EU hopes to clinch trade deal with Mexico this year

Date: 08/04/1999

By Gareth Harding

SENIOR negotiators from the EU and Mexico are confident that they can clinch a h12-billion free trade deal by the end of the year despite glaring differences between the two sides over the rate of market liberalisation.

Mexican President Ernesto Zedillo said last week that talks were "advancing with extraordinary speed and with really satisfactory results", whilst Acting Development Commissioner Manuel Marin has predicted that they can "easily" be wrapped up this year.

European Commission officials say that, unlike the recently concluded talks with South Africa, the negotiations with Mexico pose no fundamental problems. They point out that the central American republic has a liberalised economy, is firmly committed to free trade and has a lot of experience in negotiating free trade agreements.

Moreover, agricultural products, which are often a bone of contention between the EU and its trading partners, make up only a tiny share of trade between the two blocs and are unlikely to be a major stumbling block.

In spite of the undoubted progress made by negotiators in their first three rounds of talks, both sides are aware that the hard bargaining will only get under way next week when they stop trading niceties and start talking about the nitty-gritty of any future deal.

A particularly thorny issue negotiators will have to grapple with at their meeting in the Mexican capital is the speed and scope of market liberalisation. The EU wants Mexico to open up 82% of its industrial market immediately and the remainder to be liberalised by 2003. But Mexico is only offering to open up 46% now and a further 3% in 2003.

Union officials say the Mexican offer compares poorly with the privileges enjoyed by fellow North American Free Trade Agreement (NAFTA) countries such as the US and Canada. "Mexico must improve its offer," said one. "When they come on to our radar screens we can begin to talk seriously, but until then we have to wonder whether it is worthwhile."

Mexican diplomats counter that as the country's economy is less developed than Europe's, it needs more time to adapt to the rigours of open markets. They also dismiss the bloc's demand for equality with the North Americans as premature. "The NAFTA agreement was negotiated over five years and all of a sudden the EU wants to jump on the bandwagon and have parity," said one.

Negotiators will try to narrow their differences over market access next week and identify sectors which could be excluded from any future deal.

Whilst wary of setting unrealistic deadlines, EU officials say that "if a deal is going to be done, it has got to be done this year". With Mexican elections due in early 2000 and fresh talks on global liberalisation set to begin shortly, said one, "if you leave it to next year, you are entering dangerous territory".