The UK Government’s International Trade Secretary last week launched negotiations on a new UK-Mexico Free Trade Agreement (FTA) alongside her Mexican counterpart, Tatiana Clouthier, in London.
Negotiating a ‘Mexico 2.0’ deal would transform the UK’s relationship with the world’s 16th biggest economy and secure a brand-new, enhanced FTA for a digital age, which supports hi-tech jobs, industries of the future and grows our economy.
Mexico is a major market for UK exporters. Its population will be nearly 150 million by 2035 and demand for imports is set to grow by 35% in that time. It is located in a strategically situated part of the world, serving as a gateway to the Americas as well as to the dynamic trans-Pacific region.
Welsh goods worth more than £62 million were exported to Mexico in 2021. The biggest export product is drink and the UK wants a deal that breaks down barriers for firms like Worldwide Drinks, which distributes beer and cider around the globe from its Cowbridge HQ.
UK negotiators will look to go further and deeper in areas like services and technology, boosting a trade relationship already worth over £4 billion. In 2019 over £7bn of services were exported around the world from Wales. New provisions that facilitate the recognition of professional qualifications could support Welsh businesses to deliver more of their world-class services in the Mexican market.
It is the third major FTA negotiation launched by Trade Secretary Anne-Marie Trevelyan this year – following visits to kick off talks in India in January and Canada in March.
Secretary of State for International Trade Anne-Marie Trevelyan said:
“This deal would transform our relationship with Mexico, making the most of the immense opportunities its dynamic business landscape and young, growing population offer.
“From autonomous vehicle manufacturers in the West Midlands, to Wales’ green tech businesses and Scotland’s thriving food and drink sector, companies of all shapes and sizes across the UK stand to benefit.
“Trade deals like this are vital to growing the economy to address the cost of living, as they support jobs, help businesses thrive and spur investment. We’ve already kickstarted negotiations with India and Canada and are close to joining the CPTPP free trade area, with a combined GDP of £ 9 trillion, of which Mexico is a key member.”
Secretary of State for Wales, Simon Hart said:
“This is an exciting development for businesses in Wales looking to expand their export markets. There are many creative and dynamic businesses in Wales who are constantly looking for opportunities to grow and create jobs.
“The UK government will do all it can to support these ambitions, opening up new markets and cutting red tape.”
The UK is aiming for a dedicated chapter on small and medium-sized enterprises (SMEs) that would knock down sector-specific barriers, cutting costs and paperwork for SMEs looking to export.
Through this FTA, the UK will seek to make buying and selling goods and services online and product standards recognition processes smoother, helping British businesses expand more quickly and supporting jobs. There was a 92% increase in non-ferrous metal imports from Mexico to Wales from 2020-2021. A bespoke deal with simpler import rules could make it easier for Welsh manufacturers to obtain materials for their products from Mexico
We will also aim to lock in tariff reductions of £57 million per year secured under existing agreements, ensuring tariff-free trade on 97% of UK goods exports.
We will look to help workers move between the two countries more easily and enhance opportunities for UK firms to bid for contracts in Mexico, supporting major UK industries such as infrastructure and business services.
Our ambition is for an FTA which is forward looking and fit for the future, which supports innovation and women’s economic empowerment.
This new FTA will also complement the UK’s CPTPP negotiations, accession to which could see 99.9% of UK exports being eligible for tariff-free trade with this bloc, which includes some of the world’s largest existing and future economies including Mexico.