May 31, 2019 / 7:17 PM / 3 months ago

Target Trump's base if trade spat worsens, Mexican farm lobby says

MEXICO CITY (Reuters) - The Mexican government should target agricultural goods produced in states that have voted for U.S. President Donald Trump’s Republican Party if the trade conflict between the two neighbors worsens, the head of Mexico’s main farm lobby said on Friday.

Bosco de la Vega, head of Mexico’s national farm council CNA, told Reuters that such retaliatory measures should only be applied as a last resort and that he supports the Mexican government’s efforts to first seek a negotiated settlement to the dispute.

De la Vega criticized what he described as Trump’s unjustified “mistreatment” of Mexico by threatening the across-the-board tariffs on the country’s exports and emphasized that any potential retaliation should seek to cause the U.S. leader maximum political pain.

“In the unlikely event that (the U.S. tariffs are enacted), we will be supporting the government in surgically implementing tariffs aimed at farm products in Republican states,” he said.

Mexico has employed the strategy before as a means of pressuring Trump’s base of supporters in rural America, by seeking to convince them his policies are counterproductive.

Noting that Mexican officials are “drawing up a new map” of potential U.S. targets, de la Vega emphasized that such measures should only be taken as a last result after negotiations between both sides run their full course.

Nevertheless, the president of Mexico’s national farm council, which represents the country’s largest private sector agriculture and livestock companies, ticked off potential targets for the Mexican government’s possible retaliation, including U.S. grains like yellow corn, pork legs, apples, potatoes and whiskey.

U.S. exports of feed corn and soybeans, also mentioned by de la Vega, are used to fatten Mexico’s cows, hogs and chickens.

American farmers sold Mexico some 14 million tonnes of corn and almost 4 million tonnes of soy last year.

“This would be a last resort and we have to wait to see if by June 10 they’ve solved it,” he said, referring to the date Trump said an initial 5% tariff on all Mexican exports would take effect if Mexico fails to stop the flow of migrants into the United States.

“I’m betting that they’re going to solve it,” he added.

BILLIONS AT STAKE

Trump’s plan would ramp up the tariffs each month to reach 25% by October.

Responding to the threat, Mexican President Andres Manuel Lopez Obrador on Friday sent his foreign minister to Washington to negotiate a settlement with U.S. officials and repeated his desire to avoid a major confrontation with Trump.

He also said that for the time being he is not planning on lodging a formal complaint over the threatened tariffs to international bodies such as the World Trade Organization (WTO).

But Raul Urteaga, Mexico’s top agricultural trade official in the previous administration, described Trump’s tariffs as illegal under international trade rules.

“WTO rules and NAFTA don’t contemplate the imposition of tariffs because of migration issues,” he said.

“Mexico will not have any other option but to retaliate in kind” if the U.S. tariffs are enacted, said Urteaga.

For decades, Mexico and the United States have engaged in complementary agricultural trade in which U.S. farmers sell large volumes of yellow corn and select meat cuts, for example, to buyers south of the border, while Mexican producers send products such as avocados and berries, among many others, north.

Last year, Mexico exported some $26 billion in agricultural products to the United States, according to CNA data.

Meanwhile, the U.S. exported $19 billion worth of agricultural products to Mexico in 2018, according to the U.S. Department of Agriculture.

Around 80 percent Mexico’s total exports are sent to the United States.

Reporting by David Alire Garcia and Sharay Angulo; Editing by Frank Jack Daniel, Diane Craft and Cynthia Osterman

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