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The modernized free trade agreement between the EU and Mexico: a comprehensive analysis of the Agreement of 2025

Published on: March 28, 2025 / update from: March 28, 2025 - Author: Konrad Wolfenstein

The modernized free trade agreement between the EU and Mexico: a comprehensive analysis of the 2025 Agreement - Image: Xpert.digital

EU and Mexico: New global agreement strengthens economic partnership

Milestone in the trade relationships: EU and Mexico deepen cooperation

In January 2025, an important milestone was achieved in international trade relationships: the European Union and Mexico concluded a modernized global agreement after several years of negotiations. This agreement represents a comprehensive update of the previous agreement from 2000 and creates a new framework for the economic, political and cooperative relationship between the two partners. The agreement is of particular importance against the background of increasing trade voltages in North America and reflects the endeavors of both sides to deepen and diversify their economic relationships.

Historical context and negotiation process

Negotiations on the modernization of the global agreement between the EU and Mexico officially began in May 2016. The modernization process had become necessary because the original agreement from 2000 no longer met the current requirements of international trade and did not adequately cover new topics such as digital economy, sustainability and investment protection.

Although a fundamental agreement on trade aspects was already reached in April 2018, the conclusion of the agreement was delayed for various reasons. The most controversial topics included investment protection and the recognition of traditional food and drinks from the EU in Mexico. A high -ranking commission officer also stated that the conclusion of Mexico's plans for the constitutional change in favor of the state electricity company had stalled. This would have led to essential elements of the agreement for the new negotiation.

After intensive discussions, these obstacles could be overcome, and on January 17, 2025, both sides announced the success of the negotiations. The agreement is now in the phase of legal review and must then be ratified on both sides.

Central elements of the modernized agreement

Removing trade barriers and tariffs

A core aspect of the modernized agreement is the removal of tariffs to almost all goods between the EU and Mexico. The abolition of up to 100% on important EU export products in the agricultural and food sector is particularly important. This benefits European exporters of products such as cheese, poultry, pork, pasta, apples, jams, chocolate and wine.

For many types of cheese, which have so far been burdened with an inch of more than 20%, Mexico will grant preference. Quotas that are increased annually were agreed for milk powder: 30,000 tons from the entry into force of the agreement, and 50,000 tons after 5 years. Practically all pork products can be traded duty -free, and the high tariffs for chocolate products (previously up to 30%) and for pasta (up to 20%) are abolished.

Protection of geographical origin information

An important achievement for the EU is the expansion of the protection of geographical origin. A total of 568 geographical information from regional-typical European food and beverage products is protected on the Mexican market by the Agreement. This represents a significant improvement for the producers of high -quality traditional European products and protects them from imitation.

Services and public procurement

The modernized agreement offers new opportunities for service exports in areas such as financial services, transport, e-commerce and telecommunications. European financial institutions are given extended access to the growing Mexican market with simplified license procedures and reduced regulatory barriers.

Another important progress is equal access for EU companies to Mexican government orders. This enables European companies to participate in a broader spectrum of public tenders from the Mexican federal government, including an unprecedented access to the Mexican state level. Mexico will adapt its rules for transparency and non -discrimination to that of the Government Procurement Agreement of the World Trade Organization.

Sustainability and social standards

The agreement contains a comprehensive chapter on trade and sustainable development, which defines legally binding obligations in the areas of employee rights, environmental protection, climate change and responsible entrepreneurial action. It is noteworthy that this chapter is subject to a special dispute settlement procedure that ensures the effective implementation of these provisions.

Both parties have committed themselves to implementing the Paris climate protection agreement and will work together in climate protection initiatives. The agreement includes provisions for the sustainable management of forests, fishing and biodiversity as well as measures to promote renewable energies and clean technologies.

Investment protection and fighting corruption

The agreement is the first EU agreement in which agreements on investment protection were made with a Latin American country. It includes a reformed investment court system and maintains the rights of the EU and the Member States to work in the public interest. In addition, provisions for fighting corruption and measures against bribery and money laundering were agreed.

Digital trade and innovation

A dedicated chapter on digital trade eliminates barriers for online trading, introduces rules so that companies can certainly act online and protects online consumers. The agreement strengthens the protection of intellectual property and establishes framework conditions for data protection while facilitating cross -border data flows that are essential for modern business processes.

Economic importance and trade volume

The economic importance of the agreement is underlined by the impressive commercial numbers. The trade between the EU and Mexico reached a volume of 82 billion euros in 2023, while mutual trade in services reached a volume of 22 billion euros in 2022. EU exports to Mexico amounted to 53 billion euros in 2023, while Mexican exports to the EU amounted to 29 billion euros.

According to Brazil, Mexico is the second largest trade partner of the EU in Latin America. Around 42,000 EU companies export to Mexico, and EU exports have increased by impressive 302% since the original EU Mexico agreement came into force. The EU investment stocks in Mexico amounted to 195 billion euros in 2022.

The modernized agreement is expected to lead to further intensification of trade. The EU's agricultural and food sector in particular should benefit from the agreement, since Mexico is a net importer of EU agricultural products. In addition, growth opportunities in sectors such as pharmaceuticals, e-commerce and renewable energies are expected.

Geopolitical context and strategic importance

Reaction to US policy and trade voltages

The strategic importance of the EU Mexico Agreement has also gained weight due to recent developments in trade relationships between the USA and Mexico. In January 2025, US President Donald Trump announced punitive tariffs of 25 percent of import goods from Mexico. These were originally supposed to come into force on February 1, 2025, but were initially postponed by a month to April 2 after discussions with Canada and Mexico.

This customs policy is a serious challenge for the Mexican economy, since the United States has been the most important trading partner of Mexico since 2023 - before China. Last year Mexico exported worth $ 506 billion to the United States. The US criminal offenses could drive Mexico into recession this year.

In this context, the EU Mexico Agreement gains additional importance as part of a diversification strategy for Mexico and as a possibility to reduce dependence on the US market. The agreement could help to alleviate the negative effects of the US tariffs and to develop alternative export markets.

Strengthening the supply chains and resource security

Another strategic goal of the agreement is to strengthen the supply chains and to secure access to critical raw materials. The agreement is intended to ensure safe supply of materials that are crucial for the green and digital change. It improves market access and non -discrimination in raw materials, eliminates export restrictions and prohibits export monopolies and unjustified government interventions in pricing.

These provisions are particularly important in the context of global efforts to make a more sustainable economy and the growing demand for critical raw materials for renewable energies and digital technologies.

Effects on European and German companies

Opportunities for EU exporters

The modernized agreement opens up new business opportunities in Mexico. By reducing tariffs and non-tariffs and the creation of the same competitive conditions, EU exporters can expand their presence on the Mexican market. Sectors such as agriculture and food, manufacturing and engineering, e-commerce and digital services, pharmaceuticals and healthcare are likely to benefit.

Special relevance for German companies

The agreement is of particular importance for German companies. According to the Deutsche Bundesbank, German corporations have invested between $ 15 and $ 20 billion in Mexico since the turn of the millennium, making Mexico the most important recipient of German direct investments in Latin America.

Around 2,100 companies with German capital work in Mexico, which offer around 300,000 jobs. In addition to DAX companies, there are many specialized medium-sized companies in the country, in industries such as pharmacy, chemistry, electrical, mechanical engineering or logistics. The automotive industry with the VW, Audi, Mercedes and BMW, as well as numerous supplier companies, is particularly important.

The current US tariffs hit these companies hard, especially if they export them from Mexico to the USA. Johannes Hauser, managing director of the German-Mexican Chamber of Commerce and Industry, describes the situation as a “hard blow” because almost 50 percent of the Mexico vehicles from German production go to the USA. In this context, the EU Mexico Agreement offers an important alternative and supplement to the North American market.

Advantages for small and medium -sized companies

The agreement contains specific provisions for the support of small and medium-sized companies (SMEs), including their own SME chapter, which provides resources and information to help smaller companies in navigation through the requirements of international trade. It also establishes mechanisms for regulatory cooperation to reduce double test and certification requirements, which often represent a burden for smaller companies.

Simplified standards and procedures as well as reduced export restrictions should benefit KMUs in particular from the agreement and receive easier access to the Mexican market.

Cooperation needs: Success factors for the implementation of the new EU Mexico agreement

Ratification process and implementation

The modernized agreement is still subject to the legal review and ratification procedure by both sides. The official documents are to be published online in the coming days. Depending on the political situation in the EU and Mexico, the ratification process can take different lengths long, and only after this process has been completed can the agreement be used or temporarily applied.

The implementation of the agreement will require effective cooperation between the authorities on both sides to ensure that the agreed rules and standards are observed and the potential advantages can be fully implemented.

Economic and political risks

Despite the positive prospects, there are also risks and challenges. The global economic uncertainty, especially in connection with US trade policy and possible retaliation measures, could affect the expected advantages of the agreement. The effects of the US tariffs on the Mexican economy could lead to a recession, which could reduce purchasing power and demand for EU products.

In addition, the implementation of certain aspects of the agreement, especially with regard to sustainability and labor rights, could encounter practical obstacles and require continuous monitoring and adaptation.

EU Mexico Agreement: New boost for transatlantic trade relationships

The modernized free trade agreement between the EU and Mexico represents significant progress in bilateral economic relationships. It updates and expands the existing agreement from 2000 and creates a comprehensive framework for trade and cooperation in the 21st century.

The agreement comes at a strategically important time when both parties enable and diversify their economic relationships, especially in view of the increasing trade stresses with the United States. For European and especially German companies, it offers new opportunities and could help to alleviate the negative effects of US customs policy on their business in Mexico.

The removal of trade barriers, the protection of geographical origin, the improvement of access to service markets and public orders as well as the strengthening of the rules for sustainability and investment protection are important achievements that should contribute to a more intensive and fairer trade between the EU and Mexico.

However, the successful implementation of the agreement will depend on various factors, including the ratification process, the economic development in both regions and the ability of companies to use the new opportunities. In view of the current geopolitical challenges, the agreement is not only economical, but also politically of great importance and underlines the commitment of both sides for open trade and multilateral cooperation in an increasingly fragmented global economy.

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