In April 2020, Mexico and the European Union (EU) announced that they had signed a new trade agreement after a period of long-drawn negotiations since 2016. While Mexico and the EU had seemingly reached an agreement in principle back in 2018, there were still a lot of outstanding issues. These conflicts have now finally resolved, allowing both sides to come to an agreement. Let’s take a look at some of the key aspects of this new pact and what it means for the two.
Details of the New Agreement
The biggest benefit of the new agreement is that almost all trade in goods between the EU and Mexico will now be duty-free. This development could prove to be a major incentive for traders from both parties. Moreover, the new agreement also entails new rules related to sustainable development and covers the Paris Climate Agreement as well. The customs rules that apply to the goods and services have now simplified to a great extent.
Another potential benefit is that both sides have pledged to fight corruption in trade by keeping a strict watch on illegal activities such as money laundering and bribery. As a result, this new agreement may even deepen the economic and political relationships between the two sides. Even before the trade deal, Mexico was already the EU’s biggest trade partner in Latin America. With the new agreement, it is highly likely that this position will strengthen even more.
Lastly, this new deal will make it much easier for companies to procure items. It will open up new opportunities in terms of investing and ensure that trade regulations are much less tedious now. However, the one remaining hurdle for the new agreement is that it still needs to be passed by the European parliament. Once it becomes ratified, it will come into effect immediately and provide many benefits for both Mexico and nations in the EU.
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