COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 03 final 
Brussels, 08.02.1995 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
TOWARDS CLOSER RELATIONS BETWEEN 
THE EUROPEAN UNION AND MEXICO 
TOWARDS CLOSER RELATIONS BETWEEN 
THE EUROPEAN UNION AND MEXICO1 
Commission Communication to the Council and Parliament) 
In its conclusions of 24 and 25 June 1994 the Corfu European Council "reaffirms the 
importance it attaches to its relations with Latin American countries and their regional 
groupings. It expresses its satisfaction with the progress achieved in the areas of 
democracy and respect for human rights, peace and disarmament, economic reforms and 
regional integration. 
In this context, the European Council welcomes the accession of Mexico to the OECD 
and expresses its wish to strengthen its political and economic relations with this country. 
It also confirms the intention of the European Union to strengthen its relations with 
Mercosur. It invites the Council and the Commission to pursue these questions further." 
In its conclusions of 9 and 10 December 1994, the Essen European Council "urges the 
Council and the Commission (...) to put ideas on the future form of treaty relations with 
Mexico (...) into concrete form without delay." 
These conclusions had been preceded by a report drawn up by the Council (General 
Affairs) of 28 November which called on the Commission to put before the Council in the 
very near future, at the latest by end March 1995, a paper outlining the strategic options 
and including specific proposals and to this end to establish close links with the new 
Mexican government. 
In addition, in the "basic paper" on EU relations with the Latin American and Caribbean 
States adopted by the Council (General Affairs) on 31 October this year, the European 
Union expresses its readiness to start talks with a view to more far-reaching agreements, 
better adapted to our partners* economic potential and to the emergence of forms of 
regional integration. 
This Communication from the Commission to the Council and the European Parliament 
aims at meeting the requests made by the European Council and the Council of Ministers 
and covers the following: 
strategic aspects of EU-Mexico relations; 
Mexico's recent history and its current place on the international scene; 
a discussion of existing EU-Mexico relations; 
a Commission proposal for closer relations between the Union and Mexico. 
For the sake of simplicity this Communication refers to the "European Union". This reference is 
without prejudice to the Community's powers to adopt at a later date such legal instruments as may be 
required. 
1. STRATEGIC ASPECTS OF EU-MEXICO RELATIONS 
a) Increasingly complementary mutual interests. 
The Union's interests in closer links with Mexico are both political and economic. 
At a political level, the ELTs interest in principle in the consolidation of the current 
democratization process and our shared values and historic, political, economic and 
cultural links should be mentioned. 
From the economic standpoint, Mexico, thanks to the process of domestic and 
external liberalization pursued over the last few years and despite the recent 
financial crisis, is perceived as a highly promising market by European economic 
operators and an attractive destination for their investments. It is essential that the 
lack of a suitable contractual framework should not weaken the Union's economic 
position in Mexico at a time when the country, richly endowed with natural and 
human resources, seems poised to fulfil its promise. 
Mexico's interests in closer cooperation with the European Union are also of a 
political and economic nature. At political level, such cooperation would contribute 
to the successful outcome of the efforts undertaken by the Mexican government 
towards a comprehensive democratization of the country and greater closeness 
between the machinery of government and civil society. In addition, closer political 
cooperation would enable the country to improve the balance of its relations with 
the other signatories to NAFTA. 
At economic level, the Community is an attractive, relatively accessible market for 
Mexican products, and a good source of capital, modern technology and 
cooperation. What is more, greater involvement of European business in the 
Mexican economy would enable the latter to become more competitive. 
b) Mexico's role in EU-Latin American relations 
Relations between the European Union and Latin America as a whole have 
developed at three different levels: 
- regional level through the Rio Group, with which the Union has had formal 
political dialogue links since 1990; 
- sub-regional level with the countries of Central America, with which the Union 
has held regular "San José" meetings since 1984; 
- bilateral level, with various countries and groupings of countries (Andean Pact 
and Central American countries) with which the EC has signed "third generation" 
cooperation agreements. 
Mexico is a member of the Rio Group, participates in San José meetings as one of 
the three observer countries and its relations with the Community are governed by a 
framework cooperation agreement signed on 26 April 1991. 
The country is therefore well represented in all the bodies where political and 
economic dialogue between the Union and the Latin American countries takes 
place. It goes without saying that any EU strategy intended to strengthen the 
Union's relations with Mexico must not call into question its dialogue with the Rio 
Group and the San José countries. It should be considered rather as a means to 
push that dialogue further in such a way that the specificities are given due 
consideration in the Union's own interest. 
This means that the new strategy proposed by the European Union in relation to 
Mexico cannot be developed in a vacuum and, while taking the country's specificity 
into account, must form part of an overall Union strategy towards the Latin 
American countries and in particular the Rio Group. 
In this context the basic paper on relations between the EU and Latin America and 
the Caribbean countries adopted by the Council of Ministers at its meeting of 
31 October 1994 should be mentioned. In it the Union formally declared its 
readiness to open discussions with a view to concluding new, more ambitious 
agreements, better suited to the economic potential of our partners in the region. 
Similarly, the Council conclusions called for an increase in the volume of trade 
between Europe and the emerging economies of Latin America, in particular 
through the speedy implementation of tariff reductions and the elimination of trade 
barriers. 
c) Mexico as participant in multilateral organizations and member country of 
a large integrated regional grouping. 
Over the last ten years Mexico has become a contracting party to a number of 
multilateral bodies, notably the GATT and the OECD, and has played an active role 
in its regional context, mostly within APEC, the Asia-Pacific Economic Cooperation 
Forum, and the recently established Association of Caribbean States (AEC). 
In addition, the launch of NAFTA has increased the relative importance of the links 
between the EU and Mexico. From now on Mexico, already a sizable regional 
power, is to be looked upon as a founding member of one of the two largest 
markets in the world. This awareness must inform any discussion of future EU-
Mexico relations. 
As highlighted by the recent Summit of the Americas in Miami, NAFTA is likely to 
grow (negotiations with Chile should start in spring 1995) and should provide a 
model for the establishment of an 800-million strong free-trade area spanning 
Alaska and Cape Horn by 2005. 
These prospects should also be borne in mind when selecting the contractual 
framework for the Union's relations with Mexico. 
MEXICO'S RECENT HISTORY AND ITS CURRENT PLACE ON THE 
INTERNATIONAL SCENE 
a) Economic developments 
At the beginning of the 1980s Mexico was struggling with the legacy of decades of 
protectionism and a highly regulated economy. Serious macro-economic imbalances 
(budget deficits, soaring inflation, overvaluation of the peso, the flight of capital and 
rising foreign debt) were compounded by serious micro-economic distortions. 
The Mexican economy has undergone substantial changes. The key elements of the 
recovery programme were: 
- A sustained long-term budget reform policy. 
- A social pact between the government and the two sides of industry which came 
into effect in December 1987 and facilitated the implementation of macro-
economic stabilization policies. 
- A strict macro-economic policy which has enabled significant reductions in the 
rate of inflation. 
- A reduction in state control over the economy, in particular through a vast 
privatization programme (there were 1155 State-owned companies in 1982 
compared with 200 today). 
The opening up of the economy to the outside world, through the liberalization of 
external trade (see point (b) below) and foreign investment (new legislation 
introduced on 27 December 1993 considerably reinforced legal security in the field 
of investment, increased the number of areas in which foreign investors can hold 
100% of the share-capital and radically simplified the administrative procedures -
now any request submitted by a foreign investor is considered authorized if the 
competent authorities have not opposed it in within 45 days of its submission). 
This transformation of Mexico's economic landscape is reflected in the country's 
main economic indicators: 
GDP: average annual 
growth rate2 
GDP per capita2 
Inflation: annual variation2 
Current account balance as 
a percentage of GDP3 1982-87 
-0.1 
2 271 
83.6 
0.8 1988-89 
2.4 
2 200 
67.1 
-1.7 1990 
4.4 
2 256 
26.7 
-3.1 1991 
3.6 
2 291 
22.7 
-5.2 1992 
2.8 
2 307 
15.5 
-7.5 1993 
0.4 
2 262 
9.8 
-6.6 
Source: IBD (Interamencan Development Bank), Progreso Econômico y Social en America Latina, 
Informe 1994, Washington DC, October 1994. 
Source: Banco de Mexico. 
| Exchange rate in real 
terms,4 
External debt (USD billion)2 
Long term public debt 
(USD billion)2 
External debt servicing as a 
percentage of exports2 1982-87 
110 
86.1 
51.6' 
36.1 1988-89 
99 
96.9 
72.7 
29.05 1990 
119 
106.0 
77.5 
24.1 1991 
108 
115.3 
79.0 
21.4 t. ? 1 
102 
113.4 
72.3 
18.9 1993 
95 
118,9. 
74.3 
16.8 
These figures should not, however, be allowed to overshadow certain fundamental 
problems which must be resolved if Mexico is to contemplate the future with 
confidence. These are in the main: 
- poverty: despite the achievements of the "Solidaridad" programme, almost 20% 
of the population lives below the poverty line as defined by the World Bank. The 
new Mexican administration has chosen the fight against poverty as one of the 
fundamental objectives of its six-year term of office. 
- the average level of education, which is still relatively low. 
- numerous environmental problems which must be tackled by the present 
Government. 
- The growing current account and trade balance deficits, which could not be 
financed from foreign investments, often too ephemeral. 
- A currency kept artificially overvalued. 
These problems, compounded by uncertainty over the country's political climate and 
the outcome of the political and social conflict in Chiapas, precipitated the financial 
crisis Mexico has been contending^ with since December, characterized by a sharp 
devaluation of the peso and a steep rise in interest rates. 
The measures adopted by the Mexican government, helped by the international 
community, in response to the crisis highlight the progress made by the country 
since the early 80s in transforming and restructuring its economy. 
The government lost no time in adopting an emergency plan which draws together 
business and labour and aims at restoring macro-economic equilibria and hence 
foreign investors' confidence. 
In addition, the US, Canada, the Bank for International Settlements, the OECD, the 
IMF, the World Bank and Japan have all come to Mexico's rescue by shoring up 
investors' confidence with reassuring statements and, above all, by providing very 
substantial credits. Some Member States of the Union have announced their 
intention of taking part in this effort. 
1980 = 100. 
The European Commission for its part issued a statement on 11 January welcoming 
the efforts made by the international community and Mexico and announcing its 
forthcoming proposals for the strengthening of political, economic and trade links 
between the Union and Mexico. 
b) Mexico's progress in the international economic arena 
Over the last ten years Mexico, through its accession to various major international 
organizations, has progressively established its credibility as a serious partner on the 
world economic scene: contracting party to the GATT in 1986, founder member of 
the EBRD in 1990 and foil member of the OECD in 1994. 
Apart from participating in international and multilateral organizations, Mexico has 
considerably enhanced its integration in the regional economy by concluding a series 
of free trade agreements with most of its neighbours. 
In June 1994, the Group of 3 (Mexico, Venezuela and Colombia) signed a free trade 
agreement which will come into force in January 1995 and will be implemented over 
a 10 year period. The Group of 3 accounts for 35% of total GDP in Latin America 
and the Caribbean. 
In January 1991 in Tuxtla Gutierrez the Presidents of the Central American 
countries and Mexico issued a statement laying down the basis for an Agreement on 
Economic Complementarity, which will gradually lead to the establishment of a free 
trade area. In its wake, a free trade agreement was signed with Costa Rica in April 
1994. It will enter into force on 1 January 1995 and will be implemented 
progressively over a 10-year period. Negotiations along the same lines are under 
way with El Salvador, Guatemala and Honduras, as well as Nicaragua. 
Chile and Mexico signed an economic complementarity agreement in 1991. 
A free trade agreement was concluded between Mexico and Bolivia on 
10 September 1994. 
Mexico is an active member of APEC and is playing a significant role in the launch 
and consolidation of the AEC. 
Lastly, on 1 January 1994 the North American Free Trade Agreement (NAFTA) 
entered into force. This agreement, concluded between Mexico, the United States 
and Canada, accounts for around 20% of world trade. 
c) NAFTA 
NAFTA divides products into four groups according to the speed of tariff 
reductions (products in the first group have been zero-rated since 1 January 1994 
while those in the fourth group will not achieve this status until 1 January 2008). 
NAFTA is unusual in that it involves asymmetric dismantling of duties to reflect the 
difference in the level of economic development between Mexico and its northern 
neighbours: for example, on 1 January 1994 Mexico abolished import duties on 
43% and 41% of its imports from the United States and Canada respectively while 
the US and Canada abolished duties on 84% and 79% of their imports from Mexico. 
NAFTA also provides for the abolition of non-tariff trade barriers. 
NAFTA includes safeguard clauses valid for the 15-year transitional period which 
allow the parties to suspend the tariff reduction process or even re-introduce pre-
NAFTA duties if imports from the other two members constitute a substantial threat 
to a domestic industry, though compensation would have to be offered on other 
products. 
Parties also have the right to refuse to import products which do not comply with 
their environmental standards, but at the same time measures have been introduced 
to align upwards the environmental standards of the three members. On similar 
lines, a clause exists to prevent "social dumping". 
As for economic dumping, NAFTA panels will have the task of seeking a consensus. 
Any proposal by a member to modify its anti-dumping legislation will likewise be 
subject to advance scrutiny by a NAFTA panel. 
The provisions relating to public procurement provide for the progressive abolition 
of all restrictions on competition from other NAFTA members over a 10 year 
period. Certain product areas, such as military equipment and basic 
communications, are not covered by the these provisions. 
Beyond what is specifically provided for by the agreement, NAFTA will also have 
an indirect influence on Mexican legislative activity in a number of areas. For 
example, it is likely that standards systems will be aligned. 
d) The political situation 
Over the last few months a number of major events have left their mark on Mexican 
political life and have called into question principles which had hitherto seemed 
immutable. The social and political problems facing the country are many and far 
from simple. 
The new Mexican government's key objectives are to promote genuine participation 
by certain population groups and classes in the country's development, to 
consolidate the reforms introduced to ensure pluralism and transparency in the 
political life, and to undertake a comprehensive reform of the judiciary. 
In January the new Mexican administration took its first steps in this direction: since 
15 January the Mexican interior minister himself sits on the National Conciliation 
Committee, whose task is to examine possible solutions to the conflict in Chiapas. 
Similarly, on 17 January a pact known as "Agreement for Democracy" which sets 
out a negotiating base for the launching of a far-reaching reform of the electoral 
system was signed by the ruling party (PRT) and the three main opposition parties: 
the Labour Party (Partido Trabajador), the Democratic Revolution Party (Partido de 
la Revolucio Democratica - PRD) and the National Action Party (Partido Action 
National - PAN). 
UL RELATIONS BETWEEN THE EUROPEAN UNION AND MEXICO: 
STATE OF PLAY 
Economic relations between the European Community and Mexico have become 
much closer since the recovery of the Mexican economy and as its liberalization has 
progressed. 
a) trade flows and investments 
Trade statistics for the 15 Member States of the Union are shown in the table 
below (in million of Ecu and as a percentage of the total) 
[ 1980 1985 1990 1993 | 
EC imports from: 
Mexico 
Latin America 
% share0 2 054 
18 105 
11.3 5 275 
32 226 
16.4 3012 
27 063 
11.1 2 421 I 
23 386 
10.4 I 
EC exports to: 
Mexico 
Latin America 
% share 2 671 
14 738 
18.1 3 091 
16 833 
18.4 4 250 
16 946 
25.1 6 159 
25 412 
24.2 
Balance of trade and export/import ratio 
EC/Mexico 
trade balance of 617 
—. 
% exports/imports -2 184 1238 3 738 
130 58.6 141.1 254.4 
Source: Eurostat, Comext-Databank 
% share refers to EC/Mexico (imports/exports) compared with EC/Latin America imports/exports. 
Exports/imports refers to EC exports to Mexico compared with EC imports from Mexico. 
Aggregate levels of direct foreign investment from the European Commumty, the 
United States and Japan are as follows (in USD billion and as a percentage): 
Year Direct foreign 
investment US/Canada EC Japan 
USD billion 
1990 
1991 
1992 
1993 30.31 
33.87 
37.47 
42.40 19.50 
21.96 
23.70 
27.30 6.18 
7.03 
7.78 
8.38 1.45 
1.52 
1.61 
1.69 
Percentages 
1990 
1991 
1992 
1993 100 
100 
100 
100 64.3 
64.8 
63.3 
64.4 20.4 
20.8 
20.8 
19.8 4.8 
4.5 
4.3 
4.0 
Direct foreign investment flows have changed (in percentage) over the last few 
years as shown below: 
Annual flows (as a percentage) 
Year 
1990 
1991 
1992 
1993 US/Canada 
63.4 
69.1 
48.3 
73.1 EC 
25.0 
23.9 
20.6 
12.2 Japan 
3.3 
2.0 
2.5 
1.4 
The following points should be considered in conjunction with these statistics: 
- Exports from the Community have doubled since 1985. Thus in 1993 Mexico 
accounted for 24% of EU exports to Latin America compared with 18% in 1985. 
Around 90% of the exports consist of manufactured goods, with machinery and 
transport equipment accounting for over half. 
- Mexican exports to the EC, however, have made little headway at around 13% 
of total exports. Their value in ECU indeed fell by 20% between 1992 and 1993. 
Consequently, Mexico's share in total exports from Latin America dropped from 
16% in 1985 to 10% in 1993. Note that manufactured products account for 
around 50% of the country's exports to the Community. 
- The Community balance of trade with Mexico has therefore moved from a 
ECU 2 184 million deficit in 1985 to a surplus of ECU 3 738 million in 1993. 
Source: V informe de Gobierno (1994), & Direcciôn General de Inversiones Extranjeras, SECOFI. 
10 
- Mexico is the only member of the OECD to benefit from the Community GSP. 
The proposal adopted by the Council last December will enable Mexico to 
continue to benefit from this system. 
- European investments in Mexico are largely directed towards the privatization 
programme launched by the Salinas administration. 
- 47% of European investment in Mexico is in manufacturing, 15% in transport 
and communications and 12% in social and private services. 
- Note that the flow of European investments to Mexico has somewhat contracted 
over the last few years. Conversely, investments from the US and Canada have 
increased, especially in 1993. In terms of aggregate amounts, the EC accounts 
for 20% of the total and the US and Canada together account for 64%. 
Viewed against their general background, current and prospective economic 
relations between the Community and Mexico may be summed up as follows: 
- Since the end of the 1980s, Mexico has been engaged on a comprehensive 
transformation of its economy. 
- As a result, economic relations between Mexico and the EC have intensified, 
providing a sound indication of the potential for complementarity between the 
two parties. However, there is still a very obvious imbalance of trade flows, 
which suggests substantial scope for further development with a view to 
MrebalancingM trade upwards. 
- Mexican membership of NAFTA, however, could affect the level of our trade 
relations since in the medium term it is more likely to divert Mexican trade with 
the EC than increase it (especially in sectors such as textiles, clothing and 
telecommunications). 
Furthermore, the very stringent rules of origin which are now applicable to 
petrochemical and energy products will certainly have a negative effect on European 
investment in these sectors. 
- In brief, the existence of NAFTA risks hampering or even eroding economic 
relations with Mexico in the medium term, unless a new contractual framework 
governing EU/Mexico relations is rapidly established. 
- Going beyond this direct effect on bilateral relations, the existence of NAFTA, 
without an appropriate contractual framework governing EC-Mexico relations, 
could engender a reduction in relative terms of European influence within the 
various multilateral economic organizations. It should also be borne in mind that, 
in the medium term, NAFTA will very probably open its doors to other major 
Latin American economies. 
9 At this stage it would be premature to assert that this trend is due to European investors being replaced 
by other investors. 
11 
Note, too; that in the foreseeable future around 70% of Mexican imports will be 
from countries or regions with which Mexico has concluded free trade 
agreements. 
b) Cooperation between the EC and Mexico 
Relations between the EC and Mexico are governed by the framework cooperation 
agreement of 26 April 1991. 
In the last few years the amounts committed by the Community to finance 
cooperation with Mexico have grown consistently: 
1990 ECU 6 million 
1991 ECU 11 million 
1992 ECU 13 million 
1993 ECU 17 million 
1994 ECU 20 million (approx.) 
So far the Community has not carried out traditional cooperation projects in Mexico 
(such as rural development and infrastructure). This can be explained by the 
relatively high level of Mexico's GDP per head of population and by the country's 
choice to base its relationship with Europe on partnership, capitalizing on its 
economic and technological achievements. 
This choice is borne out by the dynamism and quality of economic cooperation with 
Mexico, which point at the country's determination and the interest it arouses in 
Europe. 
In this context a few initiatives may be mentioned as a good example of the way 
Mexico and the Community have succeeded in developing genuine cooperation 
based on mutual interest and cofinancing: Mexico is the chief beneficiary of the EC 
Investment Partners Programme and one of the Community's main scientific and 
technical cooperation partners; a multiannual (1995-1998) programme of meetings 
between Mexican and European businessmen is under way: some 2 300 European 
and 2 150 Mexican businesses are expected to take part in it. 
c) Political dialogue 
Reflecting a real need, the meetings between senior Mexican and EU officials have 
increased in number over the last few years. This dialogue, however, has never been 
given an official framework. 
As part of the preliminary work for the Essen European Council, the Council of 
Ministers meeting in Brussels on 28 and 29 November this year stressed the need to 
intensify relations with Mexico at both political and economic level, and to institute 
consultation machinery in the very near future. 
12 
The dialogue, which initially focused essentially on the bilateral aspects of 
EU/Mexico relations, is expected to progress beyond these limits. The synergism 
between the interests and perceptions of the two sides could work in many fields 
and no doubt a large number of multilateral questions could be addressed through 
enhanced consultation and result, in particular, in the two parties adopting 
coordinated positions in certain multilateral organizations. 
IV. TOWARDS CLOSER RELATIONS BETWEEN THE UNION AND 
MEXICO 
The modernization and liberalization of the Mexican economy are well under way 
and it seems likely that closer relations between the Community and Mexico would 
better enable the country to overcome some of the remaining obstacles and bring to 
fruition its efforts to establish itself in the international economic arena, going 
beyond the regional level to become a world-class economic and trade partner. 
European business has had a role to play right from the outset and this presence -
both trade interests and investments - has helped in preparing the Mexican industry 
to compete on world markets. It has also helped Europe to secure advantageous 
economic positions. 
Despite the recent financial difficulties, Mexico is beginning to reap the rewards of 
its brave economic reform programme. If this continues, then in view of the 
country's membership of NAFTA a sizeable consumer market with a high growth 
potential is likely to take shape. 
If the EU fails to take appropriate steps, its relations with Mexico run the risk of 
being eroded by the existence of NAFTA, particularly if other Latin American 
countries join up. The available figures on direct investment trends show that the 
risk of European operators being marginalized is a very real one. 
Also, as a result of the Uruguay Round, Mexico's bound tariffs are much higher than 
those actually applied. Currently Mexico's customs tariffs average 20%, whereas 
the bound tariffs stand at 35% and reach 50% for certain products. 
The present agreement, while important in promoting closer relations between the 
EU and Mexico, offers no means of facing the new challenges. The Commission, in 
accordance with the guidelines set by the various Council meetings, has approached 
the Mexican authorities to discuss the new framework for Mexico-EU relations. 
V. OPERATIONAL CONCLUSIONS 
The Commission feels that only an agreement combining economic partnership and 
political consultation would meet the Union's and Mexico's mutual interests in full. 
Such an agreement would aim at strengthening EC-Mexico cooperation based on a 
balanced and mutually advantageous partnership spanning economic, political and 
trade aspects. 
13 
As far as trade is concerned, a form of liberalization should be envisaged, ihc acLual 
scope and practical dctail3 of which should be determined by the negotiating 
mandate following discussion in the various Council bodies. At any rate, the 
Commission will ensure that its proposals are fully compatible with the Community's 
international obligations, including those derived from WTO membership. 
Enhanced cooperation, to include political issues, would also be sought. 
In accordance with the basic paper on relations between the EU and Latin America 
and the Caribbean countries adopted hy the Conncil at its meeting of 
SI October last year, in which the Union affirmed its readiness to open discussions 
with a view 10 concluding new, more ambitious agreements, better suited to the 
economic potential of our partners in the region, the agreement would cover three 
areas: political issues, economic issues and cooperation. 
a) Political issues 
It is in the EUs interest to strengthen dialogue with Mexico. The mechanism 
chosen for political consultation should take into account the fact that Mexico, 
within NAFTA, is the partner of countries 3uch as the United States and Canada, 
with which the EU ho3 agreed formal political dialogue procedures. However, the 
special relation between the EU and those two countries in the field of security 
should not be overlooked. 
Political dialogue would be based on respect for human rights, democracy, good 
governance and the rule of law, which is one of the basic tenets of relations between 
the two parties. 
Consultation would take the form of meetings at presidential, ministerial and senior 
official level between Mexico and the various EU insunitions. including the 
Commission. At presidential level, meetings between the Mexican President, the 
President of the European Council and the Commission President could take place 
every two years. For the olhci levels, die frequency would be dictated by die 
requirements iuindy agiccd by the two parties. At any rate, efforts would be made 
to piocccd on die basis of pre-arranged schedules detailing the topics of mutual 
iuLeiest to be discussed. 
A solemn declaration signed by the two parties at the highest level would specify the 
acrualrules. . 
In view of the current Mexican administration's stated intention to work towards 
political openness and transparency, the EU would be particularly anxious to 
promote exchanges between the various political entities of the two parties, for 
instance by arranging regular contacts between the European and the Mexican 
Parliaments. 
14 
b) Economic issues 
In time, and as far as economic and trade relations are concerned, only an agreement 
entailing the progressive and reciprocal liberalization of trade as a whole, bearing in 
mind the sensitivity of certain products and in line with relevant WTO rules, would 
enable trade flows to achieve optimum levels in both directions. 
In this context, the Commission will see to it that its proposals reconcile the 
requirements of the CAP with the Community's international committments, 
including those undertaken within the WTO. 
Even before the beginning of negotiations, a specific protocol aimed at controlling 
fraud and providing mutual administrative assistance in customs matters and origin 
rules would be concluded. 
Pending the outcome of the negotiations, the two parties would maintain the actual 
current conditions for access to their respective markets. 
As recommended in the basic paper on EU-Latin America relations adopted by the 
Council at its meeting of 31 October last year, there would also be provisions for 
cooperation and dialogue on trade issues and the liberalization of movements of 
services and capital. In addition to the reciprocal dismantling of tariffs particular 
importance would be attached to the gradual two-way liberalization of investment 
conditions and the regulatory measures concerning products and services. 
Such an approach is justified inter alia in the light of the following considerations: 
- Building on its experience within NAFTA, Mexico should be able to cope with 
the economic implications of liberalizing its trade with the EU. 
- The prospect of a contractual framework would act as a powerful incentive on 
European productive investments in Mexico, and this would go along way 
towards improving the country's financial situation. 
- Without a new, more advantageous contractual framework for trade, Mexico has 
considerable scope for protecting its market while increasing its customs tariffs 
within GATT limits. 
- Trade liberalization with Mexico would enable Mexico and the EU to boost 
bilateral trade and make the most of the mutual advantages brought about by 
NAFTA membership. 
- For agricultural products, the advantages of liberalization would be less obvious 
(exports are expected to grow by 14%-15% over the next ten years). 
- Liberalization would be perceived as a sign of strength and increased stability by 
European investors, who would view it as a guarantee for their investments in 
Mexico and a means to diversify them. 
15 
The mo3t profitable sectors are expected to be poWei generation, public 
procurement and financial services. 
- For the EU, trade liberalization negotiations with Mexico should be helped by the 
arrival of the new Mexican, administration (strongly in favour office trade) and 
the country's recent NAFTA experience. Generally speaking, the negotiations 
should pose no intractable problem since Mexico's economy enjoys excellent 
growth prospects, its export structure if. mainly aimed at the US and its sectoral 
specialization is complementary to that of the Union. 
- In addition, the significance of closer political ties, advocated by both parties, 
would be reduced if they were not accompanied by an economic and trade 
partnership to march. 
c) CuupenUiun 
We know from experience that Mexico is seeking advanced, mutually beneficial 
cooperation that is likely to increase its economy's compétitive edge and 
international p03turc. Thu3, alongside more ambitious programmes Lo piuinole 
contacts between firms from the two side3, administrative cooperation (particularly 
in the field of competition) would be developed, with a view to facilitating trade 
between the two parties. In this context, particular efforts should be made in the 
fields of environmental cooperation (projects to encourage the transfer of European 
technology), scientific and technical cooperation, education and training. 
The new agreement, unlike the existing one, would give Mexico the opportunity to 
take part in certain European cooperation projects and programmes focusing on: 
- industry, 
- culture, 
- R&D 
- information and telecommunication technologies and the information society. 
As regards iiidusuial cooperation, an enhanced dialogue and ad-hoc inrriatives in 
restructuring information technology and telecommunications undertakings would 
be launched. In addition, the negotiating directives for the future agtccuicul would 
include guidelines for the regulatory framework needed to ensure the developmeiiL 
of the information society-
There would also be scope to involve Mexican partners in pilot projects run by 
European companies. 
It would also be possible to negotiate specific agreements on topics such as 
cooperation in education and training, statistics, customs, competition, indirect 
taxation, standards and power generation. 
16 
d) Operational follow-up 
In the tight of the above and in accordance with the conclusions of the Corfu and 
Essen European Councils, the Commission calls on the Council to approve the 
proposed strategy with a view to concluding an agreement with Mexico combining 
economic partnership and political consultation. 
The Commission will présent the necessary draft negotiating directives to the 
Council in the course of the coming year. 
Progress in the implementation of the strategy outlined above will be reviewed 
regularly by the Council (General Affairs). 
I? 
ISSN 0254-1475 
COM(95) 3 final 
DOCUMENTS 
EN 11 
Catalog number : CB-CO-95-039-EN-C 
ISBN 92-77-85349-2 
Office for Official Publications of the European Communities 
L-2985 Luxembourg