Are you considering trading with Mexico? This year could be the perfect time. The opportunities between Mexico and the European Union have never been greater in the 25-year history of their Free Trade Agreement (FTA).
In January 2025, the EU and Mexico signed a Memorandum of Understanding (MoU) to strengthen their partnership established in 2000. This agreement is important. The current geopolitical pressures resulting from the U.S. trade war and the imposition of tariffs have created a favorable environment for the expansion of trade relations between the two states.
Key Issues and Outcomes – What the MOU Proposes
Agriculture and tariffs: The EU has sought access to Mexico’s agricultural markets, which has led Mexico to agree to eliminate 95% of tariffs on EU agricultural products such as cheese, poultry, pork, pasta, apples, jams and chocolate. In addition, tariff rate quotas for Mexican beef and poultry have been expanded.
Geographical Indications (GIs): The agreement increased the number of EU-protected geographical indications in Mexico to 568, ensuring that more European products are recognized and protected.
Services, investment, procurement: The new treaty opens Mexican services and public contracts to EU companies. European companies (including French banks, insurers and telecoms) will have easier access to the Mexican services market and will be able to bid on public contracts on an equal footing. An updated chapter on investment creates a new judicial system for dispute resolution. The EU aimed to protect its investors, while Mexico was assured that its reforms (e.g. in the electricity sector) would not be reversed by arbitration.
Sustainable development: The agreement aligns with the priorities of the EU and France, with a chapter on trade and sustainable development with binding commitments on labor (ILO conventions) and the environment (climate change and biodiversity). Both sides agree to abide by the Paris Climate Agreement and fight deforestation. Independent committees apply these rules. Cooperation will extend to renewable energy, resource efficiency, and anti-corruption measures, ensuring that trade growth is in line with France’s climate and social standards.
EU competitiveness and raw materials: The updated agreement covers strategic raw materials, securing critical mineral supply chains needed for Europe’s green transition, and simplifying customs procedures. The Council notes that better regulatory cooperation will improve the competitiveness of European industry and services in Mexico.
Energy sovereignty: Mexico has chosen to exclude its energy sector and utilities from the agreement. President Sheinbaum has publicly confirmed Mexico’s plan to prioritize domestic industry and keep the nationalized power sector out of EU influence. The EU has respected this decision, so that the final text preserves Mexico’s energy reforms.
France’s Role and Position
France, a major EU economy, has significantly influenced the EU’s negotiating position. French exporters, like cheese and wine producers, have supported tariff cuts on EU products, but the agricultural lobby has demanded protections against “unfair competition” from cheap imports. France advocated for special tariffs or quotas on sensitive products and championed sustainability measures, including provisions on labor, human rights, and climate. In addition, France has pushed for increased protection of geographical indications and has seen modernization as part of the EU’s strategy to strengthen ties with Latin America. Analysts have observed that in 2024-2025, the EU accelerated trade agreements with Mexico, Chile and Mercosur to diversify partnerships amid global trade tensions.
How did we get here? Historical Review of Trade Relations
2000 Global Agreement: The EU and Mexico negotiated the “Global Agreement” between 1997 and 2000, covering rules of origin and agriculture. Talks began in Brussels in December 1997. The main issues were:
- Rules of origin: Mexico requested lenient rules; the EU has demanded stricter requirements.
- Agriculture: Mexico feared harming local farmers with cheap European products, while the EU wanted market access.
Mexico has agreed to reduce many industrial tariffs and the EU has made limited agricultural concessions (with the exception of dairy products). Signed in March 2000, the Economic Partnership, Political Coordination and Cooperation Agreement entered into force on 1 October 2000, marking the EU’s first Latin American FTA. It abolished most industrial tariffs and gradually reduced agricultural tariffs. In 20 years, trade between the EU and Mexico has quadrupled, reaching around €82 billion in 2023. The EU is now Mexico’s second largest trading partner, and Mexico became one of the EU’s ten “strategic partners” in 2008. However, efforts to modernize the Agreement have not been successful.
2016–2025 Modernization: In May 2016, the EU and Mexico agreed to update the 2000 Global Agreement. New issues such as digital trade, services, investment, and raw materials were included. By April 2018, they reached an “agreement in principle” on the trade chapters and finalized technical details by April 2020. Ratification stalled due to Mexico’s constitutional reforms on energy and political shifts. The parties continued trading under the outdated 2000 General Agreement. In 2023, EU General Counsel Ursula von der Leyen and Mexican President Obrador announced renewed negotiations, but no progress was made until President Claudia Sheinbaum (2024) excluded Mexico’s nationalized energy sector from any deal and insisted the accord align with Mexico’s development plans. Despite this, EU Trade Commissioner Šefčovič continued negotiations, viewing the deal to reduce reliance on uncertain U.S. trade relations.
The Future
For the first time in 25 years, new global economic dynamics have eased past concerns about a comprehensive free trade agreement. Previous issues from the failed negotiations between 2016 and 2023 seem resolved.
On 17 January 2025, the EU announced the conclusion of political negotiations on an updated EU–Mexico “Global Agreement”. Once ratified, this new agreement will replace the 2000 treaty, covering goods and services, investment, procurement, and regulatory cooperation, with strong sustainable-development commitments.
Will this agreement finally modernize the relationship and align both parties with current trading trends? We believe it will. Both parties aim to ratify the Agreement by the end of 2025. In April 2025, EU Vice President Theresa Rivera stated during her visit to Mexico, “We have reached an agreement to modernize the global agreement that has benefited our societies and economy over the past 25 years”. She stressed that geopolitical pressures from the United States trade war and tariffs imposed by President Donald Trump made this modernization essential.
Conclusion
In the past quarter-century, opportunities for trade between European Union and Mexican businesses have never been more advantageous and favorable. As with any market, those businesses that capitalize on this opportunity promptly are likely to secure a larger market share compared to those who delay.
