The EU-Mexico Trade Agreement: New Opportunities for European exports?

15 July 2020

The EU-Mexico Trade Agreement recently concluded on April 28th after four years of negotiations. This new agreement is the update of a previous one completed between the EU and Mexico in 2000, the EU-Mexico Global Agreement. The necessity to replace the old agreement is justified by two reasons, namely the importance to include within the document aspects which go beyond trade and the need to regulate a quantity of trade exchanges that has tripled in the last nineteen years. The agreement still needs to be checked by lawyers, translated in all the official languages of the European Union and then approved by the EU Member Ministers, the European Parliament and the national ones. In the meantime, reactions to the conclusion of the agreement have been varied. On one hand, the European Parliament generally welcomed the agreement. On the other, some job categories consider it a dangerous menace to their jobs. In order to provide a complete framework on the topic, the present article will be divided in three sections, describing the characteristics of the agreement, the aims pursued by the signatories and, finally, the issues and the challenges the agreement will have to face in the incoming months.

Characteristics of the Agreement

The EU-Mexico Trade Agreement will benefit both the EU and Mexico by diminishing the barriers to trade. The fields that will benefit the most from the conclusion of this agreement are: agri-food, fisheries, machineries, pharmaceuticals, transport equipment and mineral fuels. Moreover, numerous benefits for imports and exports are expected in services related to business, finance, telecommunications and transports. The agreement also provides protections for trademarks, patents, design and trade secrets. Furthermore, the document agreed establishes that more than three hundred and forty European delicacies (e.g. Parmigiano Reggiano, feta cheese, Champagne) will be protected from forgery. On the top of this, European consumers will be able to easily buy Mexican products that respect EU standards in terms of security and safety, and the market of public procurement in Mexico will be open for European enterprises and vice versa.

How will the two partners implement all these measures? Five main instruments have been listed. First of all, Mexico will simplify its customs procedures so as to allow EU products to enter more easily at the Mexican border. At the same time, tariffs on numerous goods and other non-tariff barriers will be eliminated, benefitting more than twenty-fives areas of EU export. This instrument is particularly relevant for a specific class of products for which Mexico has rules of importation that differs from international standards. In the past, these differences have induced EU enterprises to have a different line of production just to export their products to Mexico. Once the Trade Agreement is enacted, however, this problem will no longer be an issue. Moreover, the agreement establishes measures to fight money laundry—a common crime within the Mexican State—which subtracts large amounts of money from import and export – related activities every year. Finally, some rules protecting human rights, especially workers’ rights, and promoting sustainable development constitute a fundamental part of the EU-Mexico Agreement.

Aims Pursued by the Signatories

Talking about the aims pursued by the EU and Mexico in signing the Trade Agreement, it is possible to identify two main clusters of reasons: economic-related ones and the promotion of further values, which go beyond mere imports and exports. In terms of economic and commercial goals, the primary objective of the Trade Agreement is to open up a significant market for the EU. In fact, the Mexican one is the second most relevant South American market in terms of imports and exports for the EU after Brazil. The second goal pursued by the EU and Mexico is to increase export-related jobs. Currently, already 400,000 jobs in the EU are linked to Mexican exports. Furthermore, the Agreement will signify more choice both for Union and Mexican consumers, while at the same time ensuring that EU patent protected products will be safeguarded on the Mexican market. Small enterprises will also benefit from the agreement. In particular, in establishing a commercial system with clearer rules, the agreement will lower costs and enable small businesses to better compete in the Mexican market. Finally, Mexico, thanks to the agreement, will manage to reduce its own economic dependency on the United States, which is the main power currently trading with Mexico. However, given the damaged diplomatic relations between the two countries, Mexico prefers to diversify its trade.

In going beyond the commercial aspect and discussing the promotion of further, six goals can be identified. First of all, the EU-Mexico Trade Agreement protects workers’ rights and human rights, allowing the EU to suspend the agreement in case of human rights violation by Mexico. This clause—which could appear peculiar for a trade agreement—is actually very often employed by the EU when concluding treaties with partners that have a different understanding of this topic. Secondly, the agreement seeks to promote democracy and the Rule of Law in Mexico. Thirdly, the agreement aims to strengthen environmental protection and sustainable development; an important component especially considering that the risk of non-sustainable means of production being employed in Mexico is high. Furthermore, both the EU and Mexico want, through the Agreement, to affirm the refusal of protectionism, fight corruption in the Mexican State and, finally, rebuild their economies after the strong impact of the pandemic.

Issues and Challenges Moving Forward

Despite the fact that the European Parliament seems to be satisfied by the agreement reached, there are some layers of civil society that have already demonstrated their discontent. Particularly, French farmers have been the most critical on the topic. In their opinion, the beef sector will be especially impacted by the conclusion of the EU-Mexico Trade Agreement. They maintain, as CETA and Mercosur did before, that the new agreement will damage the EU agri-food sector. The Farmers’ Confederation of France consider the agreement a real scandal as it will allow more than 20,000 tons of Mexican beef to enter the EU market. In the past, Mexican beef has been banned for health reasons. The reaction of French farmers is hardly exceptional given how since the beginning of the ongoing pandemic, numerous citizens and political parties in Europe have called to reinforce food sovereignty and to relocate it back to Member States.

Concluding Remarks

It is clear that, once again, the EU as a whole will have to face its internal discrepancies in order to make an international agreement effective. In particular, the Union has to convince the most skeptic part of its civil society of the guarantees that the agreement puts in place before allowing Mexican products to enter our internal market.

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