- Mexico demands provisions on issues like a modernized investment protection regime to apply as soon as the trade deal. So it is because cut tariffs take effect, but the EU favours delays.
- The EU has struggled to finish whole trade accords since its Comprehensive Economic and Trade Agreement (Ceta) with Canada in 2016.
- In 2020 EU companies had investments worth €176bn in the country. Mexico’s largest export market after the US in 2021 was the EU.
- It imported €23.4bn of goods from Mexico, totaling €37.7bn in exports.
- Valdis Dombrovskis, EU Trade Commissioner, mentioned that Mexican officials “are taking their time” after Brussels made some amendments. They reflect a structure used in an accord between the finalized EU and Chile in the previous month.
The European Union (EU) and Mexico have agreed on the chief trade parts of a new EU-Mexico Association Agreement. The new agreement restores a previous deal between the EU and Mexico from 2000.
The original alliance agreement brought many trade benefits to the EU and Mexico, but some trade barriers remain.
The new deal would:
- Scrap high Mexican tariffs on European food and drinks.
- Permitting EU firms to sell more services to Mexico.
- Pledge to protect workers’ rights and the environment.
The negotiations with Mexico began in May 2016, and both sides agreed in principle on the trade aspect in April 2018. The new agreement, once ratified, would replace the existing EU-Mexico Global Agreement, which was entered into force in 2000.
The trade pillar of the EU-Mexico Economic Partnership, Political Coordination, and Cooperation Agreement governs trade relations between the EU and Mexico.
It is referred to as the ‘Global Agreement.’ By 2020, bilateral trade had tripled in the 20 years since the Global Agreement entered into force.
Trade deals are signed with the intention of mutual agreement over specific trade and economy-related matters. Therefore, the modifications made to the initial contract should be favorable to all the beneficiaries.
Whatever the circumstance, tipping the scales to one side is an unfair advantage. The approval and ratification process of these long-drawn-out deals is separate.
Brussels is in the hope that the adaptations would smooth the deal’s ratification, but Mexico City fears it could mean the treaty requires separate stages of approval. It is viewed as a potential issue because the time frame would increase.
The EU Trade Commissioner said, “In recent weeks, we proposed a possible solution on the legal architecture of this modernized global agreement to Mexico.”
The legal changes require some deliberation with the concerned authorities, but this process should occur in the initial stages of framing the deal. It could avoid the inherent delay on the horizon.
It is optional to separate the agreement into parts. However, it requires approval as previously agreed upon by the commissions negotiating the deal.
The stipulations of the EU-Mexico trade deal are:
- The National Parliaments should vote in favor of them and the European parliament.
- National governments can approve trade-only deals.
Even if civic parliaments oppose the broader provisions, Brussels has pushed for “split” deals to cut tariffs. However, it still wishes to sign a single agreement with Mexico City and allow the application of the trade.
At the same time, the more complicated chapters expect consent by national parliaments, as used in the Chile model. Historically, the European Union is Mexico’s third-largest trading partner, and Mexico is the EU’s fourteenth-largest trading partner.
This information should account for tailored rules and regulations while maintaining rigidity.
Mexico is poised to benefit from “nearshoring” because firms shift production from China to the Americas.
The Inter-American Development Bank reported that estimated exports from Latin America and the Caribbean could rise by $78bn a year. It was owing to the relocation of the operations over near and medium term.
Valdis Dombrovskis vocalized that the EU wanted to broaden and expand trade and use deals to avoid “strategic dependencies” on countries, as it did with gas from Russia.
The preceding Latvian Prime Minister, among the most liberal European commissioners, backed a more significant probe of Chinese investment in new green technologies in Europe, such as vehicle battery plants.
He said, “It requires assessment,” which includes: “There are reasons why we have an FDI screening mechanism in place.”
- Published By Team Timeswire