The presidents of the United States and Mexico yesterday committed themselves to erase barriers to the movement of goods, services and money between the two countries, a controversial move that stirred immediate opposition from organized labor and some businesses.

President Bush and Mexican President Carlos Salinas de Gorari hailed the possibility of a free-trade pact in a joint statement. "Free trade between Mexico and the United States can be a powerful engine for economic development, creating new jobs and opening new markets," they said.

The United States already has a free-trade pact with Canada, which would be invited to join in the U.S.-Mexican arrangement, creating a North American free-trade zone encompassing some 350 million people stretching from the Arctic Circle to Central America.

Indications that the pact with Mexico will require tough bargaining surfaced almost immediately.

Salinas, talking to reporters here, said a free-trade agreement would cover mainly the movement of goods while the official statement described a more comprehensive pact that would "improve and expand the flow of goods, services and investments" between the two countries.

Bush and Salinas ordered U.S. Trade Representative Carla Hills and Mexican Trade Minister Jaime Serra Puche to lay the groundwork for formal talks by December, when Bush and Salinas will meet in Monterey, Mexico.

White House spokesman Marlin Fitzwater said a trade pact could take one to three years to negotiate.

But Salinas said the two countries could learn from the U.S.-Canada agreement and conclude a U.S.-Mexican pact more quickly.

The announcement came after a Sunday night White House dinner between Bush and Salinas, who is here on a two-day visit that includes meetings with members of the administration, key congressmen and business executives.

"I would say there is a consensus on the benefits for both countries. If we reach agreement, this could be the biggest market in the world, and the most efficient," Salinas told reporters.

"This will create jobs in Mexico, and the United States as well," he said later in a speech to the Business Roundtable, a group of executives from Fortune 500 companies.

He said Mexico would gain better access for its goods to the United States and greater foreign investment, especially from companies in Japan and Western Europe that would use the pact to gain entry for their products into the United States.

"This is the best of times, the proper time to invest in Mexico with the stimulation of free trade with the United States," said Salinas, who will visit Japan later this month.

He added that greater job opportunities in Mexico will stanch the flow of illegal aliens into the United States, where they now can find better paying work.

"In Mexico we seek to export goods, not labor," said Salinas.

Administration officials and business leaders said the United States would gain from increased sales into a growing Mexican market, especially if its prosperity increases as a result of the trade pact and its people have more money to buy American products.

U.S. exports to Mexico increased by $10 billion over the past three years, reaching $25 billion last year.

Although a free-trade pact has strong support within the administration and from business organizations such as the Business Roundtable and the National Association of Manufacturers, it could face tough sledding in Congress.

Organized labor is concerned that U.S. companies will move factories to Mexico to take advantage of low wages there. They predicted that a free-trade pact will loosen a flood of imports into the United States, killing what is left of the lower-wage industries.

"Such an agreement would further erode the market share of the domestic {textile} industry and result in further U.S. job losses, which should be the first concern of government," said Donald R. Hughes, president of the American Textile Manufacturing Institute.

Recognizing the difficulties, Rep. Ronald Coleman (D-Tex.), whose district lies on the U.S.-Mexican border and who supports a free trade-pact, said: "My colleagues see more problems than promise."

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee's trade panel, supported the agreement but warned Mexico that it has to make concessions "that are valuable to the U.S."

He also laid down a marker for the Bush administration, saying a pact should advance U.S. commercial interests and not serve as a substitute for foreign aid to Mexico.