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UPDATE 1-Mexican finance minister prepares tariffs in case NAFTA talks fail

(Adds comments from minister, private sector leader)

By Sharay Angulo

MEXICO CITY, Oct 12 (Reuters) - Mexico is working on tariff
measures in case North American Free Trade Agreement (NAFTA)
talks are unsatisfactory, Finance Minister Jose Antonio Meade
said on Thursday, heightening worries the talks had soured and
triggering peso sales.

Meade was addressing Mexican senators in the capital as a
fourth round of talks near Washington ran into obstacles over a
series of hard-line U.S. demands, including a proposal that
could terminate the $1 trillion pact in five years.

"We have the possibility of identifying tariff measures, we
have the possibility to identify other markets to be our
providers and other markets that we can turn to," Meade said.

"We're working on that, we have been working and perfecting
the analysis to identify not only industries but companies that
could help the contingency if we don't reach a satisfactory
negotiation."

Meade did not give details of what tariffs were being
analyzed. In 2011, Mexico effectively used targeted tariffs on
U.S. goods such as pork and cheese to win a dispute over trucks.

Meade's comments drove the peso to a nearly
five-month low of 18.92 against the dollar, a fall of more than
1 percent in the session. The currency has shed close to 4
percent since Oct. 3 on concerns the NAFTA talks could founder.

Since late last year, Mexico has said it was working up a
"Plan B" in case U.S. President Donald Trump makes good on
threats to leave NAFTA or slap tariffs on Mexican-made goods.

Mexico has also been exploring deepening trade ties with
agricultural powerhouses such as Argentina and Brazil, an
implicit threat to U.S. farmers who have seen shipments to
Mexico swell under NAFTA.

U.S. negotiators increased tensions in the talks by
insisting that any new deal be allowed to expire after five
years, three officials familiar with the negotiations said on
Thursday.

The United States also wants to boost how much North
American content autos must contain to qualify for tax-free
status and eliminate dispute settlement mechanisms.

"The proposals (of the United States) are really difficult,
but they are still at the table and they keep negotiating, so as
long as that remains the case, we have to stay calm," said
Moises Kalach, a leader from Mexico's private sector who has
been consulting with the government.
(Reporting by Sharay Angulo; writing by Michael O'Boyle;
editing by Frank Jack Daniel and Jonathan Oatis)

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