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Mexico issued an ultimatum to the Trump administration

By: Jean Luis Arce, AFP

24 de Enero del 2017

Artículo publicado en Business Insider.

Mexico issued an ultimatum to the Trump administration

MEXICO CITY — Mexico drew red lines on Tuesday ahead of negotiations with US President Donald Trump's administration, warning it could quit the talks and a major trade pact if the discussions hit a wall.

During the US election campaign, Trump vowed to make Mexico pay for a massive border wall and threatened to finance it by tapping into the $25 billion in remittances that Mexican migrants sent back home last year.

"There are very clear red lines that must be drawn from the start," Mexico's economy minister, Ildefonso Guajardo, told the Televisa network as he prepared to meet with US officials in Washington on Wednesday and Thursday.

Asked whether the Mexican delegation would walk away from the negotiating table if the wall and remittances are an issue, Guajardo said: "Absolutely."

Guajardo and the Mexican foreign minister, Luis Videgaray, will hold the face-to-face talks with the new US administration before a meeting between Trump and President Enrique Peña Nieto on January 31.

NAFTA threat

In addition to the wall, Trump wants to renegotiate the North American Free Trade Agreement with Mexico and Canada, warning last week that he would abandon the pact unless the US gets "a fair deal."

The Mexican government has responded that it is willing to "modernize" the pact, which came into force in 1994 and represents $531 billion in annual bilateral trade between Mexico and the US.

Some 80% of Mexico's exports go to the US, a clear indicator of the country's dependence on the US market for its economic well-being.

But Guajardo warned on Tuesday that Mexico was also willing to exit the 23-year-old agreement.

"If we're going for something that is less than what we have now, it doesn't make sense to stay in," Guajardo said.

Peña Nieto vowed on Monday that there would be "neither confrontation nor submission" in the negotiations, which will include trade and immigration.

Peña Nieto also looked farther north for help on Sunday as he spoke with Canadian Prime Minister Justin Trudeau by telephone to discuss ways to boost North American economic integration.

Luis de la Calle, a Mexican economist who was one of the original NAFTA negotiators, said it was impossible to enter negotiations without being willing to walk away if necessary.

Trump "puts pressure in an almost extortionist manner ... to get as many concessions as possible," de la Calle told AFP.

"But countries must be much smarter."

Videgaray said that while the US had "great interest" in talking about trade, Mexico wanted to "talk about every issue."

Peña Nieto has called on the Trump administration to do more to stop the illegal flow of weapons from the US into Mexico, which Mexican officials blame for fueling a brutal drug war.

Big market next door

While it faces tough talks with the US, the Mexican government is setting its eyes on new trade pacts with other countries.

After Trump withdrew the US from the Trans-Pacific Partnership on Monday, Peña Nieto said his government would immediately seek to negotiate bilateral agreements with other TPP members to "diversify" his country's trade relations.

Guajardo noted that Mexico had good relations with China and said Beijing was a "big concern" for the Trump administration.

But Valeria Moy, the director of the Mexico Como Vamos think tank, said Latin America's second-biggest economy could not lose sight of the importance of the US while looking for deals elsewhere.

"If you have the world's biggest market next door to you, that's the market you need to take care of, period," Moy said. "What we can diversity is who we buy from."

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