Continuity Agreement Between Mexico and the UKBy Sofía Hanna | Tue, 12/15/2020 - 17:49
Mexico’s trade agreements have been a recurring theme this year, expanding existing relationships and improving others so all parties involved get the best deal possible. Among the main topics were USMCA, the revision of the TLCUEM and now the signing of an agreement of continuity with the UK.
Following Brexit, the UK has been looking to settle trade agreements with other countries before parting ways with the EU. Before the current agreement of continuity with Mexico, the UK was already digging into finding opportunities in the Mexican automotive industry. “USMCA will bring new opportunities for English companies for local manufacturing of automotive components,” said Alejandra Rodríguez, Head of Trade and Investment Automotive and Advanced Engineering at the UK Department for International Trade (DIT) in Mexico, to MBN.
On Dec. 15, Mexico and the UK signed their continuity agreement with the goal to maintain the trade flow between both countries under the current circumstances after London’s abandonment of the Shared Trade Strategy of the EU. The idea is to start negotiating a deeper relationship next year. The reason for the agreement was to avoid having to go back to the restrictions set by the WTO. If the agreement was not established, there would have been an equivalent of £59 million (US$ 70 million) in taxes for products from the automotive and food industry, according to a Forbes article.
Besides the current agreement, there have been bigger negotiations for the long-term in the context of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The UK has shown interest in being a part of said treaty, which would imply a stronger relationship with Mexico in terms of trade, reports Forbes.
"Mexico and the UK will maintain the preferential commercial relationship they have enjoyed under the EU-Mexico Free Trade Agreement (TLCUEM) since 2000, following the Withdrawal Agreement between the EU and the UK," said the Mexican government after London left the EU’s Shared Trade Strategy. The government highlighted the UK’s position as Mexico’s sixth commercial partner within the EU. Other factors that were taken into consideration during this negotiation and after the Brexit announcement was made, according to the Mexican Government report, were the size of the commercial exchange between Mexico and the UK, which also represents the third biggest source of tourism to Mexico.
According to Forbes, the sectors that could be affected by a shift in trade standards were machinery, transport, energy, food and beverages, fashion and chemicals. Mexico will also maintain the same migration policies with the UK and will continue to be a strategic ally in climate change, civil rights and gender equity programs.