After Mercosur, Mexico is next. Already in May 2026, the EU and Mexico signed the modernised Global Agreement (MGA) and an accompanying Interim Trade Agreement (ITA). Entry into force is now imminent. We examine the consequences for trade between Mexico and the EU.
The European Parliament gave its consent to both instruments in July 2026, and with the Council Decision of 14 July 2026, the final formal step on the European side for the ITA has been completed. Mexico is expected to conclude its internal ratification procedure shortly as well. The Interim Agreement may therefore potentially enter into force still this year.
Unlike Mercosur (see our blog posts Milestone: EU-Mercosur Agreement und The EU-Mercosur Agreement as of May 1, 2026: Tariff Benefits and New Requirements for Businesses), where a free trade area is being created for the first time, Mexico builds on a foundation that has grown over two decades. A free trade area for goods has been in place since 2000, and one for services since 2011 — hence the reference to a modernised Global Agreement.
The original agreement had already eliminated tariffs on virtually all industrial goods. The focus of the modernisation therefore lies less on tariff reduction than on non-tariff barriers to trade, regulatory alignment, services, investment protection, sustainability and digital trade. This also explains why the remaining tariff reductions primarily concern the agricultural and food sector — where significant duties still apply under the existing framework.
The regulatory mechanics are similar to the Mercosur model: the ITA covers the trade component falling within the EU's exclusive competence and requires only the consent of the Council and the European Parliament. The more comprehensive MGA — encompassing political dialogue and cooperation — must additionally be ratified by all 27 national parliaments. Once the MGA enters into force, it supersedes the ITA.
Under the modernised agreement, virtually all trade in goods between the EU and Mexico will be tariff-free — according to EU figures, 99 per cent of goods, of which 98 per cent from the date of entry into force. In detail:
The agreement operates in both directions: more than 95 per cent of Mexican exports are to receive tariff-free access to the EU market across 27 countries. This affects in particular the automotive and automotive supply industries.
The economic foundation is already substantial: trade in goods between the EU and Mexico reached a volume of EUR 86.8 billion in 2025, making Mexico the EU's second-largest trading partner in Latin America; the EU is simultaneously the second-largest investor in Mexico and accounts for approximately 30 per cent of Mexico's stock of foreign direct investment.
As with the Mexico Agreement: the tariff preference applies only if the rules of origin are complied with. The modernised agreement follows the EU approach of more recent agreements and switches preferential origin management to self-certification by the registered exporter (Registered Exporter System, REX).
One of the most far-reaching innovations of the modernised agreement concerns investment protection. Previously, investment protection was left to bilateral investment protection agreements. The new free trade agreement, by contrast, liberalises and protects direct investments for the first time comprehensively through a dedicated chapter, which covers both service and non-service sectors and provides fundamental guarantees — non-discrimination, no expropriation without prompt and adequate compensation, and an obligation of fair and equitable treatment.
The core of the innovation lies in the dispute settlement mechanism. The modernised agreement fully implements the new EU approach and replaces the classic ISDS (Investor-to-State Dispute Settlement) with an Investment Court System — a permanent, international and fully independent court, consisting of a Tribunal of First Instance and an Appeal Tribunal. This brings to an end the previous model of ad hoc arbitral tribunals constituted for individual cases, in which each party could appoint its own arbitrators. Instead, a joint committee of EU and Mexican ministerial representatives appoints the nine members of the court — in equal shares from the EU, Mexico and third states. Investors thereby lose the ability to nominate arbitrators themselves — but in return gain a permanently constituted judicial body and, for the first time, a genuine right of appeal.
Mexico is not an unfamiliar market for many European companies — but the modernised agreement materially changes the legal and economic framework conditions. Those wishing to take advantage of the new opportunities should now assess whether their rules of origin compliance, distribution structures and investment safeguards are aligned with the new framework. The Spanish & LatAm Desk at ADVANT Beiten is available to assist you — on both the European and the Latin American side.
