WASHINGTON – 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.

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 American trucking companies charge Mexican trucks are not safe. The issue has festered for years.

Mexico imposed retaliatory tariffs of $2.4 billion in U.S. goods in March after Obama signed a bill canceling a program allowing Mexican trucks 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.

We would like to see a final closure and a final solution to the issue of trucking, said Mexico's ambassador to the United States, Arturo Sarukhan. He said he would like an agreement by year's end.

A top White House official, Michael Froman, told reporters the Obama administration is quite focused on the issue and was working with the U.S. Congress to resolve safety issues.


Canadian officials are expected to raise their concerns about Buy American elements of a $787 billion economic stimulus bill that they fear could shut out Canadian companies from U.S. construction contracts funded by the stimulus.

Canada is the United States' largest trading partner.

Froman said the Obama administration 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 took a potential sore point off the table ahead of his trip: That he might be willing to unilaterally reopen the North American Free Trade Agreement (NAFTA) treaty as he had talked about on the campaign trail last year.

Given the weakened economies of the three nations, he told Hispanic reporters 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.

In terms of refining some of our agreements, that is not where everyone's focus is right now because we are in the middle of a very difficult economic situation, Obama said, although he added that he was still interested in learning how to improve the treaty.

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

The death rate this year from the violence is about a third higher than in 2008, and police in the United States and as far north as the western Canadian city of Vancouver have blamed the Mexican traffickers for crime.

Obama is backing Calderon's efforts.

He is doing the right thing by going after them and he has done so with tremendous courage, Obama said.

Obama promised full support to Calderon during a visit in April, 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.

(Additional reporting by Patricia Zengerle and Anthony Boadle; Editing by Paul Simao)