An opportunity for a new trade agreement between Mexico and the United Kingdom – El Financiero

Caesar warrior*

A few days ago, the governments of Mexico and the United Kingdom (UK) announced the start of negotiations on a new trade agreement. Both countries govern their bilateral exchanges under the Continuity Agreement which entered into force on June 1, 2021, but for the purposes of trade in goods entered into force on January 1, 2021, because in an unprecedented event, importers in Mexico were allowed to benefit from it. Preferential tariffs are retroactive, since the agreement was concluded on December 17, 2020.

One of the main reasons why the majority of UK citizens voted for Brexit was to restore sovereignty to determine their course, for example, in terms of trade policy. While the UK was a member of the European bloc, the person in charge of conducting trade negotiations is the European Commission, which receives a mandate from the EU member states (now 27), so the UK’s commercial interests do. Not necessarily that it was fully reflected by differences with countries like France, which are less prone to free trade.

Now the UK is very active in the search for new horizons in trade negotiations. Negotiations were concluded with Australia and New Zealand, without exceptions in the program to reduce tariffs on sensitive products, a status of which is part of the agricultural sector of that country in question.

Another example where a change of vision regarding the EU is evident is that the UK has repeatedly sought to start negotiations for a trade agreement with the US. However, the response so far has not been positive from the Biden administration.

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The continuity agreement in force between Mexico and the United Kingdom is a true reflection of the trade agreement that governs between Mexico and the European Union, specifically to give continuity to the trade relationship that existed between these two countries before the United Kingdom left the European Union.. The said trade agreement was concluded in 1999 in Part commercial ones.

Due to the age of its provisions, its modernization was negotiated by Mexico and the European Union two years ago, but unfortunately it was not possible to sign it due to recent differences in the structure of the texts. With the United Kingdom leaving the European Union, Mexico offered the United Kingdom at the time to base its bilateral agreement on the updated agreement with the European Union. However, the UK rejected the idea, arguing that there was no time to consider the new clauses, and agreed to resume deeper negotiations in the near future, which is being announced.

This was due to the fact that the UK was so focused on maintaining the access it already had and that it would lose out as it exits the bloc. This means that they preferred to have as many continuity agreements as possible, without stopping to improve the conditions that they can now negotiate by having no obstacles inherent in the position of other countries in the EU. It was a gigantic undertaking that paid off, and they are striving for more.

The main outstanding task facing the United Kingdom in implementing its agreements is to comply with the protocol allowing free flow between Ireland and Northern Ireland, ie two different customs territories linked to the Good Friday Agreement (Good Friday Agreement), which is politically complex as it involves the application of customs controls between two regions in one country. Although dialogue continues between the European Commission and the UK, the solution does not appear easy and the EU may impose sanctions at the end of the day.

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Once these continuity agreements come into force, the goal in this new phase is to delve into the level of ambition to incorporate new issues such as SMEs and gender. Likewise, the new level of ambition will also touch upon issues of investment, rules of origin and liberalization of agricultural commodities, which were excluded in the continuity agreement from the abolition of tariffs (dairy, meat and many others). The UK has started this practice to deepen its recently established trade agreements with other countries in addition to Canada and Israel, as well as its ambition to join the Trans-Pacific Partnership (CPTPP).

The potential integration of the UK into the CPTPP would open up another avenue of preferential trade between the two countries on different terms than the bilateral agreement they are about to negotiate. From the outset, the CPTPP will allow the accumulation of origin with other member states of this agreement, increasing the possibilities for preferential trade.

*Director of Trade & Access Consulting, based in Brussels, and former head of negotiations by Mexico to update the Mexico-EU Trade Agreement.

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