Mexico, US clash over wall as tough trade talks loom

Pena Nieto issued his own demands, renewing calls for the US government to stop the illegal trafficking for guns

MEXICO CITY:

While Donald Trump is still days away from becoming US president, Mexico is already gearing for tough negotiations, refusing to pay for a border wall while rejecting protectionist threats.

President Enrique Pena Nieto and Trump gave a glimpse of things to come on Wednesday as the neighboring countries face a new and complex era in their relationship.

Pena Nieto said his government will seek "open and complete negotiations" with the next US government and that "everything is on the table," including security, immigration and trade. But, he said, "at no time will we accept anything that goes against our dignity as a country, and our dignity as Mexicans."

Drawing applause at an annual meeting with Mexican ambassadors, Pena Nieto continued: "It is obvious that we have some differences with the next government of the United States, like the issue of the wall that Mexico of course will not pay for."

Trump - who has angered Mexicans by calling migrants from their country "rapists" - boasted at a news conference hours earlier in New York that Mexico has been "so nice" to him. But the Republican billionaire said his administration will quickly begin work on the wall and make Mexico reimburse the United States through a tax or another unspecified form of payment.

"I could wait about a year and a half until we finish our negotiations with Mexico, which we'll start immediately after we get to office, but I don't want to wait," Trump said.

The cost of building a wall - which might end up being more fence than wall, analysts say - has been estimated at up to $25 billion.

While the Republican billionaire did not mention his previous threat to tap into the remittances Mexican migrants send back home, Pena Nieto said he would work to "maintain the free flow of remittances," which reached $24 billion in the first 11 months of 2016.

The Mexican currency plunged to a new record low after Trump's press conference, falling 0.9 percent to trade at 22.20 pesos per dollar.

'Fears and threats' 

Trump, who takes office on January 20, also renewed his pledge to impose "a major border tax" on companies that ship jobs to other countries like Mexico.

The real estate tycoon claimed credit for a recent announcement by auto maker Fiat-Chrysler of plans to boost investments in the United States as well as Ford's decision to cancel a $1.6 billion plant in Mexico.

The auto industry is vital to Mexico, which is the world's fourth exporter, with the majority of vehicles going to the United States, which is Mexico's main export market. Pena Nieto rejected any attempt to influence foreign investors "on the basis of fear or threats."

But he said Mexico was ready to discuss the future of the North American Free Trade Agreement with the United States and Canada, which Trump wants to renegotiate. The pact represents $531 billion in annual two-way trade.

Pena Nieto issued his own demands to the incoming administration, renewing calls for the US government to stop the illegal trafficking of guns from the United States to Mexico, which the southern neighbor has blamed for fueling drug violence for years. Pena Nieto also said the United States needs to block the flow of illegal funds to organized crime.

 'Fascinating' change looms 

But analysts warned that negotiations on the wall and NAFTA will take a while if not years, as they have to clear hurdles in the US Congress and with the countries involved in the process.

In an attempt to start off on the right foot, Pena Nieto brought back his former finance minister, Luis Videgaray, as foreign minister last week.

Videgaray had resigned in September, a week after a political firestorm over his role in arranging Trump's controversial pre-election meeting with Pena Nieto. But Videgaray's previous contacts with the Trump team are now seen as an asset.

"This is a man who certainly has strategic vision, he is a negotiator, he is a transactional politician by nature," Duncan Wood, director of the Mexico Institute at the Wilson Center think tank in Washington, told AFP.

"This is going to be complex, fascinating negotiations," he said.

Luis de la Calle, a Mexican analyst who was among the negotiators of the NAFTA deal in 1994, said many US lawmakers will want to protect businesses in their home states, noting that Mexico is the main export market for California and Texas.

"Mexico must negotiate like a serious and responsible country," de la Calle told AFP, adding that the government "must be willing to leave the negotiation table in case that what the United States offers is unacceptable for Mexico."