.m., “both camps decided to bring each other’s opinions and proposals back to their home ministries for further deliberation,” said Tadakatsu Sano, vice minister for international affairs at METI. The three ministers resumed talks with Canales late in the evening.

Mexico has said it will not sign the free trade accord unless it is given either an outright elimination of tariffs or a tariff-free quota on pork, according to officials involved in the negotiations.

“We are still not sure what our main battlefield would look like,” Sano added, alluding to several deadlocks, most of which are over agricultural goods.

By taking a tough stand on farm products, Japan is costing its industrial exporters an estimated 400 billion yen a year.

Also, Mexico recently started excluding companies from nations with which it has no FTA from participating in bids for government procurement contracts. Mexico already has FTAs with more than 30 countries.

Mexico argues the pact should cover a variety of agricultural and other products.

Besides pork, which makes up nearly half of Mexico’s agricultural exports to Japan, Mexico wants access to markets of products it exports little now but sees huge potential for growth, such as chicken, beef, sugar, flour, alcohol and leather products.

Meanwhile, Japan is demanding that Mexico change its stance on the “rule of origin” on steel imports.

Mexico has offered to open its market for steel imports but has imposed a rule that will make it impossible for Japanese steelmakers to move into the market — the iron ore used to make the steel products must be from Japan.

Japan, a nation of virtually no natural resources, imports virtually all of its iron ore.

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