Since the current trade agreement has been in force for more than 20 years, the UK began with the negotiation of a new treaty with Mexico, it is believed that there is an interest by the UK on expanding in Mexico due to various opportunities detected in the country. Among the opportunities is the fact of raising exports of various financial services, increasing investment flows in the country and above all focusing on digital commerce. The UK and Mexico would be looking for an agreement that benefits both parties to negotiate a more extensive commercial trade agreement that manages to improve access to trade in insurance and financial services.
The UK’s Department for International Trade said the current agreement with Mexico is not very complete and mainly covers trade in goods. The UK Department for International Trade also highlighted that a free trade agreement that could allow the trade in of more services would help increase British exports of insurance services to Mexico by 41%, which would be equivalent to some 80 million pounds in relation to the commercial levels that were presented in 2019. In the same way, exports of financial services would be increasing by 22%, which translates to about 20 million pounds.
Among the largest exports of services from the UK to Mexico in 2020 we can find business services, among which are accounting, legal and architectural services, insurance and pension services, and also telecommunications services. These services represented 63% of the total exports made by the UK. Both countries are trying to facilitate small and medium-sized companies in the UK to be able to export and import from Mexico.
Mexican tariffs on UK exports are approximately 45% and 20% on products such as dairy and alcohol. Due to this, the establishment of the bilateral FTA between Mexico and the UK would seek to achieve a reduction in tariffs, all this could be achieved with the creation of a new FTA between both countries or with the accession of the UK to the Comprehensive and Progressive Treaty of Trans-Pacific Association in which Mexico participates. It was also detailed that this possible new agreement would seek to set 0% tariffs on 91% of imports from Mexico and 97% on exports to Mexico.
It was also mentioned that a new and improved agreement could be a better option to reduce administrative burdens for companies and this way improve the use of tariffs which would reduce the total cost of these tariffs for smaller companies. In the same way, both countries would seek that this treaty take into account the progressive issues that we all live these days, among this we can include gender equality and innovation.
We don´t have a lot of information about how the negotiations will be carried out, how many panels will there be and we also can´t have a conclusion date, but the Secretary of the Economy, Tatiana Clouthier, and the Secretary of State for International Trade of the United Kingdom, Anne -Marie Trevelyan already announced the first round of negotiations for a new treaty, this meeting will take place on July 11 and this will mostly discuss all technical issues for the negotiation. An agreement to benefit both parties is expected to be reached by the end of the year.
