Mexico talks tough on Trump with NAFTA talks looming

16:19 | 26/04/2017 Global Economy

Mexico's government on Tuesday said it would fight any measures in a U.S. tax overhaul that broke international trade rules, and threatened to review cross-border cooperation on migration and security if upcoming negotiations founder.

Mexican Foreign Minister Luis Videgaray waits to meet Spain's King Felipe at Zarzuela Palace in Madrid, Spain, April 20, 2017 - REUTERS Photo

Foreign Minister Luis Videgaray said Mexico was watching to see if plans by U.S. President Donald Trump's administration to shake up taxation included a levy on remittances sent home by Mexican workers or the imposition of tariffs on Mexican goods.

"If they are put forward, we'll have to act with absolute firmness, using all the political, diplomatic and obviously legal means at our disposal," he told a session of the foreign relations committee of the lower house of Congress.

Trump has vowed to pull out of the North American Free Trade Agreement (NAFTA) that underpins the bulk of Mexican exports if he cannot rework it in his homeland's favor, and talks between the signatories - Mexico, the United States and Canada - on modernizing the accord are expected to start later this summer.

Regional trade tensions picked up this week, with the Trump administration on Monday announcing a 20 percent duty on Canadian softwood lumber in retaliation for what it sees as unfair restrictions on dairy exports.

And on Tuesday, the World Trade Organization (WTO) ruled that Mexico could take retaliatory trade measures against the United States in a dispute over tuna fishing.

Mexico has said it wants to put "all the issues" on the table, including security, migration and trade in negotiations with the United States.

Videgaray said existing security agreements were not under threat, at least for now, adding that Mexico would not be signing any additional pacts.

"What we're not prepared to do is increase or create new systems of coordination, and if negotiation on other issues - migrants, border, trade - is not to Mexico's satisfaction, we'll have to review our current cooperation," he said.

Lawmakers questioned Videgaray extensively about his policy toward the administration of Trump, who has caused deep anger in Mexico with his plans to build a southern border wall to keep out illegal immigrants and his threats to restrict trade.

Videgaray said his government considered the building of the wall a "hostile" act and repeated it would contribute nothing toward it. Trump says Mexico will ultimately pay for the wall.

The foreign minister said Mexico regarded remittances, which Trump had threatened to go after to pay for the wall, as non-negotiable, saying they could prove a "breaking point" issue in any dialogue that encompassed other matters.

Videgaray said any tax on Mexican-made imports by Trump was a "bad idea" that would only end up hurting U.S. consumers.

"However, these types of measures would obviously be against not just the North American accords but particularly the rules of the World Trade Organization, and so we would have the legal means to act against them," he said.

Theo Reuters