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Advantages of the UK-Mexico Continuity of Trade Agreement

A report by the World Trade Organization (WTO) detailed the advantages of the United KingdomMexico Continuity of Trade Agreement (Agreement).

This agreement replaced the Economic Partnership, Political Coordination and Cooperation Agreement between Mexico and the European Union (Global Agreement).

Thus, the global average of MFN rates applied in 2021 by the United Kingdom was 3.8% (2.5% in the case of industrial products and 8.9% in the case of agricultural products).

Under MFN, 47% of the United Kingdom’s tariff was duty free; 57.1% of industrial products and 18.8% of agricultural products were duty free.

Under the Agreement, in 2021, Mexican exporters benefited from an absolute margin of preference of 3.3% with respect to the current MFN tariff; a margin of 2.48% for industrial products and 6.8% for agricultural products.

Also, under the Agreement, the proportion of duty-free lines for imports from Mexico in 2021 was 90.8% (66.1% for agricultural products and 99.7% for industrial products).

Continuity of Trade Agreement

Conversely, in 2021, the overall average of MFN rates applied by Mexico was 6.7% (5.5% for industrial products and 14.2% for agricultural products).

Under MFN, 47.4% of Mexico’s tariff was tariff-free; 52.8% of industrial products and 14.6% of agricultural products were tariff-free.

In 2021, under the Agreement, UK exporters benefited from an absolute margin of preference of 6.1% over the current MFN tariff; a margin of 5.5% for industrial products and 10% for agricultural products.

Also under the Agreement, in 2021, the proportion of duty-free lines for imports from the United Kingdom was 96.2% (76.7% for agricultural products and 99.4% for industrial products).

Bilateral trade

Previously, trade relations between the United Kingdom and Mexico were governed by the Global Agreement, as amended, which had been in force since July 1, 2000 (with respect to trade in goods), and since October 1 of the same year (with respect to trade in services). The Global Agreement ceased to apply to the United Kingdom on January 1, 2021.

Finally, the Agreement is one of 38 Regional Trade Agreements (RTAs) in the United Kingdom and one of 23 in Mexico.

It was signed on December 15, 2020 and entered into force on June 1, 2021; preferences were provisionally granted between January 1, 2021 and the date of entry into force of the Agreement, through an exchange of Notes between the Parties.

 

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