The European Union (EU) and Mexico recently concluded their negotiations on a new trade agreement, which is a comprehensive remake of the trade agreement concluded between both parties back in 1997.

This new EU-Mexico trade agreement aims to be more wide-ranging and ambitious than its younger predecessor. Some of the key new features include: further eliminations and reductions of duties for trade in goods (99% of the products traded between the countries will be duty free), better access to government contracts in public procurements, simplification of customs procedures, reduction of formalities for trade in industrial products, and specific commitments on climate change and human rights. In addition, this will be the first EU trade agreement with specific provisions aimed at combating corruption in the private and public sectors.

Some of the key points in more detail:

  • Eliminating customs duties in new areas: Mexico will remove its high tariffs on key EU food products such as pasta, cheeses, apples (currently up to 20%), chocolate and confectionary (up to 30%), pork products (up to 45%) and poultry products (up to 100%). The EU will eliminate its tariffs on Mexican goods, like, among others, orange juice, tuna, agave syrup, fruits and vegetables. For other goods, the agreement establishes new market access with annual limits and allows easier trade of wine and spirits.
  • Public contracts: EU and Mexican companies will have mutual access to government contracts in public procurements, which was not allowed before in Mexico. Moreover, Mexico will negotiate with its States to allow EU companies tender for contracts at local level, which means that Mexico would, for the first time, open its public procurement at the local level to a treaty partner.
  • Intellectual property: Intellectual property protection will be further increased. Amongst others, protection for over 340 Geographical Indications on wines and food will be recognized.
  • Trade in services and digital trade: Trade in service will be further simplified with better access to financial services, transportation, e-commerce, and telecommunications. The treaty will also determine horizontal rules on digital trade which will remove barriers to trade done by electronic means and will establish clear rules for consumers’ online protection. There will also be recognition for each other's qualifications in certain regulated professions.

The Agreement still needs work on the technical details. Its final text is expected to be concluded by the end of the year.

Potential impact for your business:

The new EU-Mexico trade agreement will provide great opportunities as well as challenges for companies doing business in those countries:

  • There will be easier access for Mexican companies to the EU markets and for EU companies to Mexico’s large and growing market, triggering investment opportunities and growth potential in several industry sectors.
  • New and more cost effective access to new raw material and parts to foster greater industrial competitiveness.
  • New guidelines in public procurement must be studied and borne in mind by companies that intend to form part of government contracts.
  • The protection of new Geographical Indications for agricultural food and beverages represents protection for manufacturers in the EU and brings on the other hand obligations for manufacturers in Mexico being required to comply with new marketing rules.
  • New rules reflecting the migration of professionals and the recognition of professional qualifications must be taken into account by human resources functions.

We will follow up with reports on the progress on the finalization of the new agreement. In any event, companies doing business in the EU and Mexico are compelled to have a deep understanding of the opportunities and challenges of the new agreement to be prepared and ready to act once the agreement comes into force.