POST-BREXIT TRADE STRATEGY IN THE UK: MEXICO, A series on the consequences of Brexit and international trade – International law

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Five years ago, the United Kingdom (“UK”) decided by referendum to leave the European Union (“EU”). Negotiations have begun for the UK to leave the bloc in an environment rendered by uncertainty for some and optimism for others. The truth is that no one knew the real consequences the decision would have on how this new trading scenario would affect the UK’s dominant position. The transition period for the UK to leave the EU ended on December 31, 2020, at a time when the Covid-19 pandemic was hitting the British island and the effects of Brexit could not be accurately measured. . However, the trade and cooperation agreement
(“TCA”) between the UK and the EU entered into force, showing the need for the UK to develop new trade relations and new trading partners, as it could no longer benefit from the agreements concluded by the Member States. This article is the continuation of our UK-Brexit series and this time we analyze trade relations between Mexico and the United Kingdom.

As you may have seen in previous articles in this series, the UK is negotiating FTAs ​​with various allies. These FTAs ​​will increase the UK’s trade potential and help mitigate the damage to its national economy during this transition period. Today, the UK’s trade strategy appears to be focused on negotiating bilateral trade deals with the Asia-Pacific region, not to mention other strategic partners in Central America. On December 15, 2020, the Mexican and British governments signed the UK-Mexico Trade Continuity Agreement.1 The purpose of this continuity agreement is to avoid the imposition of WTO most-favoured-nation tariffs as a default measure that would otherwise have become applicable after December 31.st, 2020, when the EU-Mexico Comprehensive Agreement ceased to apply to the UK. Recently, the agreement was approved by the Mexican Senate and was published on June 1, 2021 in the Mexican Official Gazette (Official Journal of the Federation), entering into force on the same day. This will particularly benefit the textile, automotive, pharmaceutical, agriculture, food and drink and other manufacturing industries, sectors in which the UK has a volume of trade. raised with Mexico.

The Continuity Agreement includes provisions on:

  • trade in goods – including provisions on preferential tariffs, tariff quotas, rules of origin and sanitary and phytosanitary measures

  • trade in services

  • intellectual property, including geographical indications

  • public markets

UK importers should be aware that they can now benefit from preferential tariff rates for two-way trade in goods between the UK and Mexico, provided they meet country of origin requirements. Additionally, Mexican importers can also claim preferential treatment, provided the goods are considered originating and are shipped directly from the UK to Mexico. Under certain conditions, transhipment through the territory of third countries may be accepted. With respect to country of origin determinations, unless you are authorized to provide an origin declaration, you will need to complete a certificate of origin to claim preferential treatment. The UK continues to use the EUR1 format for movement certificates with trading partners that have mutual FTAs ​​with the EU, including Mexico. These movement certificates are identical to those previously used, but the place of origin on the certificate is now marked as the United Kingdom instead of the European Union.

Mexican importers can also claim preferential treatment by attaching to the Mexican Entry Summary Form (pediment) an EUR.1 certificate which must bear the corresponding sequence number and be stamped/sealed by the UK customs authorities. In some cases, the MX importer may instead include an affidavit on the invoice issued by the UK exporter regarding the original qualification of the goods. The customs authority of MX can reject the certificate or the invoice when it considers that the customs documents are not in conformity. However, MX importers and their customs brokers may file a request for a ruling regarding the completeness and accuracy of the certificate. Among other considerations, depending on the value of the goods, non-commercial imports may receive preferential treatment without the need to attach a certificate or invoice to the affidavit.

MX importers are required to complete, submit and maintain relevant customs records and proofs of origin in accordance with MX customs regulations. In the meantime, UK exporters must retain records proving the origin of the goods for a period of 3 years from the date of issue of the certificate or affidavit invoice.

MX Customs may implement audits to confirm the authenticity, validity, accuracy, origin, and compliance of the certificate or invoice with the affidavit, and may deny preferential treatment where the information or documentation are not provided as requested or do not conform.

From day one, the TCA has allowed Mexico-based businesses to continue exporting their products at favorable tariffs, but while Mexico won immediate tariff concessions, UK exporters had to wait for all national regulations to be agreed. to Mexico for the same treatment. Due to these delays and the alleged unfair treatment by many exporters, Mexico implemented a tariff rebate program in early June 2021. This means that any company that has paid customs duties on goods that would benefit from ‘preferential treatment under the agreement will be able to get a refund. . If you have paid these additional fares, you should consult your legal advisor regarding the process of obtaining these refunds.

While officials on both sides of the Atlantic Ocean were still discussing the implementation of this agreement, the EU signed a more generous and comprehensive agreement between its 27 member states and Mexico. This is important because the UK trade deal, which was meant to replicate the existing EU-Mexico deal, will now face fierce competition from EU countries, which have negotiated better conditions to sell their wares and other products in Mexico. This has caused some concern within the UK trading community as they are beginning to see how EU-based competitors are likely to gain a significant competitive advantage in the Mexican market. It is well known that for many UK companies Mexico is used as a gateway to the larger LATAM market. A significant reduction in their presence in Mexico may affect their potential expansion across Central and South America, which may affect their operations worldwide.

In response to this EU-Mexico deal, the UK and Mexico have committed to start negotiations on a new, ambitious and modern UK-Mexico trade agreement, which should be concluded within three years. . Both parties agreed that a future agreement should be as liberal as the modernized EU-Mexico agreement recently concluded, but with the ambition to go further in areas of mutual interest. We will see how relations between the two countries develop, but what is clear is that British officials still have work to do when it comes to their relationship with Mexico.

According to the Mexican Minister of Revenue and Finance
(Secretaria de Hacienda y Credito Public), trade between Mexico and the UK was less than 1%. However, according to the European Union Delegation to Mexico, the EU is Mexico’s third largest trading partner. Therefore, if Brexit affects the EU, Mexico may be affected accordingly.

Some have seen the agreement reached on June 1, 2021 as an opportunity for Mexico to continue its trade relationship with the United Kingdom, as well as an opportunity to expand its activities, its diversity and its dependence on the American market. Only time will tell.

Moreover, this new Mexican trade agreement marks the beginning of a new era for transatlantic trade. Just recently, we saw British Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau shake hands. Soon we will see the trade agreement between Canada and the United Kingdom… Does this mean anything? Two of the USMCA countries are already here… Is the UK-US trade deal closer? ? …. Keep an eye on this series and we’ll provide you with the latest update.

Footnote

1. https://www.gov.uk/government/news/joint-statement-by-the-uk-and-mexico.

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The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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