Malmström: EU, Mexico "Committed" to 2017 Trade Deal

11 May 2017

The European Union and Mexico are “committed” to finishing talks to revamp their decades-old trade agreement this year, according to the EU’s top trade official.

EU Trade Commissioner Cecilia Malmström met with Mexican Foreign Secretary Luis Videgaray Caso and Mexican Economy Secretary Ildefonso Guajardo Villareal for two days this week in Mexico City, after which they pledged to scale up their meeting schedule while reaffirming their commitment to a comprehensive, wide-ranging new accord.

“This is an ambitious but feasible goal. We want to send a clear signal to the world about the importance of strengthening – not weakening – the rules that govern international trade,” said the EU trade chief on Monday 8 May.

Negotiators from the two sides are next due to meet from 26-30 June, with meetings planned for September and November in a bid to meet this objective.

The ministers’ level meeting comes at a time when both the EU and Mexico are facing heightened trade-related challenges.

In Europe, elections at the national level have already shown the effects of trade, globalisation, and migration to be a growing source of anxiety among voters, though the results of France’s presidential election this past weekend have helped quell some concerns regarding the scale of the anti-globalisation backlash. (For more on the French elections, see related story, this edition)

Across the Atlantic, Mexico is gearing up for its own presidential elections next year, while preparing also to launch negotiations with the US and Canada for an upgrade to the North American Free Trade Agreement (NAFTA), which has been deemed a priority of the new administration of US President Donald Trump. (For more on NAFTA, see related story, this edition)

“Today it is even more important than ever to send a clear message that we are not going to be paralysed in spite of the challenge of renegotiating NAFTA. We will continue with our trade strategy because it is key to supporting growth in the Mexican economy,” said Guajardo to reporters, according to comments reported by Bloomberg.

Mexican officials will also be meeting with their counterparts from 10 other Pacific Rim nations later this month to discuss the next steps for the Trans-Pacific Partnership (TPP) Agreement, in light of the US’ withdrawal from the pact. That meeting will be held on the margins of the Asia-Pacific Economic Cooperation (APEC) trade ministers’ meeting. (See Bridges Weekly, 4 May 2017)

Mexico is also a member of the Pacific Alliance, a group that includes Chile, Colombia, and Peru, which is looking to deepen its economic and trading ties with other blocs, such as South American customs bloc Mercosur. (See Bridges Weekly, 13 April 2017)

Malmström echoed that view of showing a strong commitment to open trade during her visit to the Mexican capital city, warning against the creation of barriers in this field – and arguing that a “value-based” trading system is the way to ensure both free and fair trade.

“I share the opinion of Secretary Guajardo regarding the importance of global and open economic cooperation. For that reason, we have agreed to accelerate our conversations to conclude a new, modern agreement,” said Malmström in a speech to business representatives on Tuesday 9 May.

On that same subject, the European Commission released a report on Wednesday 10 May which covered the EU executive arm’s reflections on addressing the current geopolitical landscape on trade and globalisation and aims to spark additional debate.

Areas under negotiation

The current trade deal between the EU and Mexico is known as the Global Agreement, which dates back to the year 1997. Within that context, their deal on trade in goods took effect in 2000, and the terms on services the subsequent year.

Negotiators are now looking to expand the deal to cover a host of additional areas that were either not covered in the original deal or would need a re-think in light of the new trading environment.

These talks have been official underway for a year, and have reported steady progress since then. For example, on public procurement, the two sides are reportedly building off of the EU’s textual proposal for that chapter from last November, and have consolidated texts in areas such as small and medium-sized enterprises.

“The patterns of global trade and commerce and investment have changed, as have the expectations over what can be achieved with a modern, progressive commercial agreement,” said Malmström on Tuesday.

The EU trade chief referred to a series of areas where the EU would like to see outcomes with Mexico, including lower agricultural tariffs; faster administrative approvals; a strong regime for geographical indications; greater public procurement market access; and improved conditions for fostering foreign direct investment.

The European Commission also put online this week over a dozen proposals, covering topics ranging from sustainable development to digital trade to good regulatory practices.

For example, on sustainable development, the EU says that it aims to “enhance the integration of sustainable development in the parties’ trade and investment relationship, notably by establishing principles and actions concerning labour and environmental aspects of sustainable development of specific relevance in a trade and investment context.”

The proposed chapter then goes on to address issues such as the right to regulate; multilateral labour and environmental agreements and standards; and climate change, biological diversity, forests, fisheries, and supply chain management.

Meanwhile, the EU’s textual proposal for a digital trade chapter focuses specifically on telecommunications and information and communication technologies (ICT), while saying that this chapter will not address areas such as audio-visual, gambling, broadcasting, notary, and legal representation services. It does cover topics such as customs duties on electronic transmissions, online consumer trust, unsolicited direct marketing, and electronic public procurement, among others. It also has a bracketed placeholder for a forthcoming article on data flows and data localisation.

The EU’s executive arm has also flagged investment arbitration as a key area for Brussels, in light of their efforts to use their new “investment court system” – now part of its concluded trade deals with Canada and Vietnam – as a springboard toward negotiating a multilateral investment court. Mexico has reportedly backed using an investor-state dispute settlement (ISDS) system for the planned EU deal, according to a Commission report on the latest round of talks.

At the time of this writing, Mexico had not put its own textual proposals online, though officials from the North American nation say that they are interested in seeing advances in areas such as sustainable development and intellectual property.

ICTSD reporting; “Mexico, EU to Step Up Talks to Finish by Year End,” BLOOMBERG BNA, 9 May 2017; “Canadian trade envoy to make the case for ‘progressive’ trade,” POLITICO MORNING TRADE, 9 May 2017.

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