BRUSSELS, Jan 17 (Reuters) - The European Union and Mexico have renewed a stalled free trade agreement on Friday, just before the inauguration of President-elect Joe Biden, who has threatened both sides with tariffs.
The two parties aim to modernize their trade accord from 2000, which previously covered only industrial goods, by including services, government procurement, investment, and agricultural products.
EU proponents emphasize the urgency of seeking new partners to decrease reliance on China for critical raw materials and to shield against Trump's tariffs. Last month, the EU reached a similar deal with a group of South American countries.
The updated deal provides a fresh foundation for collaboration on upcoming challenges – particularly crucial given the EU and Mexico are both targeted by Trump’s tariff threats, stated Borja Gimenez Larraz, the European lawmaker overseeing the proposed free trade agreement.
Negotiators from the EU and Mexico had initially agreed in 2018 and in 2020 to provide reciprocal market access for public contracts.
Nevertheless, finalizing the agreement faced delays due to Mexican Congress granting preferential treatment to state-owned power generator CFE last year.
This change deprived potential benefits for EU energy companies leading to revisions being made - reducing EU quotas on Mexican exports of beef, poultry, and ethanol, and adjusting local content regulations to facilitate easier export of electric vehicles and batteries from the EU to Mexico than vice versa.
Virtually all trade in goods will be duty-free, encompassing farm products like Mexican chicken, asparagus, European milk powder, cheese, and pork, albeit within specific quotas.
Currently, the EU exports around 2 billion euros ($2.06 billion) worth of agrifood products annually to Mexico, its second-largest trading partner in Latin America. The EU ranks as Mexico's third-largest trading partner overall.
The agreement allows Mexican firms to bid for European government contracts and vice versa, including at the state level.
Mexico, aiming to diversify away from the United States, anticipates improved access for products like orange juice, tuna, asparagus, honey, egg white albumin, as well as equal access for meat products.
Additionally, the agreement is poised to acknowledge "geographical indications" for specific food and beverages, a critical EU requirement, such as stipulating that only Greek cheese can be labelled as Feta.
($1 = 0.9707 euros)