EU and Mexico make big push for trade deal

Current AffairsDecember 19, 2017

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The EU and Mexico are making a big diplomatic heave to secure a preliminary trade deal before Christmas, but only have a few days to resolve a major rift over whether Mexico will recognize EU protections for gourmet food labels.

In Brussels, officials are confident that they can secure an agreement in principle this week during a visit by Mexican Economy Minister Ildefonso Guajardo. “We hope that over the next few days that we will be able to have a positive outcome on Mexico,” said European Commissioner for Agriculture Phil Hogan.

The deal would offer big benefits to both sides. The EU already has a basic accord with Mexico since 2000 covering goods such as machinery and cars, but the upgrade would liberalize trade in important sectors such as finance, e-commerce and agriculture.

For the EU, a deal would crown an annus mirabilis for European Commissioner for Trade Cecilia Malmström, who has already finalized a landmark deal with Japan that was largely considered impossible last year. For Mexico, an accord with Brussels allows diversification away from dependence on the U.S., where President Donald Trump is threatening to torpedo the North American Free Trade Agreement, which has helped power Mexican exports over the last quarter of a century.

Mexico and Brussels need to overcome stark differences on four contentious issues.

Guajardo met with Commission Vice President Jyrki Katainen on Monday. On Tuesday, he will hold talks with Malmström, before meeting Hogan on Wednesday.

“The main achievement is strategic and geopolitical. The EU is filling the vacuum left by the U.S. with its unique third-way approach to trade,” said Alessia Mosca, an Italian lawmaker in the European Parliament, who is acting rapporteur on EU-Mexico trade.

Four officials briefed on the talks said the negotiating teams would attempt to make a breakthrough on Monday night or Tuesday morning, with a view to signing a political agreement by the middle of the week.

But in order to get there, Mexico and Brussels need to overcome stark differences on four contentious issues.

Firstly, as ever with EU trade talks, agriculture is probably the thorniest topic. Europe’s main objective is to ensure brand protections for delicacies such as Italian mozzarella and Spanish Manchego cheese, against Mexican rivals.

“In spite of American pressure, we are giving a global dimension to our standards” — Alessia Mosca, MEP and acting rapporteur on EU-Mexico trade

During the negotiations, Europe showed no willingness to compromise on these talismanic Geographical Indications, according to officials briefed on the proceedings.

“Canada, Mexico and Japan, all members of the Trans-Pacific Partnership, will recognize … our GI protection system, strengthening European rural communities and our agricultural exports,” Mosca said. “To trade with the EU, our partners need to accept our values and conditions. We will focus on the trade and sustainable development chapter … In spite of American pressure, we are giving a global dimension to our standards.”

Beyond the GIs, negotiators will also need to iron out the framework under which investment disputes are settled. In fact, EU diplomats and lawmakers say the two sides are more likely to drop this legal process from the initial accord to accelerate a deal.

Other hurdles include fair market access — such as restrictions on shareholding — and rules of origin, the regulations determining what proportion of goods must be made locally. In the latter area, textiles are of particular concern.

Original Article