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Mexico | Brussels, 21 April 2018

Key features of the EU-Mexico trade agreement

On 21 April 2018 the European Union and Mexico reached a deal on a new trade agreement. It will be part of a broader, modernised EU-Mexico Global Agreement and will deepen and broaden the scope of an existing trade agreement signed in 1997.

The European Commission negotiated the agreement on the basis of a mandate unanimously approved by EU governments. Throughout the negotiations the Commission has put transparency first. Based on the current agreement in principle, negotiators from both sides will continue their work to address all the remaining technical issues and to produce a final text of the agreement. The Commission will then verify the text of the agreement from a legal perspective, translate it into all EU official languages, and submit the agreement for approval to the European Parliament and the Council.

The EU is Mexico's third biggest trading partner, and Mexico, with 128 million people, is the EU's second biggest trading partner in Latin America after Brazil. Total EU-Mexico trade amounts to €62 billion for goods (2017) and €15 billion for services (2016). The EU exports of goods to Mexico are worth €38 billion (2017), with further €10 billion-worth of exports in services (2016).

400,000 jobs in the EU are linked in one way or the other to EU exports to Mexico. The agreement will make trade and investment with Mexico easier, so this figure is set to increase. Every €1 billion of EU exports supports some 14,000 jobs in Europe, so the more Europe exports, the more jobs it can safeguard and create.

Once in force, the agreement will:

  • benefit companies, workers and consumers across Europe;
  • advance the EU's value-based trade policy agenda;
  • send a signal to the world that the EU and Mexico are open for business and reject protectionism.

This will be achieved through:

1. Removing remaining customs duties

The 1997 agreement between the EU and Mexico did not contain many of the provisions on trade in goods that have since become standard in trade agreements. It also did not cover a number of product categories, especially farming products and fisheries. The new agreement fills these gaps.

The new agreement will mean that 99% of products would be traded between the EU and Mexico duty free. For 98% of goods there will be no duties from the moment the agreement becomes effective.

For the remaining items, customs duties will be eliminated over time or for a limited amount defined as a quota. This includes dairy and meat exports from both the EU and Mexico.

The agreement will make it much easier for EU exporters to sell their products in Mexico and save up to €100 million a year in customs duties.

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%).

For other products the agreement will deliver significant new market access within annual limits, for example:

EU product Current Mexican duty rate Volume of 0% tariff-rate quota for EU products
Milk powder Up to 50% 50,000 tonnes
Other Cheeses Up to 45% 20,000 tonnes
Fresh and processed cheeses Up to 45% 5,000 tonnes

It will also become easier to trade wine and spirits, exports of which are important for both the EU and Mexico.

2. Ensuring sustainability and fighting corruption

The agreement underpins the EU’s value-based trade policy agenda with real action. The EU and Mexico set out common aspirations and aims for an open and fair trading relationship based on a combination of the values of sustainable development and the economic engine of trade.

The agreement contains binding commitments to:

  • protect workers' rights, based on the International Labour Organisation’s Conventions;
  • protect environmental and climate, based on Multilateral Environmental Agreements.

Referring to the Paris Agreement on climate change, the agreement supports:

  • the fight against climate change;
  • the transition to a sustainable low-carbon economy.

The EU and Mexico also agree to promote corporate social responsibility practices in line with internationally agreed standards.
The agreement also includes measures to prevent and combat corruption, for example:

  • making bribery a criminal offence for government officials;
  • strengthening internal controls, external auditing and financial reporting;
  • tackling money laundering.

Any disagreements about these issues should be solved by government consultations or a Panel of Experts and the publication of a report.

The agreement includes commitments on sustainable management of forests and fisheries.

3. Maintaining strong health and hygiene standards for food products

The agreement will speed up trade while keeping it safe.

Both the EU and Mexico keep their right to establish the level of protection they consider appropriate.

The agreement also contains an explicit reference to the precautionary principle that governs the parties' approach to the decision making. This means that, as already enshrined in the EU treaties, the EU can continue keeping products out of its market as long as there is no scientific certainty that they are safe.

The agreement provides for:

  • increased mutual transparency and information exchange;
  • technical consultations and cooperation between authorities;
  • continued certification and import checks;
  • transparent import approval procedures with clear timeframes.

Mexico will also treat the EU as a single entity rather than imposing separate procedures on each Member State.

4. Reducing formalities for trade in industrial products

Customs tariffs for industrial products have already been removed. Exporters of those products will however benefit from the agreement thanks to improvements related to technical requirements and reduced formalities.

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.

Under the agreement Mexico will also recognise product certification carried out in the EU. This will make it easier for EU companies to prove they have complied with Mexican standards and regulations. And of course Mexican exporters will still have to comply with the EU's strict standards and regulations, just as they do now.

Also, thanks to the agreement:

  • exports of cars and car parts will benefit from the convergence of technical regulations;
  • trade in medical devices will be easier thanks to simplified trade in remanufactured machinery.

The agreement also contains provisions on fees and formalities, import and export licensing. It will for instance make it easier between Mexico and the EU to send goods for a repair and back.

5. Making customs procedures easier

The section on trade facilitation aims to boost EU-Mexico trade by setting out new rules for better customs procedures:

  • streamlining procedures, making them more efficient, saving time and money;
  • setting common principles and providing for better cooperation and exchange
  • of information between EU and Mexican customs authorities;
  • substantial provisions on transparency to ensure that traders and the public have access to information on customs legislation, decisions or administrative policies.

6. Opening Mexican public contracts to EU companies

Under the new agreement, Mexico will open up its public procurement market to EU companies more than it has to any of its other trading partners. EU companies will be able to bid to provide goods and services to Mexican public entities that have never before allowed non-Mexican firms to tender for contracts.

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. This will be the first time Mexico has opened its public procurement at State level to non-Mexican firms.

In 2015 public procurement in Mexico represented 5% of the country’s output and 21% of total government expenditure. The country's federal government procurement market is worth some €30 billion each year.

7. Encouraging investment and ensuring a transparent and accountable resolution of disputes through an Investment Court System

The agreement opens doors to Foreign Direct Investment and protects investments between the EU and Mexico both in services and non-service sectors.
The investment protection provisions provide basic guarantees such as:

  • non-discrimination;
  • no expropriation without prompt and adequate compensation;
  • a general guarantee of fair and equitable treatment and physical security.

The agreement fully implements the EU’s new approach to investment protection and investment dispute resolution by replacing the old-style ISDS (Investor-to-State Dispute Settlement) system with the new Investment Court System., ensuring transparency and the right of governments to regulate in the public interest. This follows the same approach as the EU adopted in its recent agreements with Canada (CETA), Singapore and Vietnam.

The inclusion of the EU’s new approach in this area in yet another trade agreement will further support the EU’s goal of setting up a Multilateral Investment Court to deal with such disputes.

8. Offering new opportunities in services sector

The EU exports some €10 billion of services to Mexico each year.

The agreement will make it easier for EU firms to provide services on the fast-growing Mexican market, while reaffirming the EU’s and Mexico’s right to regulate. Under the agreement both the EU Member States' authorities and Mexico also:

  • retain the right to keep public services public;
  • can deregulate or bring back to the public sector any privately provided services.

9. Setting rules for digital trade

The agreement sets out horizontal rules on any trade done by electronic means. As such, the rules go beyond trade in services alone.

The provisions seek to:

  • remove unjustified barriers to trade by electronic means by prohibiting customs duties on electronic transmissions and banning unnecessary authorisation procedures;
  • bring legal certainly for companies by guaranteeing the legal validity and effect of electronic contracts, and of electronic authentication and trust services;
  • ensure a secure online environment for consumers.

10. Setting better protection for innovations and creative works

The agreement includes a comprehensive chapter on all the main Intellectual Property Rights (IPR). It 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).

The agreement is good for Europe's IPR-intensive industry and IPR owners. Its provisions on copyright and related rights cover all the rights protected by EU law, including resale rights, and mirror the EU’s high standard regarding the term of protection.

For designs, the agreement:

  • includes the EU’s definition of industrial designs, including complex designs;
  • protects registered designs for up to 25 years.

For pharmaceutical and plant protection patents, the agreement allows for compensation for unreasonable delays in the marketing authorisation process.

The agreement also includes the most significant parts of EU law on the scope of protection of trade secrets and the relevant procedural rules.

11. Protecting traditional food products from imitations

The EU is a major producer of distinctive regional food and drink products. These products enjoy a special status known as a 'Geographical Indication'.

Under the new agreement, Mexico has agreed to extend the protection to 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. Under the existing agreement Mexico already protects 80 spirits with geographical indications.

This would make it illegal to sell imitations in Mexico 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. .

This will also help European exporters and reassure Mexican consumers that they are buying a genuine European product.

12. Ensuring fair trade and business conditions

The agreement sets out rules about trade remedies, i.e. procedures used to combat unfair trade practices, such as anti-dumping, anti-subsidy, global and bilateral safeguards. The EU and Mexico also confirm their rights and obligations under the World Trade Organisation agreements and agree on being more transparent and holding additional consultations.

The agreement also acknowledges that certain kinds of subsidies can hinder competition and trade. It bans export subsidies and includes rules to limit the potential negative effects of other subsidies. Specifically:

  • Mexico has agreed to ensure transparency not only on subsidies to goods, but also on subsidies to services. This goes beyond the obligations under the World Trade Organisation rules;
  • Companies have the possibility to alert their governments to subsidies which may negatively affect their business. If the subsidy’s negative effect is confirmed, both sides will try to find a satisfactory solution.

The agreement states that companies operating in Mexico have to respect the same basic competition principles as in Europe:

  • no abuse of a dominant position;
  • no agreements between companies to restrict competition;
  • scrutiny of the effects of a merger on competition.

The agreement ensures Mexican and EU companies that:

  • their rights in competition procedures will be respected (procedural fairness);
  • they can ask their respective competition authorities to enforce competition law.

As regards State-owned enterprises, the EU and Mexico have agreed on rules to ensure that private companies can compete on a level playing field with public ones.

At the same time, the agreement will:

  • let EU governments maintain any existing state-owned enterprises or monopolies, or existing rights or privileges;
  • allow both EU member states and Mexico to decide how they want to organise their public services.

13. Focusing on needs of smaller businesses

The agreement requires Mexico to set up a website containing information that small and medium-sized businesses from the EU need to access the Mexican market, and vice versa.

Contact Points in the EU and Mexico will work together to take into account the specific needs of smaller businesses and identify ways they can take advantage of new opportunities in each market.

14. Making the rules enforceable through State-to-State dispute settlement mechanism

The agreement sets out the procedures for solving any potential disputes between the EU and Mexico on how to interpret or apply the part dealing with trade.
The mechanism is triggered when one party considers that the other has failed to comply with the obligations under the agreement.

If this happens, the EU and Mexico will set up a panel to adjudicate. The dispute settlement procedures are based on due process and transparency principles, allowing interested parties to attend hearings and make their own submissions to the panel.

For More Information

Press release
Joint statement
Dedicated webpage
Exporters' stories
The EU Mexico agreement explained (Q&A)
Video material from the today's ministerial meeting
EU and Mexico trade relations
Agreement in Principle