European trade commissioner Cecilia Malmström said on April 23 that a landmark preliminary agreement reached between the EU and Mexico and is to be finalised later this year is a “powerful signal for the whole world,” including the isolationist policies of US President Donald J. Trump.
Malmström added as protectionism continues to increase in certain parts of the world, “many of us believe that good trade agreements can be made for the benefit of consumers and companies.”
A broader, modernised EU-Mexico Global Agreement will “deepen and broaden the scope of an existing trade agreement signed in 1997” according to Malmström. Mexico is the bloc’s second largest trading partner in Latin America. EU-Mexico trade amounted to €62 billion for goods in 2017 and €15 billion for services in 2016. The EU exports of goods to Mexico were worth €38 billion last year, with further €10 billion-worth of exports for services. Almost half a million jobs within the bloc are linked in one way or the other to EU exports to Mexico.
The new agreement ’s provisional application is expected after the final text is finalised by the end of the year, following the legal verification and translation of the agreement into all official EU languages, by the European Commission. The agreement will then need the approval of the European Parliament and Council.
The agreement is expected to benefit companies, workers, and consumers across the EU while advancing its value-based trade policy agenda. Updating the agreement so that provisions on goods are present, as the new standard on trade agreements, the new deal will mean that almost all, effectively 99% of products would be traded between the EU and Mexico duty-free.
For 98% of the goods there will be no duties from the moment the agreement becomes effective and for the items that remain, quotas will be imposed, for example in dairy and meat exports bilaterally.
Mexico will remove its high tariffs on key EU food products such as pasta (currently subject to tariffs of up to 20%), chocolate and confectionary (with tariffs exceeding 20%), blue cheeses (up to 20%), apples and canned peaches (up to 20%), virtually all pork products (up to 45%) and economically relevant poultry products (up to 100%), saving EU exporters up to €100 million a year in customs duties.
The EU’s value-based trade policy agenda is expected to come forward with binding commitments to protect workers’ rights, based on the International Labour Organisation’s Conventions. Multilateral Environmental Agreements are both supported by the EU-Mexico deal, which will guarantee that internationally agreed-upon climate and environmental standards are also promoted.
Measures have also been put in place to fight corruption, with bribery being listed as a criminal offence for government officials. Tools designed to strengthen internal controls, external auditing, and financial reporting have also been codified in the new agreement, which is mainly aimed at tackling money laundering.
Both the EU and Mexico retain their right to determine the level of health protection that they consider appropriate, while the deal contains a precautionary principle that governs the parties’ approach to the decision making, allowing the EU to keep products out of its market as long as there is no scientific certainty that they are safe.
The agreement aims to increase the use of international standards while safeguarding the levels of protection that each party deems appropriate. This means EU exporters will not need to set up separate production lines for goods they export to Mexico, while the products certification that is carried out within the bloc will be recognized in Mexico as well. EU’s strict standards and regulations will keep being enforced to Mexican exporters, as they already did within the 1997 agreement framework.
The section on trade facilitation will be streamlining procedures, making them more efficient, saving time and money for both sides, by setting common principles and providing for better cooperation and exchange of information between EU and Mexican customs authorities. Traders and the public will be able have access to information on customs legislation, decisions or administrative policies.
Mexico will also open up its public procurement market to EU companies more than it has to any of its other trading partners. Mexico has also committed itself to enter into negotiations with the Mexican States to allow EU firms to tender for contracts at State level by the time the agreement is signed.
The agreement opens foreign investments by protecting at the same time investments between the EU and Mexico both in services and non-service sectors, with guarantees such as non-discrimination, not allowing expropriation without prompt and adequate compensation and via a general guarantee of fair and equitable treatment and physical security.
As for services, the EU at the moment exports some €10 billion of services to Mexico annually ant the updated agreement will make this export easier, while reaffirming the EU’s and Mexico’s right to regulate. Both sides retain the right to keep public services public and can deregulate or bring back to the public sector any privately provided services.
On digital trade, provisions and horizontal rules are imposed to remove unjustified barriers to trade by electronic means by prohibiting customs duties on electronic transmissions and banning unnecessary authorisation procedures. On Intellectual Property Rights (IPR), the agreement ensures high standards of protection of intellectual property and their enforcement beyond those set out in the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), making this a good agreement for the EU industry. For designs, the agreement includes the EU’s definition of industrial designs, including complex designs and grants protection for up to 25 years to registered designs.
The deal guaranteed cheaper access to EU agricultural goods including cheeses, milk powder, pork and chocolate, by cutting Mexican tariffs of up to 20% on cheeses such as gorgonzola and increase EU pork exports.
On Geographical Indication products and especially on drinks and spirits, the new agreement protects another 340 European Geographical Indications on wines and food so that only original products from the EU will be allowed to be sold in Mexico under the same corresponding name, raising the total number to 420. This will ban the sale of imitations of products such as Comté cheese from France, Queijo São Jorge cheese from Portugal, Szegedi szalámi from Hungary, and Magiun de prune Topoloveni plums from Romania.
As for cheese with “grandfathered rights” such as manchego, the EU underlined that “manchego” term should only apply to sheep’s milk cheese from central Spain, but Mexicans can continue manufacturing cow milk manchego cheese, that will clearly state that is neither from Spain nor from goat milk.