New treaty between México – United Kingdom (TLC)

New treaty between México – United Kingdom (TLC)

With the new talks about the next treaty between Mexico and the United Kingdom there are looking to have their connections reinforce.

“The current agreement with Mexico is shallow and mainly covers trade in goods”  

UK Department of International Trade

The current agreement between Mexico and the United Kingdom, the TLCUEM, is a treaty that deals exclusively with trade and the export and import of goods. Between 1999 and 2019, bilateral trade grew 176.9%, and in 2019 it totaled 5,212 million dollars, which represents an increase of 12.5% ​​compared to 2018. The United Kingdom is our 16th trading partner worldwide and, while it belonged to the European Union, ranked 5th among its member States. Additionally, the United Kingdom is an important investor in Mexico, since direct foreign investment from that country, between 1999 and September 2020, accumulated 15,065.2 million dollars.

One of the main negotiation problems for the new agreement that’s being wanted to be finalized is that the liberalization of trade insurance and money services, since Mexico presently has the law on insurance and financial institutions, during which Article 20 mentions the following:

  • Article 20: Any natural or legal person other than Insurance Institutions and Mutual Societies authorized under the terms of this Law is prohibited from engaging in any active insurance operation in national territory.

This law has placed several obstacles within the relationship between Mexico additionally the UK during this area, that has many business opportunities. it had been mentioned that if the easement of interchange services is achieved, the rise in exports of those services in the uk would increase by 41%, adequate to the generation of eighty million pounds sterling, which is that the equivalent of one hundred million dollars. It had been also mentioned that if the export of monetary services is freed, the increase would be 22%, generating twenty million pounds sterling, which is equal to twenty-five million dollars.

Now it is very important to mention what is the top 3 exports from the United Kingdom to Mexico:

  • Business services
  • Insurance and pension services
  • Telecommunications services

“These three are equal to 63% of UK services exports”

It is strange to see that insurance and pension services are on the previous list since Article 20 of the Law on Insurance and Finance institutions prohibits these same practices, well despite the existence of this law in 2019 in Enrique Peña Nieto took into account certain talks and negotiations with the united kingdom government wherever the conclusion was reached that they might offer authorization to an insurer from that country that would acquire a Mexican insurer so they may operate in Mexico while not breaking the law. Because of this decision, it had been doable to see the high percentage of growth that the United Kingdom insurer had, giving the primary step to the chance of a replacement trade agreement between Mexico and the United Kingdom.

The new agreement not only seeks the possibility of exporting insurance and financial services but is also seeking to reduce tariffs on the main products exported and imported in both countries, such as dairy products and alcohol. presently the tariffs on dairy products are 45% and on alcohol 20%.

Part of the tariff reductions could be achieved through an enhanced bilateral FTA with Mexico or through the UK’s accession to the CPTPP (Comprehensive and Progressive Treaty for Trans-Pacific Partnership), in which Mexico participates, depending on the outcome of the negotiations. talks.

«However, an improved agreement could also reduce administrative burdens for businesses and improve the use of preferential tariffs, which would lower the cost for businesses,» 

The UK Department for International Trade said.

An issue of great importance for this treaty is the continuation of the relationship between Mexico and the United Kingdom in the green area and care for the environment in the business area, since 2010 financial and highly important agreements have been made for the countries for the Expected result of the Race to Zero Campaign (achieve zero polluting emissions by 2050.

Investments of over 230 million pounds sterling, that is resembling 313 million dollars, are reflected in multiple cities which have been boosted within the use of green energy. I mention the ambassador of the United Kingdom that they get to continue maintaining this area to continue helping cities such as Mexico City, Monterrey, Guadalajara, among others.

Another issue of the utmost importance to take into consideration in these negotiations is that the potential discussion of bringing Mexican labor to the United Kingdom, since even though there’s still no data on the matter, it’s continually an issue of high controversy since The United Kingdom was in favor of the free movement of all citizens and everything that goes with it, however with the arrival of Brexit that idea had to change.

In this treaty that seeks to profit the 2 countries, many resentments may be felt on the part of the companies since, as happened when it was the time of Brexit, several companies within the European Union and in the United Kingdom were affected with multiple procedures and further prices to be ready to keep their employees.

In this hunt for the advance of our relationships with the United Kingdom, certain areas of the business is also affected, specifically the industries that return from foreign investments, which can be seen with the concern that with the changes within the laws these are going to be having to visualize them reformed to be ready to continue operational and maintaining their employees in the same approach as they’re used to, this may cause multiple expenses.


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