Modernization of the Global Agreement between the EU and Mexico

New Global Agreement

On January 17, 2025, representatives of the European Union and Mexico concluded negotiations on a modernized Global Agreement.

The new Global Agreement establishes a modern framework for mutual economic and political cooperation aimed at strengthening the partnership framework enshrined in the original agreement that came into force in 2000. This new Global Agreement between the EU and its second-biggest trading partner in Latin America is set to directly benefit more than 550 million consumers by facilitating (and promoting) mutual economic growth, investment and trade opportunities, as well as strategic cooperation on key geopolitical issues – such as supply chain resilience and stability and the sustainable supply of critical raw materials.

In the words of the Delegation of the European Union to Mexico:

“The trade pillar of the Agreement will substantially boost an already-thriving trade relationship: EU-Mexico trade in goods reached €82 billion in 2023, while two-way trade in services reached €22 billion in 2022, making Mexico the EU's second-biggest trading partner in Latin America.”

Overview of trade relations

The European Union is Mexico's third largest trading partner (after the United States and China) and second-biggest export market after the United States (€28.6 billion; 2023); the European Union's key imports from Mexico are machinery and appliances, transport equipment (incl. automotive components), mineral products, optical instruments, and products of chemical industries.

Furthermore, the EU based companies are the second-largest foreign direct investors in Mexico (after US companies) and continues to register an overall trade surplus (€24.6 billion in 2023).

Mexico, with its 128 million strong population, is a very important market for European manufacturers, particularly in the automotive, energy, industrial and pharmaceutical sectors; conversely, several Mexican companies have a solid presence in core markets of the European Union.

Key benefits of the new Global Agreement

The key benefits of the new Global Agreement between the European Union and Mexico include:

• Elimination of tariffs of up to 100% on key EU exports, including agricultural products.

• Improved access for EU companies to the Mexican market and to bid for Mexican government contracts, incl. anti-discrimination rules and modernized investment protection by replacing the old system of investor-state dispute settlement system with a new Investment Court System.

• The cornerstone of the Investment Court System is a permanent tribunal for the new Global Agreement, set up jointly by the European Union and Mexico, to resolve disputes between foreign investors and the state in which the investment is made. The adjudicative procedure under the Investment Court System is divided into three main phases, namely the consultation, tribunal and appeal phases. The European Union has already included the Investment Court System in its agreements with Canada, Singapore, Vietnam and Chile.

• Supply chain stability and sustainability, in particular security of supply for materials critical to the green and digital transitions, including banning of dual pricing or export pricing where export prices are set above domestic prices.

•  Improved protection of EU intellectual property rights in Mexico.

• Improved environmental and labor protection.

Next steps

The representatives of the European Union and Mexico will initiate their respective procedures for conclusion and ratification of the new Global Agreement. Once in force, this major regulatory development will overhaul the existing framework for cooperation between the two markets, facilitating mutual growth in the face of the current global economic and geopolitical challenges.

The final text of the Global Agreement and other related documents are expected to be published shortly. Deloitte Legal will continue to keep you informed of this and other national and international regulatory developments.

Published: February 2025