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Fifth enlargement of the European Union
Implications for the Mexico - EU FTA
2004
Ministry of the Economy
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TABLE OF CONTENTS
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THE MEXICO - EU FREE TRADE AGREEMENT
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The EU is Mexicos second trading partner
Mexico - EU trade (million US dollars)
Growth 02/93 112
EUs imports from Mexico Mexicos imports
from the EU
Source Ministry of the Economy, with data from
BANXICO and EUROSTAT (using data from the
importing country)
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and second source of foreign direct investment
FDI distribution in Mexico, by origin 1994
December 2003

• Between 1994 and December 2003, Mexico received
  close to US 126 billion in FDI
• In December 2003, out of the 27,936 firms in
  Mexico with FDI, 5,852 companies had European
  capital.

Rest of the World 10
EU 22
US 68
Source Ministry of the Economy
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The Mexico EU FTA is part of renewed bilateral
relation
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The FTA covers disciplines in the following areas

• I. Market access
• II. Rules of origin
• III. Technical standards
• IV. Sanitary and phytosanitary standards
• V. Safeguards
• VI. Investment and related payments
• VII. Trade in services
• VIII. Government procurement
• IX. Competition policy
• X. Intellectual property
• XI. Dispute settlement

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A Broad and Ambitious FTA
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The Mexico EU FTA after three years
Mexico - EU total trade (billion US dollars)
27.1
Source Ministry of the Economy, with data from
Banxico and Eurostat
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Mexican products are already competing
successfully in the European market
Mexican exports to the EU selected products
(million US dollars)
Growth rate
Value
jul 02 -jun 03
HTS
Products
jul 99 -jun 00

840734
83.7
98.7
17.9
Spark-ignition engines
847170
51.5
139.5
170.9
Hard drives
847180
0.2
60.3
30,045
Data processing machines
22.7
41.6
83.1
040900
Natural honey
33.5
60.2
79.6
220890
Tequila
1123.4
Toys with wheels
9.6
117.9
950100
841112
Turbines
13.9
64.7
365.7
851790
Parts for line telephony
8.4
21.6
157.7
Acetic anhydride
10.0
27.1
171.4
291524
721391
Syringes
6.2
8.2
32.3
Source Ministry of the Economy, with data from
Banxico
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ADAPTATIONS TO THE MEXICO-EU FTA
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The Mexico EU FTA vis a - vis the EUs
enlargement
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LEGAL GROUND OF THE ADAPTATIONS
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LEGAL GROUND OF THE ADAPTATIONS
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The adaptations update the Mexico-EU FTA to the
new EU reality

• The main objective of the adaptations to the
  Global Agreement and its Decisions is to continue
  making operational both instruments in light of
  the accession of ten new MS to the European
  Community.
• Through these adaptations, it is intended to
  guarantee that traditional trade flows between
  Mexico and the ten new MS continue uninterrupted
  in an EU enlarged to 25 members.

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Adaptation Instruments
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1. ADDITIONAL PROTOCOL TO THE GLOBAL AGREEMENT
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2. Decision 3/2004 amending Mexico EC Joint
Council Decision 2/2000, Trade in Goods
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2. Decision 3/2004 amending Mexico EC Joint
Council Decision 2/2000, Trade in Goods
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3. Decision 4/2004 amending Mexico EC Joint
Council Decision 2/2001, Trade in Services
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4. Update of the annexes containing the
protected designations for spirit drinks
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IMPLICATIONS FOR MEXICO
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Enlargement of the European Union to 25 members
Estonia
Latvia
Lithuania
Poland
Czech Republic
Slovakia
Hungary
Slovenia
Cyprus
Malta
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IMPLICATIONS EU - 25

• Starting on May 1, 2004, the EU has become the
  largest trade bloc in the world, representing a
  market of 455 million consumers with a GDP of
  around 9.5 trillion euros.
• According to the EC, the average simple tariff of
  the ten new MS with respect to third countries
  will decrease from 9 to 4.
• The EU-25 will generate 46 of the worlds
  foreign direct investment, and will receive 24.

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Foreign direct investment in the ten new MS
Total 19.7
Source UNCTAD, FDI country Report (2001)
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TRADE IMPLICATIONS EU - 25

• The enlarged Union will account for more than 20
  of total world trade (without considering
  intra-community trade).
• Since the 1990s, trade between the ten new MS and
  the EU has been governed by preferential trade
  agreements. Around 95 of this trade was already
  liberalised before the fifth enlargement took
  place.
• Enlargement will not disrupt trade with third
  countries since around two thirds of the new MS
  trade is done with the former EU-15.

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Ten new Member States total trade (Billion euros)
62.7
Source Ministry of the Economy with data from
EUROSTAT
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28
Natural market for the enlargement countries
Enlargement countries trading partners
Source Ministry of the Economy with data from
EUROSTAT
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Total imports of the ten new MS
Billion euros
183.5
Billion euros
194.1
Source Ministry of the Economy with data from
EUROSTAT
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MEXICO ENJOYS PREFERENTIAL ACCESS

• The Mexico-EU FTA has put Mexico in a privileged
  position with respect to third countries to enjoy
  preferential access in the market of the ten new
  MS.
• Through their incorporation to the EU market, the
  ten new MS will enjoy the preferences and assume
  the obligations established in the Mexico-EU FTA.
  This will bring new markets and business
  opportunities to Mexican entrepreneurs, exporters
  and investors.
• Mexicos network of free trade agreements around
  the world now covers a market of 42 countries and
  920 million potential consumers.

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Advantages of enlargement

• Given that most Mexican exports already enjoy
  duty free access to the EU-15, enlargement will
  give Mexico a better position to access the ten
  new MS market since the average weighed tariff
  will decrease from 5.7 to 0.1

Source Ministry of the Economy with data from
EUROSTAT
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Mexican trade with the ten new MS

• Even though trade between Mexico and the ten new
  MS is relatively low, during the last four years
  it grew 80, while in 2003 it increased 25. The
  tariff reduction that took place on May 1, 2004,
  should help to substantially increase trade with
  these countries.
• Mexicos trade with the accession countries
  concentrates on four countries that represent
  around 80

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Source Ministry of the Economy with data from
Banco de México
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Mexican trade with the ten new MS

• Main export markets
• Czech Republic
• Hungary and
• Poland
• Main import markets
• Malta
• Hungary
• Czech Republic and
• Poland

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Examples of Mexican products that will enjoy
better access to the enlargement countries
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Examples of Mexican products that will have
better access to the enlargement countries
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CONCLUDING REMARKS
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CONCLUDING REMARKS
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CONCLUDING REMARKS

• The adaptations to the legal instruments that
  govern the trade relationship between Mexico and
  the EU are necessary to keep up to date the
  regulatory framework that regulates trade between
  Mexico and the EU as of May 1, 2004.
• In the following months it will be necessary to
  intensify the promotion of the FTA, both in the
  new MS and in Mexico in order to help Mexican
  entrepreneurs and European investors to better
  understand the trade and investment opportunities
  for both Parties.
• The Undersecretariat for International Trade
  Negotiations of Mexicos Ministry of the Economy
  has developed the Commercial Intelligence System,
  to help the exporters and entrepreneurs to
  identify business and trade opportunities in the
  EU. To obtain more information, please visit
  www.economia-snci.gob.mx or www.economia-bruselas.
  gob.mx

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