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EU and Mexico reach new agreement, all trade will be duty-free

Staff Writer |
The European Union and Mexico reached a new agreement on trade, part of a broader, modernised EU-Mexico Global Agreement.

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Practically all trade in goods between the EU and Mexico will now be duty-free, including in the agricultural sector.

Simpler customs procedures will further benefit the EU's industry, including in sectors like pharmaceuticals, machinery and transport equipment. The agreement also lays down progressive rules on sustainable development.

Among other things, the EU and Mexico have committed to effectively implementing their obligations under the Paris Agreement on climate change. It will also be the first EU trade agreement to tackle corruption in the private and public sectors.

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.

TotalEU-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.

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 for milk powder (so far taxed at up to 50%) there will be an annual quota of 50,000 tonnes, for fresh and processed cheeses (taxed currently at up to 45%) a quota of 5,000 tonnes and for other cheeses (current tariff rate of up to 45%) a quota of 20,000 tonnes.

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

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.

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 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.

The agreement opens doors to Foreign Direct Investment and protects investments between the EU and Mexico both in services and non-service sectors.

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.

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 asComté cheese from France, Queijo São Jorge cheese from Portugal, Szegedi szalámi from Hungary, and Magiun de prune Topoloveni plums from Romania.

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