Direct foreign investment by economic actors in European trading bloc in Mexico has increased significantly as a result of the existence of the EU-Mexico Free Trade Agreement.
Beyond the NAFTA, another high profile commercial accord that Mexico has in place with another of the world’s leading economic regions is the EU-Mexico Free Trade Agreement. The EU-Mexico Free Trade Agreement was signed on December 8, 1997 in the city of Brussels, Belgium. The terms of the accord entered into operational force on July 1, 2000. At that time, most of the taxes, tariffs and other fees and duties associated with importing goods among participating nations were eliminated.
In addition to tariff and duty matters, a partial listing of some of the other issues that the EU-Mexico Free Trade Agreement addresses includes:
- Standards and technical certifications regulations
- Rules of Origin
- Anti-Dumping rules
- Reciprocal customs cooperation among agreement signatories
- Quantitative or equivalent restrictions on certain goods
Although positive effects were registered by Mexico in short order as a result of the implementation of the EU-Mexico Free Trade Agreement, serious flows of foreign capital inflows began in 2008.
Between the beginning of that year until this past June, the EU, as a whole, has replaced the United States as the largest source of foreign direct investment (FDI) in the NAFTA region’s southernmost partner country. During this period, total EU investment in Mexico totaled approximately US $82.2 billion, while capital derived from US investors topped out at US $74.4 billion.
Despite the receipt of a measurable growth in European FDI figures since the implementation of the EU-Mexico Free Trade Agreement, Mexico has not been very effective in its efforts to use its relationship with the trading bloc to diversify customers for its exports. In 1999, Mexico exported 4% of its production to the EU. By 2014 that number grow by a small amount to 5.1% of total Mexican goods shipped overseas.
This May 11 European Union Commissioner for Trade, Cecilia Malmström, announced the plans to renegotiate the EU-Mexico Free Trade Agreement. These planned trade talks could introduce a whole new round of provisions that may bring the agreement closer to the NAFTA in breadth and scope. Some sources report newly revamped treaty will aim to create a “transatlantic free-trade zone” by minimizing tariffs, expanding intellectual property rights and opening the door for EU movement into Mexico’s agricultural sector.