EU-Mexico Agreement: What You Need to Know
On 17 January 2025 negotiations for the modernization of the Global Agreement between the EU and Mexico were concluded, updating the treaty in force since 2000 and finalizing negotiations that started in 2016. After the final legal review, the EU and Mexico will proceed with the signing and subsequent ratification of the agreement.
The EU took a new step in its integration strategy with Latin America. The agreements follow the modernization of the EU-Chile agreement, concluded in December 2023 and ratified by the European Parliament in February 2024.
It represents a pivotal shift in international trade relations, in an era of geopolitical uncertainty with the arrival of the Trump administration amid protectionist trends, regulatory risks for foreign investments and higher tariff barriers. This enhanced framework is designed to foster economic collaboration, simplify trade mechanisms, and reinforce legal protections for investors. Understanding its scope is essential for businesses engaged in global markets.
LAC Trade Agreements with the EU
| Partner Country | Type | Year | Status | %GDP of LAC | |
| Mexico | EPA | 2000* | Under ratification | ||
| Chile | EPA | 2002* | In Force | ||
| CARIFORUM | EA | 2008* | In Force | ||
| EU | Central America | AA | 2012 | In Force | 95 |
| Colombia | FTA | 2013 | In Force | ||
| Ecuador | FTA | 2013 | In Force | ||
| Peru | FTA | 2013 | In Force | ||
| MERCOSUR | AA | 2024 | Under ratification | ||
| Chile | FTA | 2004 | In Force | ||
| CAFTA-DR | FTA | 2004 | In Force |
Source: The new EU-Mexico agreement: the EU fast-tracks integration with Latin America
Notes: [*] modernized agreements, with negotiations concluded for the EU-Mexico agreement in 2025 and the EU-Chile agreement in effect since 2024. EPA – Economic Partnership Agreement. AA – Association Agreement. FTA – Free Trade Agreement. TPA – Trade Promotion Agreement. CARIFORUM includes The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Saint Lucia, Saint Vincent & the Grenadines, Saint Kitts & Nevis, Suriname, Trinidad & Tobago and the Dominican Republic. MERCOSUR includes Argentina, Brazil, Paraguay and Uruguay. Central America includes Panama, Guatemala, Costa Rica, El Salvador, Honduras and Nicaragua. CAFTA-DR includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
Source: Berganza, Campos, Estevadeordal, Talvi & Timini.
Key Aspects of the EU-Mexico Agreement
1. Enhanced Trade Access and Market Opportunities
A fundamental goal of this agreement is to streamline trade by minimizing tariffs and bureaucratic hurdles. Key benefits include:
- Tariff eliminations on significant product categories, boosting competitive positioning.
- Optimized customs protocols, cutting down processing times and operational expenses.
- Expanded market entry, allowing businesses to tap into European and Mexican consumer bases more efficiently.
- Strengthened trade relationships, promoting stability and economic growth across both regions.
- Support for SMEs, enabling smaller enterprises to leverage the benefits of international trade.
- Greater integration of supply chains, facilitating smoother transactions between businesses.
- Increased product standard harmonization, reducing barriers related to regulatory differences.
2. Strengthened Investment Security and Regulatory Frameworks
Businesses operating under this agreement gain access to reinforced investment protections, ensuring:
- Regulatory transparency with structured dispute resolution mechanisms.
- Equitable treatment for investors from both regions.
- Comprehensive intellectual property safeguards, fostering innovation and market stability.
- Legal predictability, reducing the risks associated with cross-border investments.
- Improved access to financial services, ensuring businesses can operate with greater financial security.
- Enhanced digital trade provisions, supporting the growth of e-commerce and digital transactions.
- Stronger enforcement of anti-corruption measures, promoting ethical business practices.
3. Commitment to Sustainability and Ethical Business Practices
The revised agreement incorporates progressive policies centered around sustainable growth and responsible commerce, ensuring:
- Environmental safeguards that promote sustainable production and responsible sourcing.
- Alignment with international labor regulations, enhancing workforce protections.
- Encouragement of corporate social responsibility to foster ethical business conduct.
- Commitment to carbon neutrality, supporting global efforts to reduce emissions.
- Stronger enforcement mechanisms, ensuring compliance with sustainability goals.
- Incentives for green technology adoption, driving innovation in sustainable industries.
- Tighter regulations on deforestation-linked imports, promoting responsible trade.
The EU accelerates its integration with Latin America in response to the geopolitical reconfiguration and the uncertainty of a second Donald Trump presidency. In the last 13 months the EU has modernized key agreements with Mexico and Chile, and finalized the agreement with Mercosur, seeking to strengthen its presence in the region and diversify its alliances in the face of US growing protectionism.
These new agreements once again reinforce the interest of the European Union and its Member States in strengthening free economies, foreign investment and the exchange of goods and services between countries. Above all, they represent a fundamental legal framework to offer legal certainty to the different companies, both from Mexico and the EU Member States, that wish to expand their business and presence in these regions. At ALTIOS, we consider Mexico a key market as it is a global gateway to both North and South American markets.
Comparative Trade Frameworks
To better understand the significance of these agreements, it is essential to compare key trade indicators. The EU-Mexico agreement plays a crucial role in global trade, influencing economic factors such as trade volume, tariff reductions, and foreign direct investment. Below is a data-driven comparison of this agreement with other major trade frameworks:
| Indicator | EU-Mexico Agreement (2025)(Pending ratification by EU members) | USMCA/T-MEC (2023) | EU-Mercosur Agreement (Pending Ratification) |
| Goods Trade | €82 billion | $1.5 trillion | €88 billion |
| Services Trade | €22 billion | Data not available | Data not available |
| Tariff Elimination | 99% of industrial and agricultural goods | 100% in key sectors | 91% of industrial products |
| Foreign Direct Investment (FDI) | $36.058 billion in Mexico (2025) | Predominantly from the U.S. | Data not available |
| Key Benefited Sectors | Automotive, pharmaceutical, agribusiness | Automotive, manufacturing, agriculture | Agribusiness, energy, manufacturing |
| SustainabilityClauses | Yes, with environmental and labor standards | Limited | Yes, with environmental commitements |
| Update Year | 2025 | 2020 | Pending Ratification |
Sources: El Economista, FDI, Policy Trade EU, Eurostat
By analyzing these key indicators, it becomes evident that the modernization of the EU-Mexico agreement offers substantial economic advantages. The trade volume and tariff elimination levels position Mexico as a competitive player in global trade, while the sustainability clauses reflect the EU’s commitment to environmental and labor standards.
Why Mexico remains a strong investment destination?
Mexico boasts a strong and diversified economy, driven by key sectors such as manufacturing (automotive, aerospace, electronics), energy, fintech, and agribusiness. The country is also experiencing a booming digital economy and industrial base, with numerous multinational tech companies establishing innovation hubs in major cities like Mexico City, Guadalajara, and Monterrey. This dynamic environment reinforces Mexico’s position as a strategic hub for investment and technological development in Latin America. With a strong economy, growing middle class and consumer base, many foreign companies have settled in Mexico to manage their regional operations. Mexico allows international companies to highlight and define a regionalization strategy, fundamental in a globalized world and a region well-connected with international and destination markets.
We support numerous international mid-cap companies with a variety of services. Besides the company set-up and subsidiary management, our multicultural teams provide strategic studies followed by recruitment services, many of them for strategic profiles for companies that need a skilled workforce and bilingual collaborators with regional experience (Sales Director LATAM, Managing Director, Business Developer LATAM, Engineers with both Portuguese and Spanish Language).
