How might the Mexico-EFTA free trade agreement be expanded?

Legislation | | MIC Customs Solutions |

Mexico is seeking to expand the remit of its trade deal with the European Free Trade Association, a move that could help to create further commercial opportunities between businesses in both areas.

As part of its ongoing efforts to further expand the scope of its international trade activity, Mexico has been reconsidering its commerce agreements with a number of key international partners.

One of the most significant developments on this front in the last few weeks was the commencement of negotiations over a potential update to its existing free trade agreement (FTA) with the European Free Trade Association (EFTA), the intergovernmental trade organization and free trade area comprising Iceland, Liechtenstein, Norway and Switzerland.

The four-nation trading bloc has been an important commercial partner for Mexico over the last few years, and the North American nation is now seeking to develop this relationship further. Talks are set to continue later this year, with both sides expressing optimism that a mutually beneficial arrangement can be reached.

The existing deal

EFTA's existing trade agreement with Mexico was signed in Mexico City in November 2000, before eventually coming into force in July 2001.

It covers trade in industrial products, as well as fish and marine products, with bilateral agricultural agreements put in place between Mexico and the four individual EFTA nations. The FTA also encompasses trade in goods, services, investment and public procurement within its scope.

The purpose of the deal was to eliminate unnecessary tariffs that previously discouraged trade between Mexico and the EFTA region, while efforts were made to achieve greater consistency in terms of rules of origin, competition laws, intellectual property rights, dispute settlement processes and government procurement.

Merchandise trade between the EFTA states and Mexico were valued at $4.2 billion (€3.71 billion) in 2014, with top EFTA exports to Mexico including pharmaceutical products, organic chemicals, machinery and mechanical appliances, and clocks and watches, with pharmaceuticals, precious stones and mineral fuels/oil making up the bulk of the goods flowing in the opposite direction.

Potential revisions

Ministers and other representatives from the EFTA states met with their Mexican counterparts in Davos in January this year to launch negotiations over a potential review of the existing FTA, with the aim of strengthening economic ties and expanding trade and investment between the two blocs.

The aims of those involved in the review process are manifold. Both parties see this as a potential opportunity to further enhance market access for goods, services, investment and government procurement, as well as updating the terms of the FTA to reflect international developments and the treaty practice of both the EFTA nations and Mexico since the signing of the original deal in 2000.

Most notably, this will include changes in regard of rules of origin, sanitary and phytosanitary issues, trade remedies technical barriers to trade, intellectual property rights and competition, as well as in areas not yet covered by the current FTA, such as trade facilitation and sustainable development.

The progress so far

Thus far, ministers representing the countries involved in the negotiations have been forthright in their support for the review.

A joint statement launching the negotiations was signed in January by Swiss Confederation president and EFTA chair Johann Schneider-Ammann, as well as Iceland's ambassador Martin Eyjolfsson, Liechtenstein minister of foreign affairs Aurelia Frick, her Norwegian counterpart Borge Brende and Mexico's economy minister Ildefonso Guajardo Villarreal. Mexico's president Enrique Pena Nieto was also present to witness the signing.

Since then, an initial round of negotiations was held between May 10th and 13th in Geneva, with Didier Chambovey, ambassador and delegate of the Federal Council for Trade Agreements in Switzerland, acting as the EFTA spokesperson. Mexico's delegation was headed by undersecretary of foreign trade Francisco de Rosenzweig Mendialdua and Cesar Guerra Guerrero, minister representative to the EU from Mexico's ministry of economy.

During these talks, delegates had a chance to discuss their approaches, interests and sensitivities in each of the key areas under discussion, as well as assessing the best path forward in the negotiations. With the talks having come to an amicable conclusion, a second round has been scheduled to take place in Mexico early this autumn.

Assuming the positive momentum is maintained, businesses in the EFTA nations and Mexico could soon benefit from a revamped deal that better accounts for the realities of the modern marketplace and strengthens trade ties between the regions.