The UK's trade relationship with Mexico has gained renewed significance as the UK Government announces the extension of cumulation trade terms with Mexico, meaning EU content in UK exports will continue to be an important part of the supply and sourcing chains without businesses being impact by the application of trade tariffs. The arrangement will come into effect from 1 January 2024 and will remain in place until a new UK-Mexico Free Trade Agreement enters into force. The importance of this strategic move is particularly evident in sectors where tariffs could have posed a significant threat to profit margins.
UK-Mexico trade negotiations will resume in January 2024 and by establishing closer ties with this high growth market, British companies can diversify their export destinations, reducing their dependence on traditional markets and ensuring a smoother transition into the post-Brexit trade landscape.
Mexico is the 14th largest economy in the world and second largest in Latin America, and its demand for imports is forecast to grow by 42% between 2021 and 2035 as its economy continues to grow. With a population of over 130 million people, its market is larger than France and Italy combined.
Mexico, with its strong and growing economy, offers British businesses a gateway to the vibrant markets of North America and Latin America. The avoidance of tariffs through strategic partnerships with Mexican counterparts not only ensures cost-effectiveness but also opens doors to new opportunities in sectors ranging from manufacturing to technology.
As British businesses tap into the Mexican market, there is potential for increased collaboration and knowledge exchange. This partnership can extend beyond trade to encompass joint ventures, research initiatives, and the sharing of best practices, creating a foundation for long-term economic cooperation.
Susana Córdoba, Head of International Trade at GM Chamber said: “With an unrealised export growth for British companies estimated at USD$1.3bn in Mexico, we welcome this extension and will follow next year’s negotiations closely to ensure it delivers for business in Greater Manchester and beyond."
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