On 20th May 2022, the Department for International Trade announced that negotiations with Mexico will commence, creating a new free trade agreement. This comes as exciting news for businesses in the United Kingdom looking to explore new opportunities within the country or in developing markets.
To kickstart the post-Brexit trade deals, the Secretary of State for International Trade, Anne-Marie Trevelyan, has launched a handful of negotiations. These include Canada and India which started recently, with Mexico set to be next on the list.
The current agreement between the UK and Mexico was created 20+ years ago and is based on the EU- Mexico Global Agreement. The new negotiations seek to create agreements that benefit the UK whereas previously, these were designed to benefit the EU.
The first round of trade negotiations between the United Kingdom and Mexico will begin in July in Mexico City, with the goal of reaching an agreement within two years.
Whilst these are only negotiations and no agreement has been made yet, Mexico is already on our list as an exciting export opportunity. We've taken a look into the new proposed deal, what this means, and why Mexico is already a key global destination for UK exporters.
Why is Mexico a great opportunity?
Increasing consumer market
It is no secret that Mexico is a rapidly developing market with a growing population. To be precise, Mexico has 130 million consumers demanding goods, which is set to increase further to 150 million by 2035.
But it’s not just the growing population that provides ample opportunity…
Mexico is perfectly located as a gateway to North and South America in addition to the trans-pacific region.
It is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement for countries surrounding the pacific ocean including Japan, Australia, Singapore and Chile.
The UK is currently negotiating separately to join this partnership which could offer tariff-free trade on 99% of the UK's exports. Until then, Mexico provides prime access to these locations.
Increase in demand for exports
By 2035 it has been forecasted that the demand for imports to Mexico is set to increase by 35%, giving an average annual increase of 2.7%. In comparison, in the United States across the last 13 years, the average annual growth was just 1.6% according to The World Bank.
Mexico is among the 15 largest economies
Mexico's economy has improved a lot in recent years, especially in 2021. It's now one of the top 15 economies in the world and the second biggest in Latin America.
What will the trade agreement mean?
The negotiations have begun so that the UK can obtain a better deal with Mexico and ultimately encourage trade between the two countries. The deal has many different aspects for both goods and services but here are some that will impact eCommerce retailers and brands.
Support for small businesses and SME's
Within the deal, Trevelyan is seeking a decrease in trading barriers, including a reduction in the amount of paperwork required to process goods and fewer costs.
Smoother processes and transactions
For eCommerce transactions, the negotiations have highlighted the need for smoother processes to enable the expansion of online retailers to sell to Mexico.
The aim of current negotiations is for tariff-free trade on 97% of UK goods, reducing current tariff expenses by £57 million. The increase in the percentage of tariff-free goods will ultimately result in an increase in trade and investment between the two countries.
Access Mexico with MHI
At MHI we’re ahead of the game with an exciting route already established, allowing you to benefit from this flourishing market with our tracked, DDP service. Find out more about this amazing destination and our service offering details here.
Similarly feel free to give us a call or send us an email, we’ll be happy to answer any questions you may have!
To discover our full list of new and exciting destinations for 2022, head over to our ‘What’s Hot’ page.
Maximise your cross-border growth with MHI.