UPDATE 1-Yellen and Mexican finance minister discuss digital taxation

(Adds details about the conversation, Treasury statement)

MEXICO CITY, Feb 2 (Reuters) - Mexican Finance Minister Arturo Herrera and U.S. Treasury Secretary Janet Yellen on Tuesday discussed the need for an international agreement on taxing the digital economy, Mexico’s finance ministry said.

Nearly 140 countries are currently negotiating the first update in a generation to the rules for taxing cross-border commerce, to account for the emergence of big digital companies like Google, Apple and Facebook.

Ministers within the Organisation for Economic Cooperation and Development (OECD) last week expressed optimism that the new U.S. administration of President Joe Biden was more open to such a deal.

It was the first call between the two officials since Yellen took office last week.

Herrera’s call with Yellen also included discussions about the importance of crafting a vaccination strategy that would promote economic recovery, his ministry said. The United States is by far Mexico’s biggest trading partner.

Other points of their conversation centered on climate change and how to strengthen ties with Central America via economic and financial cooperation, the ministry added, in a statement later echoed by the U.S. Treasury Department.

Treasury said Yellen underscored her desire to maintain close U.S.-Mexico coordination on economic and security issues, and believed Mexico could be a strong partner in working to respond to the pandemic, supporting an economic recovery, fighting inequality, and addressing climate change.

She also told Herrera she looked forward to further engagement on shared interests, including combating illicit finance and facilitating economic development in Central America, Treasury said. (Reporting by Frank Jack Daniel in Mexico City and Andrea Shalal in Washington)