With the departure of the United Kingdom from the European Union, and to maintain preferential market access between the two countries, on December 15, 2020 the UK-Mexico Trade Continuity Agreement was signed by Mexico’s Secretariat of Economy, Graciela Márquez, and the Ambassador of the United Kingdom of Great Britain and Northern Ireland, Corin Robertson. The agreement, which will remain in force for three years, will extend the EU-Mexico Free Trade Agreement’s current provisions. In addition, it opens the door for further negotiations to begin next year for a broader agreement that will bring even more benefit to both countries and reaffirms Mexico’s commitment to international trade and promoting tools for diversifying international trade.
With around 3,800 UK businesses exporting goods to Mexico and a trade relationship worth more than £5 billion, the signing of the agreement is key in maintaining certainty for companies and investors and represents savings of around £59 million in duties. This savings is significant for the automotive industry Mexico, as the 0% tariffs on car exports were maintained, compared to 20% under WTO terms.
The agreement will also be of particular benefit to the pharmaceutical, textiles, and agriculture industries and is aimed at benefitting the economies of Mexico’s southern and southeastern states in particular. The renegotiation of quotas on agricultural products is expected to provide a boost to farmers in states such as Tabasco, Chiapas, Veracruz and Yucatán on crops including bananas, asparagus, molasses and honey. It is also important in that it retains the Geographical Indications (GIs) in Mexico for Scotch Whisky and Irish Whiskey and those of Tequila and Mezcal in the UK.
The agreement reflects the broader global context of intensified efforts for cooperation between the UK and Mexico in all international matters of mutual interest. The signing is also significant in that it represents another step in the UK’s entering into the Comprehensive and Progressive agreement for Trans-Pacific Partnership (CPTPP), to which it will apply to form part of in early 2021. It has already signed agreements with seven other countries, in addition to Mexico, that form part of the larger trade agreement. In the words of the UK Minister for International Trade Ranil Jayawardena, “This deal is great news for businesses on both sides. It provides certainty for the thousands of British firms who already export to Mexico - and is a firm foundation for negotiating a new, more ambitious agreement next year.”
By Alejandro Lara Cruz | Board Member | American Industries Group®
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