EU, Mexico Eye Trade Deal Upgrade

13 May 2015

The EU and Mexico confirmed plans this week to update a bilateral trade deal between them, citing the need to reflect new trade realities and build off the advances being made in other major trade negotiations.

“Fifteen years is a long time, full stop. So much has happened in recent years that the year 2000 seems a lifetime ago,” Malmström said on Monday in announcing the plans together with her Mexican counterpart, Economy Secretary Ildefonso Guajardo Villareal.

The two sides have had a deal in place covering goods trade since 2000, and one involving services trade since 2001. These evolved from the trade provisions featured in the 1997 “Global Agreement” inked between them.

The EU is Mexico’s third largest trading partner, while Mexico is the 17th largest partner for the EU. Bilateral trade flows hit €63 billion in 2013, according to EU statistics.

A recent study by Spanish banking group BBVA on EU-Mexico trade ties, which was presented by the trade officials during a meeting in Brussels, found that an extension of the trade deal, particularly via the inclusion of additional agricultural products, would be to the benefit of both sides.

The paper also outlined a series of benefits that have accrued to both parties as a result of the existing agreement, including an improved business climate.

New trade deals

Officials from both sides have credited the proliferation of new trade deals as being one of the main drivers behind their push for an upgrade.

Along with being one of the Pacific Alliance’s four founding members, Mexico is also one of 12 countries involved in finalising a Trans-Pacific Partnership (TPP) Agreement, which member countries are aiming to wrap up before year’s end. (See Bridges Weekly, 30 April 2015)

Fellow Pacific Alliance founding members Chile, Colombia, and Peru all have more recent accords with the EU, with the agreement with Santiago in force since 2003 and those with Bogotá and Lima in place since 2013.

The Pacific Alliance bloc of countries signed a deal in 2014 to eliminate tariffs on 92 percent of products, with the remaining eight percent to be phased out over a period of years. (See Bridges Weekly, 13 February 2014)

“With Colombia, Chile, and Peru, we are sending a signal of fresh air that we are the countries of free traders. We are responsible for more than half of Latin America’s exports to the world,” Guajardo said, in comments reported by Reuters.

The EU, for its part, is in negotiations for a Transatlantic Trade and Investment Partnership (TTIP) with the US, and concluded talks last year with Canada for a wide-ranging bilateral trade deal.

“Ultimately, both the EU and Mexico will want to consolidate all this new openness in North America. The closer our modernised deal is to those high standards, the easier that will be,” the EU trade chief added.

Possible areas to include

Malmström then outlined on Monday a series of areas which she suggested could be featured in a new bilateral pact. These included, for example, further slashing tariffs and adopting new trade facilitation measures, with the latter aiming to go beyond what has been agreed in the WTO’s Trade Facilitation Agreement, which is currently in the ratification process.

Reshaping their relationship to regulation and trade – such as by adopting comprehensive chapters on non-tariff barriers for industrial goods, food, and agriculture – would be another major area for advances. However, she stressed that any such changes would not come at the expense of regulatory protection, a concern that has been raised in public debates over the TTIP negotiations.

With both sides involved in the Trade in Services Agreement (TISA) negotiations, Malmstrom has suggested that a revised EU-Mexico deal should build on any advances seen in the former set of negotiations. These talks currently involve 24 WTO members and aim to liberalise services trade within the group. (See Bridges Weekly, 19 February 2015)

In the area of intellectual property rights, this could include expanding the product coverage of geographical indications, which are meant to identify goods by their geographical origin and which possess certain qualities or traits due specifically to that origin. Examples of these include tequila or cognac.

TTIP timing?

The EU and Mexico are set to hold a high-level summit on 12 June in Brussels, which will include a visit from Mexican President Enrique Peña Nieto. Trade officials have said that they hope to have the results of a scoping exercise, known as a “Joint Vision Report,” ready in time for next month’s event.

Malmström also said on Monday that she hopes to have a mandate from the European Council to begin negotiations this year, possibly by autumn. If talks were to begin in 2015, however, it is unclear in what timeframe they would aim to be completed, nor what effects the timing of the TTIP talks would have on them.

EU and US officials have lately acknowledged that the TTIP talks are likely to drag into 2016, though they have pledged to make as much progress as possible this year, before the US general election gets into full swing. (See Bridges Weekly, 30 April 2015)

“Mexico would like to finish these negotiations before [the EU] concludes those with the US, or at the latest at the same time,” Guajardo said on Monday.

“We have to be ready for when this [TTIP] deal reaches its conclusion, in order to be aligned within North America without negative effects for Mexico,” he added, in comments reported by El Universal.

ICTSD reporting; “Europe, Mexico to seek new trade pact to deepen North American ties,” REUTERS, 11 May 2015; “Busca México actualizar su TLC con la UE,” EFE, 11 May 2015; “Reconoce SE urgencia de modernizar asociación con UE,” EL UNIVERSAL, 11 May 2015.

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