Negotiations have concluded to modernize the EU’s Global Agreement with Mexico. The deal is poised to bring trade growth potential between the two regions, with a rise in EU agri-food exports to Mexico on the cards. Dairy organization Eucolait describes the agreement as an “important win for the European dairy sector.” 

The agreement has been stalled for some time with much back and forth over the years.

But more talks in Brussels late last week led to the European Commission (EC) announcing the agreement following political engagement between the Commissioner for trade and economic security Maroš Šefčovič and Mexican secretary of economy Marcelo Ebrard.

Upgraded global agreement

According to the EC, the deal will implement a modern framework to deepen and widen EU-Mexico political dialogue, cooperation and economic relations. 

The Commission points to “new economic opportunities for both sides” and promises more robust rules to fight corruption in private and public sectors.

In terms of dairy trade, Eucolait points out how EU dairy products, like cheese and milk powders, will benefit from duty-free tariff rate quotas, while yogurt and blue cheese will benefit from full, tariff-free access. 

A wide range of EU geographical indications will also enjoy protection in the Mexican market. 

On the EU side, all tariffs on dairy products will be removed upon entry into force of the deal.

“Mexico is the second largest dairy import market globally and still offers significant growth potential. This agreement will help the European dairy sector further diversify its exports and better take advantage of the opportunities on the Mexican market,”Eucolait secretary general Jukka Likitalo tells Food Ingredients First.

“It is also an important agreement from a geopolitical perspective, complementing the list of agreements the EU has already concluded with other Latin American nations.”

Avoiding Trump’s trade crossfire

Mexico is an important market for the EU dairy trade. Due to its growing economy and population (currently 131 million), consumers are shifting toward high-quality dairy products. Mexico’s main dairy exports are cheese, casein and infant formula, with trade exceeding €250 million (US$258 million) annually.

Many have noted the timing of the agreement, pointing to Donald Trump’s inauguration as US President as a key factor. During his election campaign, Trump pledged to reimpose trade restrictions and tariffs. Agreeing to modernize EU-Mexico relations could protect Europe from potential trade disruption in 2025 and reduce the EU’s reliance on China for certain commodities and raw materials.

“The agreement will provide enhanced trading opportunities, especially for products that are currently protected by high tariffs of 45-50%, such as cheese and milk powder. Under the agreement, Mexico will open several duty-free import quotas, which will improve the competitiveness of European exports,” Likitalo continues.

“The quotas for milk powders and cheeses are quite sizable, wheras those for butter, whey and milk and cream are considerably more modest. The quotas are complemented by tariff eliminations and reductions for blue cheese, yogurt, lactose and infant formula.”  

Enhanced trading opportunities

The EU exports about €2 billion (US$2.06 billion) of agrifood products annually to Mexico.

“The EU’s global agreement with Mexico will tear down trade barriers and drive investment, supporting job creation and prosperity on both sides. It will open opportunities and simplify procedures for EU SMEs, make it easier for EU companies to bid for Mexican government contracts, and improve protections for EU investors,” says Maroš Šefčovič, Commissioner for trade and economic security; interinstitutional relations and transparency.

Subject to final legal revision, the EU and Mexico will proceed with their respective procedures for conclusion and ratification.

“The agreement still needs to be formally approved by both sides before it can enter into force. This process is likely to take at least 18 months, so we are not talking about any immediate changes. I am sure that interested companies and those already active in Mexico will use this time to prepare for the entry into force of the deal,” Likitalo concludes.