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American Shipper

EU, Mexico put pieces in place for free trade deal

After several months of negotiations, the European Union and Mexico reached an agreement in principle on trade and investment and hope to have the remaining technical issues resolved “as soon as possible.”

   The European Union and Mexico on Friday reached an agreement in principle on bilateral trade and investment that will remove or reduce existing duties on nearly all goods traded between the two.
   Of particular significance are provisions within the framework agreement to exempt agricultural trade from all duties, establish simpler customs procedures and ensure environmentally sustainable development.
   Agricultural exports from the EU like poultry, cheese, chocolate, pasta, and pork stand to benefit greatly from such an agreement, the European Commission said in a statement. More specifically, the deal would provide preferential access for cheeses including Gorgonzola and Roquefort, which currently face import duties of up to 20 percent; guarantee a “considerable volume for milk powder exports” from the EU—30,000 metric tons per year to start and 50,000 metric tons after five years; eliminate duties on virtually all port products from the EU; and remove tariffs on products like chocolate, which are currently as high as 30 percent, and pasta, which are currently up to 20 percent.
   In addition, the agreement would provide copyright protection for more than 340 distinctive European foods and drink products in Mexico, namely those with geographical indications, such as Comté cheese from France, Queijo São Jorge cheese from Portugal, Szegedi szalámi from Hungary, and Magiun de prune Topoloveni plums from Romania.
   “This means that EU producers of traditional delicacies are not struggling against copies, and when consumers buy these products they can do so knowing they are buying the real thing,” the commission said.
   In terms of customs procedures, the free trade deal will establish new rules to simplify and speed up documentation as well as physical customs checks in Mexico.
   And on the environmental front, the EU and Mexico have essentially committed to implementing the necessary changes to meet their obligations under the 2016 Paris climate agreement.
   According to a joint statement from trade and economic ministers from the EU and Mexico, the final agreement will also be the first EU trade agreement that aims to address corruption in both the private and public sectors.
   “The European Union and Mexico stand together for open, fair and rules-based trade,” the joint statement read in part. “Our negotiators will now continue their work to resolve the remaining technical issues and finalize the full legal text so that our citizens and enterprises can start reaping its benefits as soon as possible.”
   The EC noted that since the entering into force of the current EU-Mexico trade agreement in 2000, trade in goods between the EU and Mexico has risen at an average rate of 8 percent per year and 148 percent overall.
   “Despite these positive results, there was still a wide margin for improving the trade relationship that the new agreement is addressing, by making virtually all trade in goods duty-free,” the commission said.
   Although the agreement has yet to be finalized, the new deal between the EU and Mexico comes at a time of intense trade tensions for both regions.
   The European Union is still dealing with the complexities and second- and third-tier implications of the United Kingdom’s decision to leave the economic and trading bloc, while  Mexico is in the midst of renegotiating the North American Free Trade Agreement (NAFTA) with the United States and Mexico after President Donald Trump repeatedly threatened to withdraw from the agreement.
   Trump has also indicated he will push for Mexico to help pay for construction of a massive wall along the U.S.-Mexico border in an effort to address immigration issues, a move which could serve to heighten political tensions between the neighboring—not to mention and closely allied—nations. And negotiations on both NAFTA and funding for the border wall may have to wait until after the completion of Mexico’s presidential election in July.
   “Trade can and should be a win-win process and today’s agreement shows just that. Mexico and the EU worked together and reached a mutually beneficial outcome,” European Commission President Jean-Claude Juncker said of the agreement in principle. “We did it as partners who are willing to discuss, to defend their interests while at the same time being willing to compromise to meet each other’s expectations. With this agreement, Mexico joins Canada, Japan and Singapore in the growing list of partners willing to work with the EU in defending open, fair and rules-based trade.”
   “In less than two years, the EU and Mexico have delivered a deal fit for the economic and political challenges of the 21st century,” added Commissioner for Trade Cecilia Malmström. “We now open a new chapter in our long and fruitful relationship, boosting trade and creating jobs. Today’s agreement also sends a strong message to other partners that it is possible to modernize existing trade relations when both partners share a clear belief in the merits of openness, and of free and fair trade.”
   Commissioner for Agriculture Phil Hogan said the agreement “proves yet again the value of the EU leading from the front globally in promoting open and rules-based trade. Our commitment is to deliver benefits for our citizens at home through closer cooperation with our partners abroad. This deal is very positive for our agri-food sector, creating new export opportunities for our high-quality food and drink products, which in turn will create support more jobs and growth, particularly in rural areas.”

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