EU-Mexico Free Trade Agreement is Updated
The EU-Mexico Free Trade Agreement that was signed in 1997 has been updated recently to reflect a commitment to expanded trade between the European Union and Mexico. The announcement of the updated trade accord between two economic partners was made on April 21, 2018.
The new EU-Mexico Free Trade Agreement (FTA) is important for Mexico in that it is a part of the country’s strategy to decrease its reliance on commerce with the United States.
After Brazil, Mexico is the second largest Latin American trading partner with the EU. Total trade between the EU and Mexico currently stands at a total of € 79 billion. This number breaks down into € 62 billion in goods and € 19 billion in services. With the new EU-Mexico Free Trade Agreement and the further economic opening of the two trading partners, these numbers are expected to grow significantly.
One of the main thrusts of the new version of the EU-Mexico Free Trade Agreement is the elimination of 99% of the tariffs that are applied to goods that enter the commerce of each of the parties to the agreement. Although tariffs for the bulk of manufactured goods traded between the two partners were lowered and fully removed by the 1997 agreement, tariffs have remained in place for farming products. For example, under the revised accord, tariffs will be completely eliminated on products such as pasta, asparagus, chocolate and confectionary goods, cheese, apples and canned peaches and pork and pork products, and dairy. Also, eliminated under the new EU-Mexico Free Trade Agreement will be tariffs that are currently in place for poultry products. For the remaining 1% of goods that are traded and still dutiable under the agreement greater bilateral access will be achieved by setting new, more liberal, quotas.
Also, with respect to the greater bilateral trade in agricultural products, the EU-Mexico Free Trade Agreement outlines plans for the trading partners to work together to maintain strong health and safety standards for food products. Both parties agree to allow the other to keep the right to establish the levels of protection that they deem to be appropriate for the items that are traded.
In addition to further eliminating duties, the new EU-Mexico Free Trade Agreement includes commitments to protect workers’ rights and to protect the environment. With respect to the latter, both parties to the accord reaffirm their cooperation in fighting climate change and in transitioning to low-carbon emissions economies.
In terms of the trade in industrial products between the two parties to the updated FTA, both Mexico and the European Union have mutually agreed to reduce the formalities that are involved in the import and the export of such items. Although most of the tariffs that were attached to industrial goods were removed as a result of the applied provisions of the 1997 agreement, many of the technical requirements of each of the trading partners remained in place. The new FTA establishes harmonized technical requirements for the trade in industrial goods. This will facilitate the ability of both parties to import and to export such items in a more cost-efficient, effective and competitive manner.
Among the other changes that have been put into effect by way of the new Mexico-EU Free Trade Agreement, is the facilitation of the bidding for government contracts in the territory of both parties. Going forward it will be easier for EU firms to bid for Mexican government contracts and vice versa.
Some of the other key features addressed by the updated EU-Mexico Free Trade Agreement include pledges aimed at:
- Ensuring stability and fighting corruption;
- Encouraging investment in an environment that is transparent for businesses;
- Offering new rules in the services sector;
- Setting rules for digital trade;
- Establishing better protections for innovations and creative work;
- Focusing on the needs of smaller businesses;
- Preventing traditional food products from imitations;
- Making the rules for trade enforceable through a State-to-State trade mechanism.
The United States-Mexico-Canada Free Trade Agreement will boost the North American auto industry and will affect labor relations