Secretary of State George P. Shultz and Mexican Foreign Secretary Bernardo Sepulveda met yesterday in what both sides said was an effort to repair damage to their relationship created by recent drug-traffic problems.

Sepulveda told reporters that the 2 1/2 hours of private and luncheon talks were "very fruitful, very positive, very cordial." He added, "A solution can be found to every single issue."

A high-ranking Mexican official later said there was agreement that "a police issue should not be translated into a foreign policy issue."

Another Mexican official close to the talks said Sepulveda had expressed "total skepticism" to Shultz about the chances for success of U.S. policy toward Nicaragua. He asked that Shultz recognize the need for "full participation by all parties," including Nicaragua, in any regional peace settlement, the official said.

A senior U.S. official, who briefed reporters on condition he not be named, said the two foreign ministers had agreed that the kidnaping and murder of a U.S. Drug Enforcement Agency official in Guadalajara last month was "part of an international problem" and "has not damaged U.S.-Mexican relations."

Although Shultz told a congressional hearing last week that "our level of tolerance has been exceeded" by the incident, he did not criticize Mexico's handling of the case to Sepulveda, the U.S. official said, adding, "We're past that point."

"We have put a lot of faith in [Mexican] President [Miguel] de la Madrid's indication that he has put a lot of emphasis on this issue," the official said. "We will wait and see."

The high Mexican official said the Mexican government was concerned over "outrageous" charges by midlevel U.S. Drug Enforcement Agency officials that neglect, inefficiency and corruption on the part of Mexican agents had hampered investigation of the murder.

He said the U.S. agents' charges, and their subsequent clampdown on border traffic that stopped travelers for as long as seven hours for searches, had "distorted" the U.S.-Mexican relationship, damaged the economies of border towns and was perceived in Mexico as an overreaction.

The decision to impose the weeklong border clampdown might have been made by midlevel DEA officials rather than by the White House, the official said. "It should not have been taken from the very beginning, and once taken it should have been reversed much faster than it was."

But he added, "The impression I have from the conversations today is that this is behind us."

Mexico has been instrumental in organizing the Latin American Contadora peace process, named for the island where Mexico, Venezuela, Colombia and Panama first met on the issue. In a speech prepared for delivery yesterday to the National Defense University, Sepulveda asked the United States to make "unequivocal efforts" toward peace and to affirm "the supremacy of political negotiation and dialogue" through the Contadora process.

A recent, apparently temporary halt in the Contadora talks "caused some anxiety" among Central American leaders "because they suddenly realized there was a political vacuum . . . they had no one to talk to," the high Mexican official said later.

Mexican officials have criticized the United States for what they regard as lukewarm backing for talks and undue skepticism about conciliatory moves by Nicaragua. Nicaragua's recent offer to send home 100 Cuban advisers and delay acquiring sophisticated jet fighters was "a useful thing," the official said. The United States "should take it as a political statement and ensure that it becomes a political commitment," he said