UK, Mexico extend zero tariffs until free trade talks conclude

The UK and Mexico agreed to extend a commitment to reduced or zero tariffs until they conclude talks for a free trade agreement, providing certainty to businesses trading between the two nations.

The arrangement extends so-called rules of origin and will take effect on Jan. 1, the UK’s Department of Business and Trade said Friday in a statement. That will ensure provisions negotiated when Britain rolled over its European Union-era deal with Mexico don’t expire as previously scheduled. 

The UK is trying to expand trading relationships outside the European Union to demonstrate it can reap benefits from leaving the bloc. Last month, Britain and South Korea agreed to extend a low- and zero-tariff agreement for two years, while Prime Minister Rishi Sunak this week began efforts to enshrine in domestic law membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Britain agreed to join the trade alliance, which includes Mexico, Japan and Canada, earlier this year.

The Mexico deal will stay in place until a new free trade agreement that’s still being negotiated enters force. The two nations enjoy £6.2 billion ($7.6 billion) of bilateral trade in goods and services and started formal talks last year. The next round of discussions is due to take place in 2024.

The government said British auto and food manufacturers in particular will benefit from the rollover of low and zero tariffs. The automotive industry accounts for almost £300 million, or 20%, of goods exported to Mexico from the UK, it said. The food and drink industry’s exports to the Latin American nation totaled some £175 million.

“Ensuring UK goods avoid higher tariffs is essential for British businesses to stay competitive in this huge and dynamic market of over 130 million people,” Industry and Economic Security Minister Nusrat Ghani said in the statement. “This extension will provide UK businesses exporting to Mexico with certainty as they plan for next year and beyond.”