Brexit — Mexico and United Kingdom´s Commercial Relationship
Edmundo Elías-Fernández
On December 31, 2020, concluded the transition period on the withdrawal of the United Kingdom of Great Britain (“United Kingdom”) from the European Union, in accordance with article 126 of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.
Through the transition period, the European Union laws applied to and in the United Kingdom. This means that, during the transition period, the Free Trade Agreement between Mexico, and the European Union (“Mexico-EU FTA”), applied to the United Kingdom.
How does the exit of the United Kingdom from the European Union affect the commercial relationship between Mexico, the United Kingdom, and the European Union?
Derived from the United Kingdom’s exit from the European Union and the expiration of the transition period, the United Kingdom will no longer have the benefits granted in the Free Trade Agreement with Mexico.
This means that companies located in the United Kingdom will no longer be entitled to issue an invoice declaration or a certificate of origin to Mexican importers, stating that goods qualify as originating from the European Union since the United Kingdom is no longer a party to the Mexico-EU FTA.
Now that the transition period elapsed, what will happen with Mexico and the United Kingdom’s commercial relationship?
Pending negotiation of a complete free trade agreement, Mexico and the United Kingdom have signed the Trade Continuity Agreement Between the United Mexican States and the United Kingdom of Great Britain and Northern Ireland (“Mexico–UK Continuity Agreement”), which establishes that the provisions of the Free Trade Agreement between Mexico and the European Union related to trade matters, including those relating to the origin of goods produced in the United Kingdom shall be applied between Mexico and the United Kingdom as if the countries had executed a bilateral agreement, concerning goods originating from the United Kingdom.
Has the Mexico–UK Continuity Agreement entered into force in Mexico?
Yes, on April 9, 2021, the President of the United Mexican States, Andrés Manuel López Obrador, published in the Federal Official Gazette, a Decree through which the Agreement regarding Article 12 of the Trade Continuity Agreement between the United Mexican States and the United Kingdom of Great Britain and Northern Ireland it is approved, executed by means of an exchange of letters dated in Mexico City on December 29 of two thousand and twenty.
Therefore, the Mexico–UK Continuity Agreement has entered into force in México, however, there was a 3 (three) month period left with no regulation (vacation legis) until the Mexico–UK Continuity Agreement became effective.
Will importers be able to claim preferential duty treatment under the Mexico–UK Continuity Agreement with respect to imported goods before the entry into force of the Mexico–UK Agreement?
Yes, importers from a party country of the Mexico-UK Continuity Agreement, who imported originating goods from the United Kingdom, from January 1, 2021, until the entry into force of the Mexico-UK Continuity Agreement, may retroactively claim preferential duty treatment regarding such originating goods.
The above implies that, importers into the parties to the Mexico–UK Continuity Agreement, may request, as applicable, the offset or refund of import duties paid without claiming preferential duty treatment, upon the importation of the goods into the country (i.e. Mexico).
Do the Mexico–UK Agreement should be considered as the final agreement that will regulate the commercial relationship between Mexico and the United Kingdom?
No, the Mexico–UK Continuity Agreement is a temporary agreement. In accordance with Article 9 of Mexico–UK Continuity Agreement, Mexico and the United Kingdom agreed to initiate the corresponding negotiations for a free trade agreement.
Also, Mexico and the United Kingdom have agreed that they will endeavor to conclude the negotiations for the signature of a free trade agreement within three (3) years after the entry into force of the Mexico–UK Continuity Agreement (April 23, 2021).
Do not hesitate to contact us in case of any further questions.
Edmundo Elías-Fernández
eelias@rrs.com.mx
RAMOS, RIPOLL & SCHUSTER
Daniel Torres-Güémez
dtorres@rrs.com.mx
RAMOS, RIPOLL & SCHUSTER
Daniel Ascencio-Zamarripa
dascencio@rrs.com.mx
RAMOS, RIPOLL & SCHUSTER
