Mexico is prepared to negotiate changes to the North American Free Trade Agreement to modernize the 23-year-old open trade pact grouping the U.S., Canada and Mexico, Economy Minister Ildefonso Guajardo said on Friday.
Guajardo said Mexico is prepared to discuss with the Trump administration and Canada revisions to NAFTA, such as including labor and environmental standards. Mexico "is willing to modernize NAFTA," he said.
However, Guajardo said Mexico will not accept tariffs. U.S. President Donald Trump has called for new border taxes on Mexican-made goods.
"It makes no sense to introduce an agreement with border restrictions or tariffs," he said.
Meanwhile, the peso rallied on Friday to a nearly four-month high after the new U.S. commerce secretary offered a softer tone on trade talks.
Already the best performing major currency in recent weeks, the peso strengthened as much as 2.5 percent to 19.5085 per dollar on Friday, its best since Nov. 9, the day after Donald Trump's surprise presidential election win.
The peso hit a historic low on Jan. 11, after tumbling about 17 percent on concerns that Trump would follow through on threats to tear up NAFTA.
Speaking on CNBC, Secretary of Commerce Wilber Ross said a sensible trade deal with Mexico would help the peso, which he acknowledged had been hit by fears about what could happen to NAFTA.
"It's a much more neighborly discourse," said Benito Berber, an analyst at Nomura in New York. "The best tool to help the peso is to change the tone on NAFTA."
Berber said the recent signals from the U.S. administration were calming worries that Trump would seek to end NAFTA or impose hefty tariffs on U.S.-bound Mexican goods.
In the interview, Ross highlighted rules of origin clauses in NAFTA as one of the pact's weak points, an area Mexico has said it is willing to discuss.
The peso's deep losses had been working against Trump's objective to narrow the U.S. trade deficit with Mexico, since the weaker peso makes U.S. exports more expensive in Mexico while making Mexican exports cheaper in the United States.
"A weak peso works against the interest of the U.S. administration, because it makes Mexican exports more attractive," Guajardo said.
In his interview, Ross also suggested that a new mechanism should be created to stabilize the peso exchange rate, which added to recent speculation that Mexico could try to use more measures to bolster the currency.