Mexico and the European Union (EU) have reached an updated trade agreement, reaffirming their commitment to free trade in contrast to the United States’ move towards greater protectionism.
Saturday’s announcement came as talks to renegotiate the North American Free Trade Agreement (NAFTA) continue and six weeks after Mexico and 10 other Pacific Rim countries formally entered into a revised Trans-Pacific Partnership trade pact.
In a joint statement by the secretariats of Foreign Affairs and Economy, the Mexican government said the agreement in principle includes political, economic and cooperation aspects that “will allow political dialogue to be strengthened and increase trade and investment flows.”
With lingering uncertainty still surrounding NAFTA — including a tweet by United States President Donald Trump today suggesting an agreement might be conditional on immigration policy — news of the deal was welcomed as it could help Mexico reduce its dependency on its northern neighbor.
A European Commission (EC) press release said that “practically all trade in goods between the EU and Mexico will now be duty-free,” including those in the agricultural sector.
European exporters of poultry, cheese, chocolate, pasta and pork are the biggest winners, the EC statement said, because they will now have preferential or tariff-free access to the Mexican market.
Tariffs on chocolate and pasta, currently as much as 30% and 20% respectively, will be removed completely and trade barriers will also be lifted on cheeses such as Gorgonzola and Roquefort.
In turn, Mexican exporters will benefit from the removal of tariffs on products such as orange juice, tuna, honey and agave syrup.
The agreement also ensures “the protection from imitation for 340 distinctive European foods and drink products in Mexico.”
The right to use European names for Mexican-made cheeses had previously been a sticking point in the negotiations.
Among them were manchego, parmesan and gruyere, but Mexican producers will be able to continue using those names.
The EC also said the updated arrangement “will be the first EU trade agreement to tackle corruption in the private and public sectors” and it also includes sections on sustainable development and climate change.
EU Trade Commissioner Cecilia Malmström highlighted the speed with which the deal was reached.
“In less than two years, the EU and Mexico have delivered a deal fit for the economic and political challenges of the 21st century,” she said.
“We now open a new chapter in our long and fruitful relationship, boosting trade and creating jobs. Today’s agreement also sends a strong message to other partners that it is possible to modernize existing trade relations when both partners share a clear belief in the merits of openness, and of free and fair trade.”
The updated agreement replaces the pact that came into force in 2000 and will take effect once it has been approved by lawmakers both in Mexico and the EU.
Economy Secretary Ildefonso Guajardo, Malmström and EU Agriculture Commissioner Phil Hogan also released a joint statement saying the agreement “will contribute to making our trade relationship fit to face the opportunities and challenges of the 21st century.”
“. . . The European Union and Mexico stand together for open, fair and rules-based trade. Our negotiators will now continue their work to resolve the remaining technical issues and finalize the full legal text so that our citizens and enterprises can start reaping its benefits as soon as possible.”
Annual trade between the two is €62 billion (US $75 billion) and growing at about 8% per year, according to European Union figures. The latter is running a trade surplus of €14 billion (US $17 billion).
The EU is Mexico’s third biggest trade partner in goods, while Mexico is the EU’s 13th biggest.
Mexico’s biggest trade partner is the U.S. The two do US $525 billion in trade annually, in goods and services.
UPDATED: This story has been updated to include information regarding Mexican-made cheeses and Mexico-EU trade flows.