The United States and Mexico have reached agreement on a new air transportation pact that appears to fulfill President Carter's stated objective of increasing competition in international aviation.

Joel W. Biller, Deputy Assistant Secretary of State for Transportation, yesterday confirmed that the two countries initialed a new "expansive" agreement Monday evening after seven years of negotiating without success.

Biller said the agreement provides "the greatest expansion of routes" that has been negotiated in any air agreements other than initial ones.

No less than 33 U.S. cities will get new or improved scheduled service over the next three years to one or more of 21 Mexican cities and resort points under the new agreement. There are also important new right to fly from various major gateway cities, such as New York, Los Angeles, and Houston, through Mexiacn cities to Central America and beyond to South America.

In return, the Mexican airlines gain expanded opportunity and routes to the U.S.

Although Mexico already had a liberal attitude toward U.S. charters, an agreement was reached on a memorandum of understanding in which each country will, with minor exceptions, accept the charter worthiness rules of the country in which the charter originates. Should there be a future problem with any charter application, the countries - prior to disapproving the application - agree to inform each other to try to work it out.

Biller, who served as chairman of the U.S. delegation, said another important element of the pact is an agreement to promote and encourage the airlines flying between the two countries to introduce innovative low fares like those introduced across the transatlantic this winter.

The route package is expected to double air traffic between the two countries within five years, Donald L. Litton, chief of the Western Hemisphere area of the Civil Aeronautics Board's Bureau of International Affairs, said yesterday.

He said 1.5 million people traveled by air between two countries in 1976, almost 1 million of them U.S citizens. There are currently two Mexican airlines flying into Mexico. One of the Mexican carriers - Mexicana - carries the most number of passengers between the two countries.

The agreement with Mexico is the second signed by the U.S. in as many weeks that can be characterized as ties for new scheduled services, charter airlines and low fares. Last week, the U.S. signed a similarly liberal agreement with Paraguary.

In addition to an agreement signed with Belgium last month, these agreements stand in sharp contrast to the controversial Bermuda II Agreement negotiated with Britain this summer.

After it became clear that the British agreement was not the pro-competitive pact some in the administration had hoped for, the President issued new policy guidelines for negotiators to follow in the future. "I was guided throughout the negotiations by the President's policy," Biller said yesterday.