From Politico

MEXICO — AGRICULTURE EMERGES AS BIG HURDLE IN TRADE TALKS, DATA FLOWS ARE OUT: As
negotiators from the EU and Mexico get ready to hold their next round of trade talks from April 16-20 in
Brussels, they will face tough discussions on agriculture tariffs — but also have a shot at reaching a long-
awaited political agreement.

The April talks announced after Mexican Economy Under-Secretary Juan Carlos Baker and Commission
director general for trade Jean-Luc Demarty made “good progress” during a high-level meeting last
Thursday, a Mexican official told Morning Trade. Both sides achieved a “better understanding” on rules
of origin, public procurement, services and intellectual property, the official said, while adding that
agriculture remained a more complicated chunk to chew.

Morning Trade has the detailed breakdown:

No data flows: This news will come as a big disappointment to digital service operators from both sides:
The most recent word from the Commission, according to the Mexican official, is that the new
compromise text on data flows won’t be included in the trade accord. Instead, there will be probably a
review clause, which says that both sides will return to the issue at a later stage — just as in the EU-
Japan deal. That’s surprising in a way because the Commission previously told POLITICO that it was
aiming to include the data flows text in the Mexico deal (Morning Trade reported). A definitive
confirmation by the Commission on this was still outstanding by late Wednesday, but we will follow up
on this.

Flexible car rules? The Mexican side is hopeful that Brussels will come up with a more flexible approach
on rules of origin that would allow the use of more foreign content in car exports. This issue was a deal-
breaker when talks crashed in February.

More procurement: The EU demands that Mexico opens up procurement contracts not only at the
federal but also at the sub-federal level, meaning for the country’s 32 federal states. While Mexico is
trying to include a large part of these states in the procurement rules — thereby also covering
infrastructure projects financed by federal funds — the Mexican official insisted that it was not realistic
to expect the inclusion of cities or municipalities.
Food trouble: Market access for agriculture was the only area where Baker and Demarty achieved “no
clarity” doing last week’s talks, so there will be some tough discussions in the upcoming negotiation
round, the official said. Mexico wants better market access for products such as beef, sugar, bananas
and other fruits, while the Europeans push for tariff-free trade on dairy products. There are also around
50 geographical indications — mostly on cheeses — outstanding where case-by-case compromises need
to be found.

Patent battle: Both sides will also need to bridge remaining differences on intellectual property rights for
medicines and chemicals, the official said.

— A POLITICAL AGREEMENT BY LATE APRIL? It’s still unclear whether the upcoming talks will result in
sufficient progress so that Trade Commissioner Cecilia Malmström and Mexican Economy Minister
Ildefonso Guajardo can meet in late April to reach a political agreement on the trade deal. But at least
the timing would be right: Guajardo will be travelling with Mexican President Enrique Peña Nieto to
Hanover on April 22 to open the Hannover Messe, a German trade fair that has Mexico as this year’s
partner country. A flight from Hanover to Brussels is only about an hour

..........................................

(official information form the European Commission)

Find herein a report on the eighth round of negotiations to modernise the trade pillar of the EU-Mexico
Global Agreement, which took place in Mexico City between 12 and 21 February 2018.

Report on the 8th round of negotiations between the EU and Mexico for modernising the trade part of
the EU-Mexico Global Agreement

The 8th round for the modernisation of the trade part of the EU-Mexico Agreement took place on 12-21
February 2018 in Mexico City. It was preceded by a week of meetings in Brussels on 5- 9 February 2018.

Overall, there was important progress in the round. The Parties reached agreement on the text of the
following chapters (which will be forwarded to M-S) during this round:
Sectorial annexes on automotive and wines,

State owned enterprises,

Public procurement (main text),

Subsidies,

Domestic regulations (in the Services title),

Telecommunication (in the Services title),

Maritime transport (in the Services title),

Investment Dispute Settlement,

Dispute Settlement and

Anti-corruption.

This complements the list of the chapters closed earlier in the process, namely:

Trade in Goods (main text),

Technical Barriers to Trade,

Delivery services (in the Services title),

Good Regulatory Practises,

Transparency,

Energy and Raw Materials,

Trade and Sustainable Development,

Sanitary and Phytosanitary Matters and

Customs and Trade Facilitation.

These chapters will now be proof read and checked for consistency and coherence with other relevant
parts of the Agreement.

In other areas where it was not possible to finalise the work, substantial progress was achieved, as
follows:

Trade in goods

Regarding the text, the only open issue remaining is the sectorial annex on pharmaceuticals which
requires further work.
As regards the offers on market access for goods, the Parties continued to explore the possibilities to
improve further their respective offers taking into account their respective interests and sensitivities.

Rules of origin

The Parties discussed extensively the text of the Protocol on rules of origin, in particular its general
provisions and the verification process.

The EU and Mexico have consolidated further the annex on product specific rules of origin and agreed
on the specific rules for several products. Differences remain in some sectors, including cars, textile,
coffee, tobacco, machinery and pharmaceuticals.

Services

Several Services chapters were closed during this round. Four chapters are still object of discussions: (1)
General provisions, (2) Mutual Recognition Agreements, (3) Financial services and (4) Digital trade
(including the provision on data flows). The work on all these chapters is also well advanced.

On the market access side, the Parties explained further the content of their respective revised offers
and discussed possible improvements.

Investment protection

The Parties agreed the definition of investment and the standards of protection and worked with a view
to close the open issues in the chapter on financial services, in particular the provisions on capital
movements, the umbrella clause and the sunset clause still need to be agreed.

Public Procurement
The Parties agreed the main text containing the agreed disciplines and the underlying principles that
should be respected by their respective tendering processes, including granting national treatment to
established entities from the other parties.

The Parties continue to discuss the commitments to be taken on market access and more work is still
needed, notably to find a solution to the question of market access on the sub-federal level in Mexico.

Intellectual Property Rights

Work took place on the only left open issue regarding the regulatory data protection for
pharmaceuticals, which still requires further discussions.

Regarding the protection of geographical indications, the discussions progressed further. Some issues
still need to be solved in the text as well as well in the list of the protected geographical indications
under the Agreement.

Other open chapters

The EU and Mexico also discussed the reduced number of open issues which hamper the closure of the
following chapters:

Customs and Trade Facilitation: the provisions on cooperation and the institutional set up are pending,

Trade and Defence Instruments: the provision on the bilateral safeguard for outermost regions has not
been agreed,
Good Regulatory Practise and Horizontal and General Provisions: several provisions are subject to legal
review.

Further process:

The parties remain in contact and are exploring the possible dates for their next meeting.

---

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From Politico

MEXICO — TECHNICAL TALKS ON RULES OF ORIGIN, AGRICULTURE: Three weeks after EU-Mexico trade
talks ran into an impasse over rules of origin for Mexican car exports, both sides meet again today in
Brussels to resume negotiations on upgrading their trade deal. “It’s not a full negotiation round but talks
at technical level on the outstanding issues,” a Commission official told Morning Trade. Those
outstanding issues mainly are rules of origin and market access for agriculture products, the official
added. Trade Commissioner Malmström, quizzed by Morning Trade at an event on Monday, said the
technical talks were “planned for this week and next week.”

On rules of origin, the Mexicans are pushing for a more flexible transition period on cars, which would
allow their automotive exporters to use more foreign content in the first years after the entry into force
of the upgraded agreement. The EU has so far insisted that carmakers must not be allowed to use more
than 45 percent foreign content (for more background, see Morning Trade from last week). There are
also rules of origin discussions on a number of other products, such as textiles and — who would have
thought it — tobacco and coffee.

On agriculture, it’s all about dairy for the Europeans: Brussels wants to liberalize cheese exports to the
North American country, while the Mexicans prefer a tariff-rate quota that would restrict the yearly
amount of Roquefort, Mozzarella or Brie that can be shipped tariff-free over the Atlantic. The EU is also
gunning for free market access for milk powder, butter and baby formulas.
Mexico, in return, is pushing for better market access for beef, bananas and sugar. Beef, evidently, is a
highly sensitive issue for the Europeans. On bananas, both sides may settle on a reduced import duty of
€75 per ton, which the EU already agreed to in its deal with Peru, Ecuador and Colombia. On, sugar
there will be most likely a tariff-rate quota — the main question is whether the tariffs inside that quota
can be reduced to zero.

On geographical indications, both sides already agreed on about 290 protected food names, but a few
dozen remain difficult because they are also produced by Mexican farmers: That’s mainly cheeses such
as Feta, Manchego, Gruyère and Roquefort as well as deli hams like Mortadella Bologna and
Schwarzwälder Schinken.

Both sides are “very close” to reaching an agreement on investment protection and are also advancing
on public procurement, a Mexican official said. “Mexico is for the first time willing to engage in a process
to include public procurement at the sub-federal level,” the official added. However, much of the
opening of procurement contracts in Mexico’s 32 federal states will likely be on a voluntary scheme.

If the technical talks make progress in the coming two weeks, Mexican Economy Minister Ildefonso
Guajardo will fly over to Brussels later this month to strike a political agreement. Nevertheless, it’s
unlikely that there will be enough time left to fully finalize trade talks, do the legal review, translation
and ratify it before the European Parliament holds elections in spring next year. Any deal potentially
struck in the following weeks will therefore probably have to wait until late 2019 or 2020 before it can
enter into force.

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