EU-Mexico Trade Agreement: a Silver Lining in Trying Times

It happened just when the hunger for “good news” was growing amid the coronavirus crisis. Mexico and the European Union wrapped up four years of negotiations with a new free-trade agreement. The announcement was made in April and, once ratified, the pact will replace the existing EU-Mexico Global Agreement, which entered into force in 2000.

As EU Trade Commissioner Phil Hogan said in a statement, even while tackling the outbreak of the virus, “we have also been working to advance our open and fair trade agenda, which continues to be very important.” For the Netherlands, Mexico will keep being an essential trading partner. The value of Dutch exports to Mexico is around €2.7 billion (US$3.02billion), while the Dutch imports from Mexico are worth €3.2 billion, according to data from the European Commission. 

The motto of the Embassy of the Netherlands in Mexico during the last four years has been “siempre positivos, nunca negativos” (always positive, never negative). This sentence was inspired by a statement made to the press by football coach Louis van Gaal during his time in Barcelona. And there are reasons to believe that there is in fact a silver lining for Mexico and the Netherlands in these challenging times.

CHEESE, MILK POWDER AND HORSES ON TOP

The fact that the import and export of food between the two countries has generally proceeded without significant problems during the crisis is one of these reasons. Mexico’s vibrant agriculture sector offers many business opportunities for Dutch companies, especially in the fields of horticulture and poultry. 

The booming Mexican greenhouse horticulture now benefits from our country’s technology and inputs like seeds, substrates and flower bulbs. Cheese, milk powder and horses from the Netherlands are also very popular in Mexico and show growing export numbers. In exchange, avocados, berries and lemons without seeds are among the favorite Mexican products in the Netherlands.

While all industries are expected to benefit directly or indirectly from the modernization of the EU-Mexico trade agreement, the agro-food sector is considered one the biggest winners. Tariffs will be cut and it will become illegal in Mexico to sell imitations of certain distinctive European regional food and drink products, such as Gouda Holland, Edam Holland and Dutch Goat cheese.

HEALTH-RELATED COOPERATION: THE NEWCOMER 

It was all over the Mexican news: 2,000 E-30 Philips ventilators arrived in Mexico on May 14th. The purchase was the result of a collaborative work effort between the federal government and the Mexican private sector to face the COVID- 19 pandemic. But it was no coincidence that the equipment was produced by the Dutch multinational. Philips Health’s expansion in the Mexican market reached 20 percent in 2018 and the firm hasn’t stopped growing since then.

It’s not the only Dutch health-related company that has set eyes on the country. Mexican organizations are looking abroad for solutions that can assist them in combatting their current and future health challenges. The Netherlands has taken an interest in this opportunity. Among the Dutch companies that are operating in this sector, there is a manufacturer of beta-lactam antibiotics, a clinical trials provider, a producer of molecule generics and hybrids, and many more in on the waiting list.

With the new trade agreement, rules of origin of medicines and medical devices will be streamlined, which could have a positive impact on imports and exports. 

BOUNDLESS AMBITION

The current pandemic has showed how much we depend on international value chains in a globalized economy. Without Mexico’s automotive industry, car companies worldwide were affected, as they need all 5,000 particles components to assemble a car.  But it also showed the importance of global openness and cooperation, sharing knowledge to combat the crisis together. 

Besides the cooperation in the health sector, we believe that there is also a big potential for bilateral cooperation in the water sector. In Mexico, only 30 percent of water is treated and 1 percent of waste water is recycled. There is an increase in private initiatives and public-private partnerships trying to come up with creative solutions and Dutch technology and know-how is highly valuated. 

Also, despite the current impact of the Coronavirus crisis on the automotive sector, the EU-Mexico trade agreement is expected to benefit both Dutch and Mexican car parts manufacturers. They will have more certainty as they continue to export using international standards.

Last but not least, as one of the Mexican government’s objectives remains to improve multimodal connectivity and logistics nationwide, the Dutch have the opportunity to share their expertise in one of their specialties: port infrastructure. The living proof is the port of Rotterdam, Europe’s largest port and a vital logistical logistics hub for the entire planet.

The 42-kilometers port – from the heart of the city to the North Sea –- continues its daily operations during the pandemic. There is a lot at stake: the goods and services produced going throughin the port and industrial area have a total added value of approximately €45.6 billion (US$51.02 billion) annually. It’s also a glimpse of normality when it’s needed the most, just as our motto: “siempre positivos, nunca negativos.”(Always positive, never negative).