The European Union and Mexico wrapped up 16 months of negotiations with an accord today on establishing a free-trade pact, the EU's trade commissioner said.
The agreement is the most comprehensive free-trade deal ever negotiated by the EU and the first with a Latin American partner, Trade Commissioner Pascal Lamy said after talks with Mexican Commerce Minister Herminio Blanco.
The accord covers industrial tariffs, agricultural goods, preferential agreements in services, public procurement, investment, competition rules, intellectual property and a dispute-settlement system, Lamy said.
"Our trading relationship will improve markedly," he said.
Some minor aspects of the accord are still under discussion, but Lamy said these were merely "cleanup" details.
EU exports to Mexico totaled $11.7 billion last year, while Mexican exports to the EU totaled $3.9 billion. It was the third year in a row that Mexico's deficit widened, according to the Mexican Commerce Ministry.
A final agreement needs acceptance by the 15 EU member states and ratification by the Mexican Senate before it can be implemented. If the agreement is approved, it will probably take effect July 1.
Mexico has been seeking a trade-opening deal with the EU to lessen its dependence on the United States, the destination of 88 percent of its exports last year.
Mexico ranks as the 34th-largest exporter to the 15-nation EU and has been seeking in particular to boost sales of steel, textiles, fibers and auto parts to the region.
From the European side, the tariff-cutting deal is seen as essential to keeping its exports competitive after Mexico's signature on the North American Free Trade Agreement with the United States and Canada in 1993.
During the nine negotiating sessions, however, Mexico resisted EU demands for the elimination of tariffs on industrial goods by 2003, the same treatment accorded the United States and Canada under NAFTA. The EU reduced its demand to an industrial tariff cut of 80 percent.
The agreement was announced as the EU and the Mercosur group of Latin American nations began preparations for free-trade talks scheduled to start in March.
The Mercosur nations--Argentina, Brazil, Paraguay and Uruguay--agreed to start free trade talks with the EU at a meeting in Rio de Janeiro in June.