THE TRADE CONTINUITY AGREEMENT BETWEEN MEXICO AND THE UNITED KINGDOM

junio 1, 2021

The Trade Continuity Agreement Between Mexico and the United Kingdom

With the United Kingdom´s (UK) withdrawal from the European Union (EU), a new trade agreement was necessary between Mexico and the UK to maintain preferential tariffs and market access.

For this reason, in December 2020, the Trade Continuity Agreement between Mexico and the UK was signed, as well as the Agreement related to Article 12 of the Trade Continuity Agreement between Mexico and the UK. Both agreements are aimed at maintaining and expanding preferential market access between the two countries.

Entry into Force of the Trade Continuity Agreement in Mexico

As mentioned in our Legal Alert of April 30, the Trade Continuity Agreement had to be published in the Official Gazette of the Federation (DOF) to become legally binding in Mexico.

Today, Tuesday, June 1, 2021, the Trade Continuity Agreement was finally published, entering into force on such date. The following decrees were published in the DOF:

Decree Promulgating the Trade Continuity Agreement between the United Mexican States and the United Kingdom of Great Britain and Northern Ireland, made in Mexico City on December fifteenth, 2020.
Decree Promulgating the Agreement relating to Article 12 of the Business Continuity Agreement between the United Mexican States and the United Kingdom of Great Britain and Northern Ireland, executed by exchange of letters dated December twenty-ninth, 2020, in Mexico City, on December twenty-ninth, 2020.

Tariff’s Return Mechanism

In addition, the Mexican Ministry of Treasury also issued the Resolution that establishes the General Rules related to the application of the customs provisions of the Continuity of Trade Agreement between Mexico and the UK.

In this regard, Rules 2.2.2 and 2.2.3. provide the mechanism for the refund or compensation of duties paid by importers of goods that qualified as originating in the UK and were imported into Mexico as of January 1, 2021; as noted, this is the date that the UK’s exit from the European Union became effective, and prior to the entry into force of the Trade Continuity Agreement in Mexico.

Preferential Access Per the Trade Continuity Agreement

In addition to the publication of the aforementioned decrees, the following five instruments necessary to guarantee preferential access for products between Mexico and the UK were published in the DOF:

Sixth Resolution amending the General International Trade Rules for 2020.
Agreement on the Applicable Rate of the General Import Tariff/Tax for goods originating from the United Kingdom of Great Britain and Northern Ireland is disclosed.
Agreement on the export quota to the United Kingdom of Great Britain and Northern Ireland in the period from July 1 of a given year to June 30 of the following year, frozen concentrated orange juice with a degree of concentration greater than 20 Brix, originating from Mexico.
Agreement establishing the export quotas to the United Kingdom of Great Britain and Northern Ireland of various products originating from Mexico.
Agreement by which the quota and the mechanism to import processed tuna, except loins, originating from the United Kingdom of Great Britain and Northern Ireland are made public.

The purpose of these instruments is to provide the necessary information to economic operators in Mexico regarding the requirements to access the preferential quotas provided in the Continuity Agreement.

The following steps?

The Trade Continuity Agreement establishes that Mexico and the UK will begin negotiations for an ambitious, modern and comprehensive free trade agreement as soon as there is an opportunity and within one year of the entry into force of this Agreement. In other words, before June 1, 2022, both countries commit to start negotiations for a free trade agreement that will seek to strengthen and expand preferential access between both markets.

Finally, both countries commit to making every effort to conclude the negotiations of the free trade agreement within a period of three years from the entry into force of this Agreement, that is, before June 1, 2024.