Introduction
The European Union (EU) and Mexico have agreed to form a free trade area. This agreement will involve the removal of tariffs on all goods, the liberalization of services trade, the opening up of government procurement markets, and other major breakthroughs in trade facilitation. This agreement will benefit both parties involved and will contribute to the advancement of trade and investment between the two regions. This paper will explain the details of the agreement, its benefits and its implications.
Background
The European Union and Mexico have a long history of economic cooperation. Since the establishment of diplomatic relations in 1968, the two regions have witnessed a gradual deepening of economic relations. Bilateral trade between the EU and Mexico was €63.2 billion in 2017. Mexico is the fourth-largest trading partner of the EU outside the European Single Market. The EU is the top foreign investor in Mexico, with total EU investment in Mexico rising to €9.9 billion in 2017.
With a view to enhancing this already strong relationship, the two regions concluded negotiations on a free trade area in April 2018. By creating a free trade agreement, the two sides aimed to facilitate the liberalization of goods, services and investments, promote regulatory cooperation and harmonize standards. The free trade area agreement was signed on 21 April 2018 and came into force on 1 July 2020.
The Agreement
According to the agreement, all tariffs and other obstacles to trade in goods between the two parties will be eliminated through a phased approach over an 8-year period. This will help to create a free and open market between the two parties and will greatly facilitate the flow of trade. In addition, the two sides have agreed to liberalize trade in services, undertake measures to improve the regulatory environment and cooperate in the fields of technical standards and government procurement. The agreement also provides for the protection of intellectual property rights, the promotion of environmental and labor standards, and the facilitation of investment.
Benefits
The free trade area agreement between the EU and Mexico will bring a number of benefits to both parties. It will generate economic growth, as it will lead to increased trade and investment between the two regions. It will also open up new opportunities for businesses in both regions, as it will increase competition and ensure greater legal certainty for foreign investors in Mexico. The removal of tariffs on goods and the liberalization of services trade will also help to reduce prices for consumers in both the EU and Mexico. Furthermore, the agreement will help to improve the regulatory environment and increase the competitiveness of both parties.
Conclusion
The free trade area agreement between the EU and Mexico is a significant milestone in the economic relationship between the two regions. It will bring a number of benefits to both parties, including increased trade and investment, the reduction of prices for consumers, the promotion of competition and the improvement of the regulatory environment. This agreement will help to foster closer economic relations between the two regions and will contribute to the long-term prosperity of both the EU and Mexico.
