BRUSSELS — The European Union and Mexico wrapped up talks on Friday to overhaul their trade agreement, strengthening a partnership that is crucial for European auto makers three days before Donald Trump, who campaigned on a protectionist ticket, is due to be sworn in as U.S. president.
The announcement represents a pre-emptive move to link arms after Trump threatened to hit U.S. neighbors Mexico and Canada with tariffs of 25 percent on taking office. The EU meanwhile faces U.S. tariffs of 10 percent to 20 percent — with analysts saying its car industry is at particular risk.
The modernization of the “global agreement” between the 27-nation bloc and Mexico will expand opportunities in services, strengthen supply chains and bolster investment protections, the European Commission said in a statement after talks between EU trade chief Maroš Šefčovič and Mexican Economy Minister Marcelo Ebrard.
“This landmark deal proves that open, rules-based trade can deliver for our prosperity and economic security,” European Commission President Ursula von der Leyen said. The bilateral trading relationship is worth more than €100 billion a year — four-fifths in the form of goods and one-fifth in services.
Echoing the apprehension around Trump’s tariff ideas, the German car lobby VDA said “the conclusion of a modernization of the agreement is also an important political signal —especially in times of increasing protectionism.” Cars and spare parts are one of the largest export categories from Europe to Mexico. In 2022, Germany alone sold €2.5 billion worth of these products to Mexican importers.
EU car exporters will be at an advantage over their Mexican counterparts in this deal, because they will qualify for certain lower tariffs in Mexico under less strict rules than the other way around.
Win for EU food exporters
The EU executive also trumpeted export opportunites for agri-food exporters, with the deal removing tariffs that had been as high as 100 percent on exports of products such as cheese, pork, pasta, apples, jams, and marmalades — as well as chocolate and wine.
Protection of geographical indications — a kind of trademark brand for premium produce — will be expanded to 568 products. And export procedures will be simplified, the Commission said, outlining details of the agreement.
The original deal between the two sides dates back to 2000, meaning it was due for a revamp. The EU also redid its agreement with Chile in a similar manner two years ago. A senior EU official admitted the latest deal was less ambitious than at a previous stage in the talks in 2020.
The Commission wanted to avoid Mexico slipping away, the official said. If other trade partners would swoop in and do deals with Mexico, it could put the EU “in a worse position.”
Ahead of Trump’s inauguration on Monday, the deal sends a signal to Washington that the EU has plenty of diplomatical clout — and trade options — around the world.
A “process of reform in the energy dimension” allowed for the deal to be concluded now, though that also meant a key ask from the EU could no longer be granted by Mexico, the official explained.
It boils down to how EU energy companies are treated in the Mexican market. “Mexico has come back from a 2013 law to liberalize the energy market, so Mexican companies will continue to be granted rights and priviledges.”
On the flip side, the deal reduces maximum import volumes from Mexico to Europe on sensitive imports like beef and ethanol, by cutting the quota in half compared to a near deal in 2020.
Additional reporting by Jordyn Dahl. This story has been updated.
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