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EU and Mexico Fail To Conclude Political Agreement On Trade Deal

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By Iana Dreyer

(EurActiv) — There will be no modernised trade deal with Mexico for Christmas. Despite having spent three days in Brussels, Mexican economy minister Ildefonso Guajardo hasn’t managed to break the deadlock over the contentious outstanding issues, geographical indications and investment protection.

The modernisation of the EU-Mexico global agreement launched in 2016 has progressed significantly, with a variety of chapters advancing nicely. Areas such as energy have reportedly progressed well. Guajardo stressed that “energy is not one of the remaining issues”.

European trade officials had been more optimistic about the prospects for a deal with Mexico than with the South American bloc Mercosur, talks towards which ended in a limbo in early December. But European Commission hopes to announce a ‘political agreement’ with Mexico by year-end were nonetheless dashed.

The issues that required ironing out over the last days included market access in agriculture, agreement over a few geographical indications on cheeses (such as Manchego) and the EU’s investment court system.

EU trade chief Cecilia Malmström said today: “We are confident we can solve all the remaining political issues. But we need a little bit more time.”

Geographical indications

The Mexican government is under pressure from a group of 130 domestic cheesemakers that launched legal action last week to stop the government from agreeing to a text with the EU that would stop them from using European names for their cheeses.

The EU tabled a list of approximately 400 ‘geographical indications’ for food and drink products, with more than 60 contested by the Mexican business sector, and, reportedly, by United States producers selling in the Mexican market.

For Brussels, getting Mexico to sign on to EU-style GIs is a strategic issue that goes beyond the Mexican market: the point is to make advances vis-à-vis the US in North America. GIs were one of the most contentious issues in the now stalled trans-Atlantic TTIP negotiations.

Mexico is one of the three members of the North Atlantic Free Trade Agreement, which is being renegotiated. Canada already signed on to EU GIs in its 2016 trade accord with the bloc,known as CETA. The EU wants to add Mexico to the list.

Speaking to journalists in Brussels on Thursday (21 December), Guajardo said: “We need to find ways of coexistence of our systems [of protection of origin denomination].” Mexico uses a trademark-based system.

Investment court, rules of origin

Mexico is also sceptical about the EU’s investment court plans. Here again, Europe wants Mexico to sign on to a CETA-style bilateral investment court. The Latin American country has signed on to the idea in principle, but the government argues that the specifics need ironing out.

Further outstanding issues remain rules of origin for goods slated for duty elimination. The EU and Mexican systems clash on these texts. In textiles and autos, for instance, Mexico is keen to preserve its US- and NAFTA-inspired rules, which are very different from EU style rules of origin.

The EU is also asking Mexico to liberalise certain sectors such as maritime services – which it is reluctant to do.

Brussels is also asking Mexico to open up its public procurement markets, especially at sub-federal level. But Mexico’s federal system means it faces constitutional hurdles in asking states to sign on to liberalisation commitments.

A leading EU business lobbyist told Borderlex that his organisation would be happy to see ambitious commitments at central level, and some limited commitments at a lower political level in the areas of infrastructure, energy and health.

In the EU, there is strong resistance to opening up agricultural markets to Mexican sugar, beef and fruit – including goods such as avocados.

This week, a group of nine European NGOs called on the EU to halt the negotiations on the grounds that Brussels hadn’t undertaken a human rights impact assessment of the deal.

No new meeting date was set between EU and Mexican negotiators.


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