The ITA between Mexico and the European Union will impose restrictions on Pemex and the Federal Electricity Commission (CFE), as well as on the EU’s state-owned enterprises. In effect, it will ensure a level playing field between public and private companies in the market.

According to Economy Secretary Marcelo Enrard, the Interim Trade Agreement (ITA) is expected to be ratified “within a matter of months” by the European Parliament and the Mexican Senate. This ratification will follow its signing this Friday in Mexico City.

ITA between Mexico and the European Union

The ITA is part of the Modernized Global Agreement (MGA). The MGA will also be signed this Friday. Its entry into force requires ratification by the European Parliament, the Mexican Senate, and the legislatures of the 27 member states of the European Union. Furthermore, the MGA will replace the Agreement on Economic Partnership, Political Coordination, and Cooperation between the European Community and its Member States, on the one hand, and Mexico, on the other. The previous agreement entered into force on October 1, 2001.

The ACI ensures that companies respect the basic principles of competition. These include no abuse of a dominant position, no agreements between companies that restrict competition, and an examination of the effects of a merger on competition.

At the same time, the ACI will ensure a level playing field between public and private companies in the market. State-owned enterprises, enterprises that have been granted special rights or privileges, and designated monopolies must act in a non-discriminatory manner. They must also act in accordance with commercial considerations when buying and selling goods and services in the market.

Subsidies

In order to address unfair trade practices efficiently and effectively, enhanced disciplines on trade remedy measures have been agreed upon. 

Furthermore, the FTA between Mexico and the European Union contains provisions to protect domestic industries in the event that increased imports of a product covered by the Agreement are causing, or threaten to cause, serious injury to such an industry. 

Finally, the FTA contains a chapter on subsidies that helps ensure a level playing field between European Union and Mexican companies through:

• Greater transparency regarding subsidies for both goods and services.
• Consultations in the event that subsidies may have a negative effect on trade.
• Rules on the most harmful subsidies (restructuring aid without a restructuring plan and unlimited guarantees).