UK-Mexico Trade Agreement
Paves the Way for Future Negotiations
On June 23, 2016, voters of the United Kingdom of Great Britain and Northern Ireland approved a referendum to withdraw from the European Union. The far-reaching consequences of this separation (known as Brexit) have been widely discussed, with impacts felt across the EU and around the globe, and Mexico is no exception. Trade between the UK and Mexico increased 177% between 1999 and 2019, making the UK Mexico’s 16th largest trading partner, highlighting the importance of reaching a new agreement to replace the Economic Partnership, Political Coordination and Cooperation Agreement (EPPCCA) between the EU and Mexico that became void with the UK’s exit from the EU. 

starting up business in Mexico

Consequently, the two countries began negotiations for a continuity agreement to maintain the preferential tariff treatment and terms between the two countries under the EPPCCA, avoid disruptions in their supply chains, and the default application of the World Trade Organization’s Most-Favored-Nation (MFN) treatment. MFN treatment implies higher tariffs and less favorable commercial conditions than those provided in the EPPCCA.

The result of the negotiations is the UK-Mexico trade continuity agreement (TCA). The agreement was signed on December 15, 2020 went into effect on June 1, 2021. It ensures tariff-free exports on 88% of all goods imported to Mexico from the UK. Overall, the new agreement contains very similar provisions as those from the EU-Mexico Agreement, with some necessary changes to reflect the new political context of the UK.

manufacturing in Mexico

Due to the delay between the expiration of the EPPCCA and the entering into force of the EU-Mexico agreement, although Mexican exports of goods benefited from preferential tariffs since January 1, 2020, the Mexican Government applied the tariffs outlined in the MFN until the new agreement entered into effect in June of 2021. This means that that UK businesses exporting goods between January 1 and June 1, 2021 were required to pay the MFN treatment, but will be able to claim a refund on the difference.

As the TCA is mainly aimed at maintaining pre-Brexit trade conditions and will only be effective for three years, both governments are committed to relaunching negotiations in the near future. With 15 million dollars in FDI coming into Mexico from the UK between 1999 and September of 2020, the countries must generate improved trade deals that will benefit both countries and be better tailored to the UK and Mexican economies’ and rapidly-changing political and global realities.

international companies in Mexico

With a consistent increase in trade between the countries, even post-pandemic, with the UK being Mexico’s 4th most important trade partner in the first quarter of 2021 (representing 5.5% of total trade), there is a desire to build on the TCA and implement a new generation of trade deals that go further than the existing rollover agreement. These negotiations are part of the UK’s commitment to boosting trade with economies of the future, like Mexico, and finding innovative ways to handle topics like digital trade, climate, and women’s economic empowerment.

This continuous collaboration and willingness to further open trade between the two countries is a clear win for international companies in Mexico looking to take advantage of new trade agreements and foster improved global trade relations and economic collaboration.

If you are interested in finding out more about the benefits of starting up business in Mexico, don’t hesitate to reach out to schedule your free business case analysis.


By Sandra Malottky | Chihuahua Business Development Manager | American Industries Group®
Did you find this content interesting? Sign up for our monthly newsletter to receive more articles and infographics.

Subscribe

If you would like to find out more about this topic or are interested in receiving a complimentary business case analysis for your operation in Mexico, please fill out this form or contact us at:

US toll-free: +1 (877) 698 3905

CAN toll-free: +1 (844) 422 4922

start@americanindustriesgroup.com
Please note that we do not accept job applications here. If you are interested in applying for a position, please visit the following link: https://www.americanindustriesgroup.com/jobs/




Related posts

June 28, 2022
Electronic Companies Manufacturing in Mexico
What Companies Manufacturing in Mexico Need to Know About Electronic Signatures
Our world today is so digitalized that we can no longer imagine completing many of our everyday tasks without the help of technology. An endless number […]
June 14, 2022
Aerospace Industry in Mexico
Chihuahua’s Aerospace Manufacturing Capacity
To promote economic development, 50 years ago, President Gustavo Diaz Ordaz implemented the program commonly referred to as the IMMEX program (formerly known as the Maquiladora […]
June 3, 2022
Ciudad Juarez is ideal for US companies manufacturing in Mexico
Ciudad Juarez: Cradle of Mexico’s Manufacturing Industry
In 2022, a variety of factors continue to disrupt international trade, including the trade war between the United States of America and the People’s Republic of […]
May 31, 2022
LEED O+M CERTIFICATION: A Commitment to Continuity
LEED O+M CERTIFICATION: A Commitment to Continuity
As a company that is proud to uphold ESG values (Environmental, social, and governance), American Industries Real Estate is participating in the process of obtaining LEED […]
May 24, 2022
Manufacturing Mexico Outlook and Factors to Consider When Setting Up Operations 3
Manufacturing Mexico: Outlook and Factors to Consider When Setting Up Operations
With the reworking of global supply chains after disruptions caused delays and even total shutdowns of manufacturing and production operations over the last two years, businesses […]
May 19, 2022
Main Industries in Mexico Manufacturing
Main Industries in Mexico Manufacturing Part II of II: Electrical and Electronics, Home Appliances, Plastics, Textiles and Garments, and Furniture
In today’s business environment,  North American companies are looking to reduce dependence on China, strengthen local supply chain networks, and make logistics processes more agile. When […]