The EU and Mexico have reached a new global agreement on trade for goods and services with changes to tariffs and an easing of business restrictions.
It's easy to understand why Europe is an attractive market for companies looking to invest overseas. The companies dominate the top 100 companies globally and it represents 22% of the global economy. Europe has offered a reliable and consistent record of economic growth, giving businesses considering expanding into the Eurozone the confidence they need to grow their footprint. However, the varying size, scale, complexity and cultural differences of the 28 members can be a challenge.
Mexico rivals any other emerging market for investors and businesses. It's one of the most competitive countries for investments, at an international level, thanks to its macroeconomic stability, size, strength of its internal market and stable inflation. Mexico ranks 49th in the World Bank Ease of Doing Business Survey and one of Mexico's key developments has been its trade policies, with trade agreements signed with many nations, positioning itself as one of the most open countries for international trade. By opening its borders, Mexico has become a global manufacturing base, with strong links to the customer.
The relationship between the EU and Mexico
The EU is Mexico's second biggest trading partner, with the main exports from Mexico being travel and transport services, fuels, mining products, office and telecommunication equipment. From the EU, Mexico receives transport equipment, chemical products, fuels and mining products.
The global agreement
In April 2018, the EU and Mexico reached a new global agreement on trade in goods and services, the technical details are expected to be completed by the end of 2018. The original was signed in 1997 and came into force in November 2000.
The updated agreement takes account of the changes in global trade, geopolitics and investment policies. The aim is to take advantage of new and unexploited bilateral trade and investment in EU-Mexico trade relations, reflecting economic and political changes in both the EU and Mexico since 2000. An Impact Assessment by the Commission highlighted that the modernisation could result in an increase in European Union Gross Domestic Product (GDP) of 0.01 % per annum by 2028. There could be additional benefits of improvements to social and environmental standards.
The terms of the agreement
Removing most of the remaining custom duties on trade in goods between the EU and Mexico aims for the eventual liberalisation of 99% of different tariffs, particularly focussed on trade in industrial goods. In the area of agricultural goods, the new agreement would free up more than 85% of tariffs, excepting more sensitive sectors, such as dairy and meat. Mexico and the EU also included items on rules of origin, trade remedies, trade facilitation, technical barriers to trade, sanitary and phytosanitary.
The updates to the agreement should ease any business restrictions of EU companies doing business in Mexico, whilst protecting both parties' right to regulate, as well as to encourage and protect investment. It includes a wealth of other elements such as dispute settlement, corruption, competition, trade and sustainable development (TSD), subsidies, transparency, energy and raw materials and the free flow of data.
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