By Caren Bohan
WASHINGTON (Reuters) - U.S. President-elect Barack Obama will discuss the drug war and trade issues with Mexican President Felipe Calderon on Monday, in Obama's first meeting with a foreign leader since his November election.
Obama has promised to nurture close ties with Mexico and with Latin American countries that complained of neglect by the United States after President George W. Bush's foreign policy focussed heavily on Iraq and the war on terror.
With Mexico's drug violence exploding and amid fears that Obama might seek changes to the North American Free Trade Agreement, Calderon is eager for a meeting with the incoming U.S. president.
Obama aides said the Calderon meeting was part of a long tradition of U.S. presidents meeting with the Mexican leader before their inauguration.
The two leaders are to have lunch at noon (5:00 p.m. British time) and then sit down for a working meeting.
Calderon plans to meet Bush on Tuesday.
Beyond following tradition, a senior Obama adviser also said Obama "feels very strongly about the U.S.-Mexico relationship. This is obviously a priority."
Obama, who takes over from Bush on January 20, in a speech last May accused the Bush administration of being "negligent" towards its friends in the Americas and pledged to renew ties with neighbours like Mexico.
Obama aides confirmed last week that he plans to make Canada the destination of his first foreign trip as president, but they have not said when the trip would take place.
One of Calderon's priorities is to press Obama to follow through on a U.S. aid program launched by Bush in 2007 to help Mexico combat the drug trade. The Mexican president is battling drug traffickers blamed for killing 5,650 people last year.
'SHARED CHALLENGE'
Mexican Foreign Minister Patricia Espinosa told a news conference on Friday that it was vital to push ahead with the $1.4 billion drug aid package known as the Merida Initiative.
So far nearly $300 million (199 million pounds) of aid has been freed up, but the first equipment is unlikely to arrive until late this year.
The Obama adviser, who spoke on condition of anonymity, said Obama viewed the effort to combat drug trafficking as "a shared challenge for both our countries."
"As worried as we are about the northbound drug trade, we're also worried about the southbound weapons and cash flows that impact the drug war," the adviser said.
In the May speech in Miami, Obama praised Calderon's tough stance against drug trafficking and vowed to support his efforts.
"We need tougher border security, and a renewed focus on busting up gangs and traffickers crossing our border. But we must address the material heading south as well," Obama said.
Calderon is also concerned about Obama's campaign promise to renegotiate North American Free Trade Agreement with Mexico and Canada. The deal has greatly expanded Mexican trade with its powerful neighbour since it went into effect in 1994 but is seen by U.S. unions as a cause of job losses in big industrial states like Ohio.
Calderon told international business leaders at a summit meeting in November that restricting trade would only drive more Mexicans to emigrate illegally to the United States.
Bush failed to deliver a promised immigration agreement with Mexico, and instead his administration began construction of a 670-mile (1,070-km) border fence designed to stem the tide of illegal immigrants.
Another major topic for Calderon's meeting with Obama is the deepening global economic downturn. The meeting comes as Obama is engaged in intensive negotiations with the U.S. Congress over a $775 billion fiscal stimulus plan aimed at reviving the ailing U.S. economy.
Mexico, which sends 80 percent of its exports to the United States, is suffering a spillover from the U.S. economy's woes, as layoffs at Mexican factories mount and families with relatives in the United States see a decline in remittances.
(Additional reporting by Catherine Bremer; Editing by Anthony Boadle)
