Mexico is a fascinating market with plenty of opportunity for UK companies. The visit from the CBI was warmly welcomed by the Mexican government and business community and came at a crucial time for the bilateral trade relationship.
Continuity of trade with Mexico post-Brexit is concerning many British firms. The UK currently trades through the EU-Mexico agreement, allowing tariff free access and other benefits including procurement opportunities. A no deal Brexit would likely see those advantages fall away.
The UK government is working hard to negotiate a rollover deal and it’s a key priority for Ambassador Corin Robertson, but the Mexicans have made clear their reservations around rules of origin demands. And we heard that message from the Mexican business community too when meeting the influential business group, CCE. There is however a huge willingness on the Mexican side to reduce any gap and we heard that first-hand from Deputy Trade Minister de la Mora. From various conversations throughout our time in Mexico City it was made clear that progress can be made if the UK government pitches an ambitious future trade agreement rather than narrowly focusing on short-term continuity.
Part of the discussions with CCE and Mexican officials were around the government-business dialogue on trade, which is very strong. In Mexico, the relationship between negotiators and businesses is extremely beneficial, with a “side room” where businesses are physically at negotiating rounds to advise and support government. It’s an approach for the UK to consider. The Department for International Trade has set up a formal structure for engagement, with the CBI represented on a wide range of expert groups, but more detail is needed about their functionality and the wider approach.
Meetings with CBI members also shed light on the value of trading in Mexico. A population of nearly 130 million and an emerging middle class is allowing UK firms with innovative, quality and world-leading products and services to thrive. But Mexico doesn’t come without challenges. The Embassy, with support from the Foreign Office Prosperity Fund, is doing a great deal of work to address market access issues. And UK officials in-market are also working hard to address sector-specific issues affecting industries such as food and drink and pharmaceuticals.
The final reflection is around the perception of the new government – a left wing populist administration that has often spoken negatively about the private sector. While campaign promises such as scrapping the building of a new airport in the capital have been delivered despite not making sense economically, there is a growing appreciation for the value of business and foreign investment. The President is toning down previous attacks on business, and the contribution that UK companies make to the Mexican economy is widely recognised, as well as being visibly apparent.
The President’s number one priority is to protect the economy, which is perilously close to a recession, so we’re hearing more positive noises about encouraging investment into Mexico. And we can expect there to be no new tax hikes on business. The speed at which the USMCA agreement with the US and Canada passed the Mexican Congress also demonstrated that there’s no desire to reduce the contribution that trade makes to the Mexican economy, with exports making up nearly 40% of GDP.
All in all, Mexico should be seen as an increasingly exciting prospect for British firms. And for companies already enjoying the benefits of trading there, the government has launched a new market access platform to register any restrictions to expansion. This economic diplomacy drive is extremely welcome. There are active government discussions about the UK-Mexico relationship and the business communities on both sides are ready to support an ambitious bilateral agreement that goes beyond the status quo.