The United Kingdom has successfully negotiated a crucial extension with Mexico, preventing potential tariff increases for British businesses. Set to start on 1st January 2024, this arrangement acts as a bridge until the new UK-Mexico Free Trade Agreement takes effect.
This decision is a boon for British manufacturers, ensuring access to reduced or zero tariffs, crucial for sectors like automotive and food and drink. The automotive sector alone accounts for almost £300 million of the UK’s exports to Mexico, a significant portion of the total export value.
Mexico stands as the world’s 14th-largest economy and Latin America’s second-largest, with a growing appetite for imports expected to rise by 42% by 2035. With a consumer base larger than France and Italy combined, Mexico’s market presents a substantial opportunity for UK businesses.
Nusrat Ghani, Minister for Industry and Economic Security, highlighted the importance of this extension for UK businesses to remain competitive in Mexico’s vast market.
This extension also cleverly navigates supply chain complexities, particularly concerning the rules of origin. It allows the use of EU inputs in UK products for a temporary period until a comprehensive new trade agreement is established. Negotiations for this new deal commenced in May 2022.
Industry leaders like Mike Hawes of the Society of Motor Manufacturers and Traders and Balwinder Dhoot from the Food and Drink Federation have praised this move. They underscore its significance in avoiding duty liabilities and sustaining smooth trade relations. The upcoming deal promises to refresh the existing trade framework, potentially enhancing trade in various sectors, including automotive technologies.
As International Trade Week concludes, this announcement is a highlight, reflecting the UK’s dedication to fostering robust global trade partnerships and supporting its industries in a dynamic world economy.
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