Background
In May of 2016, the European Union and Mexico began negotiations for a new trade agreement. On 21 April 2018, an agreement was finally reached. The new agreement, once ratified, is set to replace the previous Global Agreement signed in 1997. Since then, trade between the EU and Mexico has risen at a rate of around 8% per year, resulting in an overall increase of 148% in trade and the need for improving the current trade relationship between. The main purpose of the new trade agreement is to broaden and modernize the current EU-Mexico Global Agreement.
Key Elements
The new trade deal will make it easier for EU exporters to sell their products in Mexico, as almost all goods traded, including agriculture, will become duty free. Mexico will remove its high tariffs on various key EU food products such as pasta, chocolate, and spirits. Mexico will also begin to treat the EU as a single entity instead of imposing separate procedures for each Member State. Formalities for trade in industrial products will also be reduced, as Mexico will begin to recognize EU product certification and continue to comply to current EU standards and regulations. Additionally, the new agreement opens up trades in services, with the end goal of creating a favorable environment for knowledge-based economy in digital trade. It is important to note that although the agreement will speed up trade, maintaining strong health and hygiene standards for food products is essential, as the EU and Mexico will both retain their right to establish the level of protection they consider to be appropriate for trade. This includes a high level of protection of intellectual property rights for EU research and development.
The agreement is also a big step forward in mutual access to government contracts for both EU and Mexican companies in the public procurement markets, as all companies will be placed on a level playing-field irrespective of where the bid is presented. Mexican public contracts will be opened to EU companies more so than any of Mexico’s other trade partners, and Mexico has committed itself to enter into negotiations with the Mexican States to allow EU companies to bid for contracts for the first time at state level. Investment protection will also be improved by the new conditions for the EU’s Investment Court System, set to ensure transparency and right to regulation for public interest by governments.
In addition to trade, the agreement also set binding commitments to protect workers’ rights, fight climate change as according to the Paris Agreement, and prevent and combat corruption. The is the first EU trade agreement to include provisions to fight corruption and protect human rights.
Next Steps
Although some technical details remain to be clarified, the important elements have been agreed upon and negotiators will move forward to finalize the full legal text by the end of the year. The Commission will then proceed with verification and translation of the text, after which it will be submitted for approval to the European Parliament and Council of the European Union. Possibly, also EU national parliaments will have to approve the final text.
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