President Bush dined privately with Mexican President Carlos Salinas de Gortari at the White House last night and laid the groundwork for formal negotiations to lift trade barriers between the two countries.

A White House spokesman said both presidents believe their countries would "derive substantial and long-term benefits" from a trade pact.

The statement by White House press secretary Marlin Fitzwater stopped short of announcing the start of formal negotiations to forge a free trade pact, but administration officials said they expect that announcement to come today.

Salinas, who is in the United States on a private visit to address the Business Roundtable, will meet with Secretary of State James A. Baker III and members of Congress today, and will resume "consultations on the free trade issue" in those meetings, Fitzwater said.

He said they also discussed the recent superpower summit, the fight against drug trafficking and other issues. Bush reiterated the U.S. desire for "close cooperation with Mexican authorities" in the drug fight, said Fitzwater.

If successful, the trade negotiations could bring all of North America into a single market free of tariffs and other barriers to trade. The United States and Canada entered a free trade agreement two years ago. Two-way U.S.-Mexican trade now totals about $52 billion a year, but experts say it has the potential to go much higher.

Bush will welcome East German Prime Minister Lothar de Maiziere to the White House today for talks on Germany and Europe. It will be the first meeting between a U.S. president and the head of East Germany.