On the 21st April 2018, the EU and Mexico reached an agreement in principle on a new trade agreement that will be part of the broader Global Agreement.
The negotiations to broaden and modernise the scope of the EU – Mexico Global Agreement were launched on 25 May 2016. Practically all trade in goods between the EU and Mexico will now be duty free, including in the agricultural sector. Simpler customs procedures will further benefit the EU’s industry including sectors like pharmaceuticals, machinery and transport equipment. The agreement also lays down progressive rules on sustainable development. Among other things, the EU and Mexico have committed to effectively implementing their obligations under the Paris Agreement on climate change.
The Minister for Business, Enterprise and Innovation, Heather Humpreys and the Minister of State for Trade, Employment, Business, EU Digital Single Market and Data Protection, Pat Breen welcomed the swift and ambitious progress on the modernisation of the trade deal with Mexico that will provide significant trade and investment opportunities for business in Ireland.
Welcoming the new trade deal, Minister Humphreys said “Twenty-one years ago, the Global Agreement signed with Mexico, that largely covers industrial goods, was the most comprehensive and advanced trade deal the EU had ever reached. Now this ambitious successor agreement together with the recent trade deals with Canada, Japan and Singapore sends a powerful and positive message on global trade. Already exporting over €2 billion of goods and services, this Agreement offers the potential to grow that further through increased market access, reduced tariffs and administrative simplification for exporters.
The Agreement will provide a platform to increase Irish exports to Mexico, the current total value is just over €2 billion per year with total imports of nearly half a billion euros per year. It will further remove industrial tariffs and important agricultural tariffs. This will be significant for Ireland’s important Agri-food sector especially for dairy, pork and poultry products. There are many exciting opportunities in Mexico for Irish businesses including manufacturing, automotive, engineering, telecommunications, ICT, aerospace, software and service and manufacturing technology.”
Minister Breen with responsibility for Trade, added, “I am delighted that political agreement was reached on the free trade negotiations with Mexico. The Agreement presents a huge market opportunity to Irish business in Mexico by the opening of public procurement contracts and the removal of trade barriers reducing the cost of entry to this market. The Agreement includes a dedicated one stop information chapter for SME’s. This will especially benefit them given that trade barriers tend to disproportionately burden smaller firms, which have fewer resources to overcome them than larger firms”.
What will the Agreement cover?
In 1997, Mexico was the first Latin American country to conclude an Economic Partnership, Political Coordination and Cooperation Agreement with the EU. The agreement included trade provisions developed in a Free Trade Agreement that entered into force in October 2000 for the part related to trade in goods and in 2001 for the parts related to trade in services.
The negotiations to broaden and modernise the scope of the EU – Mexico Global Agreement were launched on 25 May 2016. The Agreement was adjusted to reflect the new political and economic global challenges. Modernisation includes good regulatory practices, more trade in agriculture and food, common sanitary and phytosanitary (food safety and animal and plant health) standards, sustainable development in labour and the environment, rules of origin, and investment protection. The political part of the agreement addresses issues including human rights, the fight against corruption and cooperation at the international level.
On 21 April 2018, the EU and Mexico reached an agreement in principle on a new trade agreement that will be part of the broader Global Agreement.
What will the Agreement cover?
The 1997 agreement between the EU and Mexico did not contain many of the provisions on trade in goods that are now standard and did not cover a number farming and fisheries products. There will be no custom duties on 98% of goods from the moment the agreement comes into force. For the remaining goods, custom duties will be removed over time or for a limited amount defined as a quota.
The agreement will, in particular –
- provide preferential access for fresh and processed cheeses of a 0% tariff quota of 5,000 tonnes (currently taxed up to 45%) and for mature chesses of a 0% tariff quota of 20,000 tonnes (currently taxed up to 45%);
- secure a considerable volume for milk powder, which Ireland is a prominent exporter of, starting with a 0% tariff quota of 30,000 tonnes from entry into force, rising to 50,000 tonnes after 5 years (currently taxed up to 50%) and
- allow Ireland to increase its pork and poultry exports to Mexico, with duty-free trade for virtually all pork products (currently taxed up to 45%) and economically relevant poultry products (currently taxed up to 100%).
The agreement contains provisions in relation to customs and trade facilitation, which are aimed at reducing processing times at the border and making movement of goods cheaper, faster, more predictable and efficient.
This includes streamlining customs procedures, setting common principles and providing for better cooperation and exchange of information between EU and Mexican custom authorities and substantial provisions on transparency to ensure that traders and the public have access to information on legislation, decisions or administrative policies.
Under the agreement, Mexico will also recognise product certification on industrial products carried out in the EU. This will make it easier for EU companies to prove they have complied with Mexican standards and regulations. Mexican exporters will still have to comply with the EU's strict standards and regulations, just as they do now.
The agreement will speed up trade while maintaining strong health and hygiene standards for food products. The agreement also contains an explicit reference to the precautionary principle that governs the parties' approach to the decision making. This means that, as already enshrined in the EU treaties, the EU can continue keeping products out of its market as long as there is no scientific certainty that they are safe.
The EU exports some €10bn of services to Mexico each year. The agreement will make it easier for EU to access to Mexico’s fast-growing services market, while reaffirming the EU and Mexico’s right to regulate.
Under the agreement, Mexico will open up its public procurement market to Irish and EU companies more than it has to any other trading partner. Mexico has also committed itself to enter negotiations with Mexican States to allow EU firms to tender for contracts at State level by the time the agreement is signed.
The Agreement contains a dedicated chapter for SMEs that requires the EU and Mexico to provide a website to avail of the benefits of and provide dedicated information to SME’s on the Agreement.
The EU and Mexico have agreed to a common sustainable development framework establishing a set of rules for both labour and the environment. The Agreement also includes a commitment on the part of all governments to ensure that there is no relaxation of environmental or labour law in efforts to promote trade or attract investment.
The agreement contains binding commitments to protect workers' rights, based on the International Labour Organisation’s Conventions and to protect environmental and climate, based on Multilateral Environmental Agreements. Referring to the Paris Agreement on climate change, the agreement supports the fight against climate change and the transition to a sustainable low-carbon economy. The agreement includes commitments on sustainable management of forests and fisheries.
The agreement in principle contains the most important chapters agreed and the EU and Mexico will continue to work to resolve the remaining technical issues. The EU and Mexico hope to finalise the full legal text before the end of the year.
The final text will be reviewed by lawyers from both parties, a process called “legal scrubbing”. After legal scrubbing and translation into all EU official languages, the agreement will be submitted for the approval of EU Member States and of the European Parliament before signature.
Further information and a detailed description of the agreement in principle is available on the EU Commission’s website at trade.ec.europa.eu/doclib/press/index.cfm?id=1830.