Opinion of the European Economic and Social Committee on EU-Mexico relations
Date: 2006-02-15
Institutions: European Economic and Social Committee
Subjects: EU relations, Mexico, cooperation agreement (EU), economic cooperation, economic situation, free-trade agreement, political cooperation, political situation, social situation

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Opinion of the European Economic and Social Committee on EU-Mexico relations

(2006/C 88/17)

On 1 July 2004, the European Economic and Social Committee decided to draw up an opinion, under
Rule 29(2) of its Rules of Procedure, on EU-Mexico relations.

The Section for External Relations, which was responsible for preparing the Committee's work on the
subject, adopted its opinion on 26 January 2006. The rapporteur was Mr Rodríguez García-Caro.

At its 424th plenary session held on 14 and 15 February 2006 (meeting of 15 February 2006), the Euro-
pean Economic and Social Committee adopted the following opinion by 107 votes to four with six absten-
tions.

1. Introduction

1.1
The aim of this opinion is to analyse the development
of relations between the European Union (EU) and Mexico
since December 1995, when the EESC adopted its first opinion
on the issue (1), and to propose areas for discussion in order to
develop and strengthen these relations, as regards both the
future of EU-Mexico relations and the involvement of civil
society in both regions.

Considerable progress has been made in EU-Mexico rela-
1.2
tions, resulting in the EU-Mexico Economic Partnership, Poli-
tical Coordination and Cooperation Agreement (Global Agree-
ment) signed in October 2000, which provided for a free trade
area. This opinion therefore aims to provide information which
will help to highlight the strategic importance of EU–Mexico
relations and to strengthen and improve the EU-Mexico Asso-
ciation Agreement, whilst giving consideration to the specific
features of each region.

1.3
One specific aim referred to in that Agreement (Articles
36 and 39) is the need to involve civil society from the two
regions in the development of EU-Mexico relations.

In the Declaration (2) adopted at the Third Meeting of European
Union, Latin American and Caribbean civil society organisa-
tions held in April 2004 in Mexico (in which the EESC played
an active role), a series of initiatives were agreed, with a three-
fold goal: to step up the partnership between the European
Union, Latin America and the Caribbean,
to establish an
agenda for social cohesion, and to strengthen the role of orga-
nised civil society. The Declaration highlights the need to
create ‘structured bodies for dialogue at national and regional
level’ and the parties' ‘willingness to commit themselves fully to
the process of creating and strengthening such institutions’, and
calls for ‘the support of the European Economic and Social
Committee in transferring expertise and fostering dialogue’.

1.4
The EESC believes, with respect to EU-Mexico relations,
that the objective of incorporating civil society into the Agree-
ment should not only involve the promotion of relations
between civil society in both regions and between its represen-

(1) Point 5.5 of the opinion on EU-Mexico relations, adopted on 21

December 1995 (OJ C 82, 19.03.96, p. 68).

(2) Point III of the summary and points 33, 34 and 35 of the Final
Declaration adopted by the Third Meeting of European Union-Latin
American-Caribbean civil society organisations held in Mexico on.
13, 14 and 15 April 2004. This document acknowledges the
progress made on the recognition of cultural and ethnic diversity
and the rights of indigenous peoples.

tative bodies; it should also enable civil society to participate
effectively in the institutional framework of the Agreement, by
means of a consultative body acting either via mandatory
consultations on matters relating to the Agreement or through
own-initiative proposals. The EESC considers that this partici-
pation should be implemented by creating a Joint Consultative
Committee, within the framework of the Agreement.

2. Political, economic and social situation and outlook for

Mexico

2.1 Political situation

2.1.1 Mexico's democratic transition has been a long and
unusual process. The events that have marked the country's
political life in the last twenty years have created a solid basis
for a pluralist and democratic regime. Mexico has experienced
a changeover, strengthening and independence in its legislative
and judicial powers, as well as changes in the distribution of
political power and far-reaching institutional changes, such as
the reform of the Mexican Supreme Court of Justice (Corte
Suprema de Justicia de la Nación), the Federal Electoral Institute
(Instituto Federal Electoral), and the Federal Electoral Court
(Tribunal Electoral del Poder Judicial de la Federación).

The Mexican political situation reached a turning
2.1.2
point
in 2000, with the victory of presidential candidate
Vicente Fox Quesada for the National Action Party (Partido de
Acción Nacional — PAN), bringing an end to the 71-year
the Institutional Revolutionary Party
governmental reign of
(Partido Revolucionario Institucional — PRI). This event high-
lighted the need for alternation in power to ensure the smooth
running of the democratic system, and heralded a period of
change.

2.1.3
The Mexican government's National Development Plan
2001-2006 was designed as a tool for political, economic,
It established a number of
social and demographic change.
priorities for the current administration's activities, focusing on
social and human development, growth with quality, and order
and respect.

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2.1.4
Various reform bills considered crucial by the current
Mexican government (such as tax and energy policy reforms)
have been blocked, because there is not a sufficient majority in
parliament (Congress and Senate) for them to be passed, and
because of the forthcoming presidential elections scheduled for
July 2006.

2.1.5
The degree of economic growth and relative political
stability that Mexico enjoyed throughout much of the second
half of the 20th century boosted the country's role as a player
on the international scene. This state of affairs changed in the
wake of the economic crisis suffered by Mexico in the eighties
and the upheavals that occurred internationally in the nineties,
forcing the country to re-examine its economic, political and
external relations objectives.

2.1.6
Since then, Mexico's strategic stance towards Europe,
and vice versa, has been set down in the Global Agreement,
which goes beyond the specific aspects of the bilateral relation-
ship. Thus Mexico and the EU's positions on international
matters have shown an increasing tendency to coincide in
recent years, and the two regions have also displayed a
growing ability to coordinate their stances in multilateral
forums. Mexico and the EU have cooperated on issues such as
the environment (Kyoto Protocol), development policy (Johan-
nesburg and Monterrey summits), and human rights. For its
part, Mexico has maintained very close relations with the rest
of Latin America, as shown by the country's political coopera-
tion with the Rio Group. Mexico also supports the Mercosur
integration process and partnership with the bloc, and the Free
Trade Area of the Americas (FTAA).

2.1.7
As a pivotal country on the American continent,
Mexico must be a key strategic reference point for the EU in all
aspects — present and future — of its relations with the area.

2.2 Economic situation

role in job creation,

2.2.2
Approximately 98 % of Mexican firms can be consid-
ered micro-enterprises or small and medium-sized enterprises
(SMEs). They play a vital
regional
economic activity and training of business leaders and technical
experts. Their potential contribution to Mexico's economic and
social development is huge, not just when it comes to meeting
the basic needs of
the population, but also because they
provide large companies with raw materials and components,
and generate direct and indirect exports.

2.2.3
Since the end of the eighties, it is the SME sector that
has been most affected by the changes in economic policy,
financial crises and the withdrawal of financial incentives for
investment, employment and regional development. These
companies have seen their business reduced substantially. It is
widely agreed that, especially in the case of SMEs, the policies
and instruments in force are not sufficient for their future
survival and development.

2.2.4
According to the Report on Mexico by the Interna-
tional Monetary Fund (IMF) (3), management of public debt in
Mexico has seen considerable progress in the last five years,
due to an effective management policy and increased transpar-
ency. However, despite this progress, the public sector is still
vulnerable to refinancing and interest rate risks.

2.2.5
Furthermore, the opening up of trade that began in
1986 when Mexico joined the GATT (4) has made Mexican
exports the country's biggest driver of economic growth, with
Mexico evolving from an exporter of raw materials to an
exporter of manufactured goods, focused particularly on maqui-
ladoras (assembly plants). (5) Nonetheless, Mexico's trade slow-
down since the year 2000 has brought to light the country's
vulnerability to fluctuations in foreign demand.

(3) Report on Mexico by the International Monetary Fund (IMF) no.

04/418, 23 December 2004.

2.2.1 Mexico has also undergone a major economic transi-
tion over the last decade as its economy has become much
more open: it is the only country to have Free Trade Agree-
ments with the USA, Canada, Japan and the EU, and with the
European Free Trade Association (EFTA), Israel and most Latin
American countries. Furthermore, in 1984 it joined the GATT,
now the World Trade Organisation (WTO), and in 1993
became a member of APEC (Asia-Pacific Economic Coopera-
tion). Since 1994, it has been a member of the Organisation
for Economic Cooperation and Development (OECD). The scale
and speed of the Mexican reform process have exceeded those
of most other developing countries that have made similar
economic changes
in recent years. The rise in domestic
consumption, growth in US demand, the increase in the price
of US assets, the rising price of oil, the major influx of foreign
direct
the contributions from the tourist
sector and remittances from emigrants have been among the
key factors for Mexico's economy.

investment

(FDI),

(4) General Agreement on Tariffs and Trade.
(5) According to Mexico's national council for the exporting maquila
industry (Consejo Nacional de la Industria Maquiladora de Exporta-
ción - www.cnime.org.mx), maquila refers to the industrial or
service-based process involving the processing, production or repair
of goods of foreign origin which are temporarily imported and
subsequently exported, performed by maquiladoras or companies
that export under the terms of the Mexican decree for the supply
and operation of the exporting maquiladora industry and its reforms.
Industrial activity in Mexico includes the mining, manufacturing,
construction, electricity, gas and water sectors. The fall in invest-
ment flows to the manufacturing sector between 2001 and 2003
led to a drop mainly in manufacturing and construction. During
this period, the manufacturing sectors suffering the biggest reduc-
tions were those that were worst hit by the decrease in exports,
especially the following: metal products (automobiles, electrical
goods, electronics, machinery and equipment), textiles, clothing and
leather, and chemical
rubber,
plastic). The manufacturing sectors with the greatest reductions in
actual production are those for which maquiladoras account for over
50 %,
for
example, textiles and clothing (62 %), machinery and equipment
(60 %) and wood (56 %).

i.e. over half of their exports are from maquiladoras:

substances (oil, pharmaceuticals,

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2.2.6
the following cause-effect chain:

The slowdown of the Mexican economy is a result of

— the lower growth prospects in the USA have a direct

impact on Mexican exports;

— Mexican exports decrease, and hence investments in the

export sector;

— in general,
production;

the lower

investment

levels affect national

— the drop in national production levels has an impact on

employment indicators (6).

2.2.7
The US economy's less than optimal recovery is not
the only factor impacting on the Mexican economy. Other
factors include the economic emergence of China (7) and Mexi-
co's loss of global competitiveness.

2.2.8
As regards Mexico's loss of global competitiveness,
and according to the Mexican Institute of Competitiveness (8),
Mexico's competitive position on the international stage has
deteriorated in recent years. The reasons for this loss of compe-
titiveness include, in particular, the collapse of Mexico's low-
wage-based economic model, and the lack of improvements in
other areas that would boost business activity, such as the cost
of basic infrastructure (transport, communications, water),
energy, taxation, education, the skill level and productivity of
the workforce, security and government management.

2.2.9
In this context, the country is faced with the challenge
of achieving conditions that will enable it to become truly
competitive, based on such factors as improved competitive-
ness, productivity, a skilled workforce, technological develop-
ment and innovation, and democracy. In trade terms, Mexico
will need to strengthen its legal security,
logistical processes
and infrastructure to facilitate investment and the transport of
goods, and develop a more competitive tariff structure.

2.3 Social situation

2.3.1
As mentioned above, Mexico is a country undergoing
transition, whose social condition is characterised by inequality.
The disparities between regions and individuals have increased
(differing degrees of development, particularly between north
the rural exodus continues (spawning massive
and south),
live in conditions of
conurbations), and most Mexicans still
extreme social fragility and insecurity.

2.3.2
After a long period during which the social situation
deteriorated, the National Development Plan 2001-2006 was

(6) According to the Mexican Department for Trade and Industry, all
manufacturing industry subsectors recorded, between 2001 and
2003, an increase in unemployment of 17.8 % for maquiladoras and
13.8 % elsewhere, as compared to the 1995-2000 period. The
recovery in 2004 has not affected employment indicators, which
continue to show a downward trend.

(7) Competitive pressure from China and its presence on the US and
EU textile and garment market mean that other countries exporting
to these markets will need to adapt. The consequences are particu-
larly harsh for Mexico. Moreover, China's development potential
poses a real threat to Mexico's current position, particularly as
regards labour-intensive goods, given Mexican wage levels.

(8) Analysis of competitiveness in Mexico. Mexican Institute of Compe-

titiveness (IMCO). September 2003.

adopted, making social policies one of the highest priorities of
the country. In recent years, government social programmes
have been expanded, with an increase in the number of recipi-
ents and the benefits and aid granted. Social spending has
grown in real terms: spending on education, social protection
and schemes aimed at the poor increased annually by 8.4 % in
the 90s, and has grown by 9.8 % a year since 2000.

However, there are differences in the growth rates,
2.3.3
and the State's redistributive capacity is limited by the meagre
tax intake and low fiscal pressure. Consequently, social cohe-
sion policies are inadequate, and this situation is exacerbated
by the low-volume domestic economy and the lack of a fully-
fledged internal market.

2.3.4
Between 2000 and 2002, 3.4 million people rose
above the breadline, i.e. they became able to cover their own
food requirements and to invest — albeit modestly — in educa-
tion and healthcare. This statistic is in contrast with the situa-
tion recorded between 1994 and 1996, when the number of
people living below the breadline increased by 15.4 million.

The percentage of the population living below the
2.3.5
breadline (homes whose income per person is not high enough
to cover their food requirements) in urban areas dropped from
12.6 % to 11.4 %, while in rural areas the percentage fell from
42.4 % to 34.8 %. Despite the reduction in the number of
people living in poverty, these percentages are still extremely
high, given the country's level of development and wealth.
Nonetheless, the progress recorded can be seen as a positive
trend (9). The disparity within Mexican society is not linked
solely to poverty, however. It also relates to the quality of and
access to educational opportunities and healthcare, which
complicates the situation for disadvantaged regions. In terms of
education,
illiteracy levels in the north of the country (5 %)
contrast sharply with those in the south/southeast, which are as
high as 17 %.

2.3.6
The issue of human rights is a serious problem, often
linked to more than legal shortcomings. Large-scale trafficking
of drugs and persons only exacerbates the issue, to the extent
that the human rights situation in Mexico, particularly for the
indigenous population, remains distinctly unsatisfactory. The
main difficulties are caused by major shortcomings in the
police forces and legal system. People are not always guaran-
teed satisfactory access to the justice system, although this
problem is being combated at the highest levels of government.

(9) Ministry for Social Development. Development measurement. Mexico

2000-2002. 23 June 2003.

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2.3.7 Moreover, although in recent years Mexico has made
progress in constitutional matters as regards the recognition of
cultural and ethnic diversity and the rights of indigenous popu-
in effectively
lations,
protecting and promoting the human rights and fundamental
freedoms of these peoples. These problems include land-related
conflicts, discrimination in access to and administration of
justice, and the displacement of people against their will (10).

facing major challenges

still

is

it

2.3.8
Another key social problem is the issue of land distri-
bution in Mexico. The Metropolitan Area of Mexico City
(MAMC), with a population of approximately 25 million
people,
is undergoing two main transitions: first, from high
population growth to relative demographic stability and spatial
redistribution, and second,
from a declining manufacturing
economy focused on national markets to one based on services
competing internationally (11).

2.3.9
The MAMC has considerable growth potential linked
to the concentration of corporate headquarters and of educa-
tion and research facilities, as well as rich cultural resources
and high flows of FDI. However, potential growth is
constrained by the concentration of low-income populations in
precarious settlements, with limited or non-existent public
services and infrastructure, and vulnerability to natural disas-
ters. Education levels are insufficient and the insecurity index in
these areas is much higher (12).

2.3.10
Nonetheless, between 2000 and 2002, the educa-
tional situation of those living below the breadline did change.
The percentage of five to fifteen year-olds not attending school
dropped from 14.3 % to 11.9 %. The biggest drop can be seen
in the twelve to fifteen year-old age group: the percentage of
those working fell from 18.6 % to 6.6 % during the reference
period. Likewise, there was a decrease in the illiteracy rate and
the percentage of fifteen-plus year-olds who do not complete
their primary education. However, although these are positive
developments,
the education and
healthcare systems are not adequate, nor therefore are they
sufficient to achieve desirable levels of social cohesion.

the level and quality of

2.3.11
As regards employment, Mexico's unemployment
rate in 2004 was 3.1 %; during the same period, the unemploy-
ment rate was 8.2 % in the EU-15 and 5.6 % in the USA (13).
According to the newly launched Employment Observatory (14),
the last decade has seen an increase in professionals in almost
every field of knowledge. It is worth noting that 56 % of all
salaried professionals are concentrated in three fields of knowl-
edge: economy/administration, education and social sciences.

(10) UN Bulletin no. 03/042, 17 June 2003, on the fundamental rights

and freedoms of indigenous peoples in Mexico.

(11) OECD Policy Brief, October 2002. Territorial reviews: Mexico City.
(12) Poverty in Mexico: an assessment of conditions, trends and govern-

ment strategy, World Bank, 2004.
(13) OECD, Employment Outlook, 2005.
(14) The Employment Observatory is an instrument set up by the
Mexican government to improve the labour market. A delegation
from the EESC was present when it was inaugurated by the Presi-
dent of Mexico at his official residence, Los Pinos, on 2 March
2005.

Of these, the first field has seen the greatest number of jobs
created in the last four years.

2.3.12
The statistics also show that most women are
gaining access to the labour market. However, only 40 % of
women with a degree have a job, despite the fact that women
account for 52 % of graduates.

Eight out of ten Mexican workers are salaried (15); i.e.
2.3.13
they have an employment contract and receive a wage. While
the highest-paid fields are those with the lowest employment
rates (engineering, physico-mathematical science and biological
science), it is the field of education that has the highest employ-
ment rate, but the lowest salaries.

2.3.14 Mexico's institutional framework has progressed in
terms of social development and the promotion of civil society
it is worth
through networks and alliances. In this context,
noting the law on access to public information, the social
development law, and the law to promote civil society organi-
sations.

3. Background and evaluation of the EU-Mexico Global

Agreement

3.1 Background (16)

3.1.1
The Economic Partnership, Political Coordination and
Cooperation Agreement between the EU and Mexico (Global
Agreement) took effect on 1 October 2000. It also includes a
Free Trade Agreement between the two parties, and covers
aspects of political dialogue and joint cooperation. This Global
Agreement was preceded by an agreement signed in 1991
between the European Community and Mexico. In 1995, the
two parties signed a Joint Declaration in Paris, setting down the
political, economic and trade objectives that would be reflected
in a new Agreement. Negotiations began in October 1996 and
were concluded in July 1997. The result was the Global Agree-
ment and the Interim Agreement,
signed in Brussels on
8 December 1997.

political

strengthen

The main priorities of the Global Agreement are to
3.1.2
institutionalise
and
dialogue,
economic relations via bilateral, preferential, gradual, reciprocal
liberalisation of trade in accordance with WTO rules, and to
broaden the scope of cooperation, which currently includes
around thirty different areas. Lastly, the Agreement established
a Joint Council which is responsible for supervising its imple-
mentation.

trade

(15) National Institute for Geographical Statistics and IT. Mexico City, 8

March 2004.

(16) ‘EU-Mexico relations’, Permanent Representation of Spain to the

EU.

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The Interim Agreement (17) enabled the parties to
3.1.3
swiftly apply the provisions on trade and the supporting
measures, pending the ratification of the Global Agreement. It
took effect on 1 July 1998.

in the context of

In November 2004,

the EU and Mexico decided to implement

the Joint
3.1.4
Committee,
the
review clauses contained in the Agreement for the chapters on
agriculture, services and investments. In parallel to this, it was
agreed that negotiations in these sectors should begin in early
2005, with a view to concluding them within the year.

3.2 Assessment

Over five years after the entry into force of the EU-Mexico
Economic Partnership, Political Co-operation and Co-
operation Agreement (Global Agreement), the EESC believes
that it is a powerful tool and that its progressive nature benefits
both sides in the three areas that form the pillars of the Agree-
ment (political dialogue, trade development and cooperation).
The EESC is positive in its appraisal of the trade and investment
figures
institutional dialogue.
However, the EESC considers that the Global Agreement has
not been implemented to its full potential; a number of
comments are therefore included in this opinion.

strengthening of

and the

3.2.1 Poli t i ca l di me nsi on

3.2.1.1
In November 2004, at the fourth meeting of the EU-
Mexico Joint Committee in Mexico City, Mexico and the EU
agreed to drive bilateral political dialogue forward and reiter-
ated their commitment to strengthening multilateralism. They
also exchanged views on the International Criminal Court, and
agreed on the need to support it.

3.2.1.3
However, the EESC believes that the quality of the
agreements should be improved by the inclusion of provisions
on cooperation and institutionalised dialogue, and by bringing
all the sectors concerned into the decision-making loop. In this
connection, the EESC welcomes the conclusions of the Joint
Council meeting, concerning the possibility of institutionalising
dialogue with civil society and calling for the identification of
‘the most appropriate methodology and format for such an
institutionalisation’ (18).

and

human

principles

fundamental

At the EU's proposal, the Agreement includes the
3.2.1.4
for
so-called ‘democratic clause’ which establishes ‘Respect
democratic
rights,
proclaimed by the Universal Declaration of Human Rights,
underpins the domestic and external policies of both Parties
and constitutes an essential element of this Agreement.’ This
clause aroused great hopes within civil society, as it was a step
towards making trade a means of sustainable development and
an instrument for the guarantee of human rights,
including
economic and social rights. However, nothing further is speci-
fied with regard to economic and social rights.

3.2.2 E conomi c di me nsi on

Generally speaking, both parties believe that

3.2.2.1
the
results have been positive since the Agreement was signed five
years ago, highlighting the significant increase in trade (19) and
investment between Mexico and the EU.

The Agreement has also enabled the EU to compete
3.2.2.2
on equal terms with those countries with which Mexico has
free trade agreements, allowing European countries equal
access to the conditions that the USA obtained in Mexico
through the North American Free Trade Agreement — a situa-
tion known as NAFTA parity. Meanwhile, Mexico benefits from
the high potential of European investment, technology transfer
and the extensive European market.

3.2.1.2
In addition to the Summits of Heads of State or
Government of the EU and Mexico, and the various councils
and committees that bring together experts on specific subjects,
the Global Agreement has opened up new, permanent channels
for communication that did not exist before, enabling both
sides to achieve high-quality dialogue. The Agreement has
made it possible to bring political representatives closer. Mean-
while, and particularly as a result of the Third Meeting of Euro-
pean Union, Latin American and Caribbean civil society organi-
sations held in April 2004 in Mexico City and organised by the
EESC, relations have been stepped up between civil society
organisations in both regions.

(17) Framework agreement which defined the trade negotiation rules,
representing a fast track for initiating trade negotiations, via the
Joint Council provided for by the Global Agreement.

However,

3.2.2.3
the results could be greatly improved
upon. Although trade flows between the EU and Mexico have
increased since the Agreement came into force, this has not
translated into a greater share of overall percentages for the EU,
while the Mexican trade deficit continues to grow. Nonetheless,
it should be borne in mind that this deficit relates mainly to
imports of semi-finished goods and capital needed to moder-
nise Mexico's production infrastructure, and the manufacture
by European companies set up in Mexico of finished products
with greater added value for export to the US market.

(18) Point 15 of the Communiqué by the EU-Mexico Joint Council,

Luxembourg, 26 May 2005.

(19) From June 2000, when the trade chapter of the Agreement came
into effect, until June 2004, total trade between the EU and Mexico
increased by 31 %, i.e. 111,000 million dollars. Europa en México,
2004, EU Delegation to Mexico, 2004.

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3.2.2.4
The EU's total investment in Mexico from January
1994 to June 2004 stood at 33,656.6 million dollars (20),
which accounts for 24.3 % of all the foreign direct investment
(FDI) received by the country during this period. Between 1999
and 2004, Mexico received a total of 78,060 million dollars in
FDI, 19,791 million dollars of which came from the EU. With
respect to FDI flows between January 1994 and June 2004, the
EU Member States' contributions are ranked as follows: Spain
(8.3 %), Netherlands (8.2 %), UK (3.7 %), and Germany (2.6 %).
The growth in investment from the European Union highlights
Mexico's strategic importance for the EU. Mexico and the EU
must make the most of the options provided by the Global
for extending and expanding the service sector
Agreement
(essential for the EU) and investment.

3.2.3.2
A solid legal framework for bilateral cooperation is
laid down in the Agreement's chapter on cooperation and in
the Memorandum of Understanding on EU-Mexico multi-
annual co-operation guidelines 2002-2006, under which both
parties agreed to gear cooperation towards social development
and the reduction of inequalities, consolidation of the rule of
law, economic cooperation, and technological and scientific
cooperation. Through co-financing,
the EU has earmarked
EUR 52.6 million for the 2002-2006 programming period,
while the Mexican institutions implementing the projects have
contributed a similar amount. Another of the instruments that
has been set up is the Financing Framework Convention, which
serves as the basis for specific cooperation projects between
Mexico and the EU.

3.2.2.5
Agreement, such as:

The EESC emphasises other economic effects of the

— EU investment must diversify (particularly in the fields of
scientific and technological development), as it is restricted
to a very low number of productive sectors and regions in
Mexico;

— Mexico is exporting more products, but

these are still
concentrated in a very limited range; Mexican companies
should therefore seek out niches for new products and
markets in other EU countries;

— the increase in trade and investment has been positive for
the economy in general, but it has not had the desired
effects on social development and the campaign against
poverty;

— while large Mexican and European companies take advan-
tage of the Agreement, SMEs have not been able to reap all
the potential benefits;

— the legal framework of the Agreement is not sufficient to
attract greater investment, which is why it is essential to
increase legal security;

3.2.3.3 Moreover, greater impetus has also been given to
instruments for
the negotiation and adoption of additional
strengthening cooperation between Mexico and the EU:
for
example, in February 2004, the Sectoral agreement for scien-
tific and technological cooperation was signed. Meanwhile,
contacts are being sustained with a view to formalising the
Sectoral agreements on higher education and the environment.

Integrated support programme

The
for SMEs;
3.2.3.4
(PIAPYME)
is also being implemented. Among other things,
this aims to build technical capability to boost productivity of
SMEs; to support technology transfer; to boost business coop-
eration programmes in order to drive joint investment and stra-
tegic alliances between Mexican and European SMEs, and to
the
internationalise
modernise
Programme for the facilitation of the Agreement
is geared
towards specific fields such as customs, technical standards,
health and plant-health standards, consumer protection and
intellectual property.

Furthermore,

SMEs.

and

— the Agreement does not in itself constitute an immutable
structure for trade relations: new ways to improve and
update it, via the review clauses, should therefore be consid-
ered.

the ‘Implementation of

In the field of human rights cooperation, there are
3.2.3.5
projects
the recommendations
for
resulting from the diagnosis of the human rights situation in
Mexico’ and the ‘Promotion and protection of the indigenous
peoples' human rights in Mexico’.

3.2.3 Coop e r a ti on di me nsi on

3.2.3.1
Cooperation between Mexico and the EU is based on
four aspects: firstly, bilateral cooperation at government level;
secondly,
regional programmes offered by the European
Commission for all of Latin America (AL-Invest; URBAN;
ALFA; @lis, Eurosocial, etc.),
in which Mexico participates;
thirdly, cooperation on specific issues such as human rights,
the environment and NGOs; lastly, Mexico has the possibility
of accessing other programmes such as the 6th Research and
Development Framework Programme.

(20) All the FDI data are based on the information contained in: Europa

en México, 2004, EU Delegation to Mexico, 2004.

some Mexican government

3.2.3.6
As regards the management and administration of
institutions have
cooperation,
drawn the EESC's attention to the complexity of Community
procedures and mechanisms for implementing cooperation.
With regard to future cooperation, Mexico and the EU appar-
ently agree on the importance of stepping up relations through
a new cooperative approach, by identifying and adopting addi-
tional measures such as sectoral dialogue and trilateral coopera-
tion between Mexico, the EU and third countries, particularly
Central America. As regards the future areas of cooperation
that need to be established for 2007-2013, the EESC considers
it necessary to strengthen the support currently given to SMEs,
together with social cohesion, education and the environment,
among others.

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3.2.4 E ffe c ts of

th e e nla r g e d EU on r e la ti ons w i th

M e x i c o

opening up to Eastern Europe, a process triggered by the reuni-
fication of Germany.

3.2.4.1
The dynamism of trade between Mexico and the EU
is particularly evident in its trade with some of the ten new
Member States. Worth noting, for example, is the growth in
trade with the Czech Republic, Hungary and the Slovak
Republic. It is clear that the medium and small-scale economies
are benefiting more than the larger economies. Nonetheless,
trade between Mexico and the new Member States is still at an
embryonic stage.

4.2
Since NAFTA came into force on 1 January 1994, three-
way trade has risen to over USD 623 billion, more than double
the pre-NAFTA level. Between 1994 and 2003 FDI in the three
countries increased by more than USD 1.7 trillion. In addition
to NAFTA, the North American Agreement on Environmental
Cooperation (NAAEC) and the North American Agreement on
Labour Cooperation (NAALC) also came into force (23).

the special
For Mexico, enlargement means that
3.2.4.2
trade relationship that has existed with the EU since the Global
Agreement came into force has been extended to the ten new
members. Enlargement should therefore have a tangible effect
for companies in Mexico and the new Member States, giving
them access to a free trade area of more than 550 million (21)
consumers (EU and Mexican populations combined (22)). With
enlargement, the new Member States also participate in the
EU's trade policy, so that transactions in the new Member
States by companies from non-EU countries such as Mexico
have been considerably simplified, due to the application of a
single set of trade regulations, single tariff and single set of
administrative procedures.

3.2.4.3
Both Mexico and the new Member States agree that
their markets offer many opportunities for each other's compa-
nies, with emphasis on the manufacturing sector in the new
Member States and the agricultural sector in Mexico. Moreover,
the economic growth that has been visible in the new Member
States will further increase demand. This gives Mexican expor-
ters a relative advantage over their Latin American and Asian
competitors who do not yet have a preferential agreement with
the EU.

investment

According to the estimations of the World Bank (24),
4.3
without NAFTA, Mexican exports and foreign investment
would have been lower. North America is Mexico's main
source of
(while the EU is its second biggest
source). From 1999-2004, North American investment went
mainly into manufacturing industry (43.7 % of the total) and
services (38.4 % of the total). However, NAFTA's effects have
been questioned in other areas, particularly unemployment,
migration, per capita income and agriculture. Since NAFTA
came into force, the massive inflow of investment has not had
the promised result of closing the gap between Mexico and its
North American partners (25).

Lately,

4.4
the NAFTA countries have been working to
further economic integration in North America, seeking addi-
tional means to improve trade, investment and competitiveness.
However, NAFTA does not address fundamental issues such as
migration or mobility of workers, with the USA offering only a
limited number of visas for professionals. Since the liberalisa-
tion of trade, the number of illegal Mexican immigrants in the
USA went from 2 million in 1990 to 4.8 million in 2000 (26),
which increased the problems at the border. In 2004, approxi-
mately 10 million people born in Mexico were residing in the
USA. Add to this the number of US citizens of Mexican origin
and the total rises to 26.6 million — 9 percent of the North
American population. One of
the most visible impacts of
migration is the sending of remittances, which in 2004 added
up to over 13 billion dollars (27).

4. The EU-Mexico Global Agreement and the North Amer-

ican Free Trade Agreement (NAFTA)

4.1 Mexico's proximity to one of the biggest markets the
world, the USA, largely explains the level of integration of the
Mexican economy with that of its neighbour. The USA was
concerned to increase its competitiveness in relation to its main
rivals, the EU and Japan. Meanwhile, Mexico hoped to establish
its presence in the global economy. Mexico's relations with the
USA were therefore channelled through NAFTA, which was
greatly beneficial for North America and for small and large
companies in general. The EU, meanwhile, was occupied with

(21) Including Bulgaria and Romania.
(22) In 2003, Mexico's population was 102 million (OECD Fact Book,

2005).

The fundamental difference between NAFTA and the
4.5
EU-Mexico Global Agreement is that the latter goes beyond
trade: not only has it made the EU Mexico's second biggest
trading partner, with a more balanced and fairer trade relation-
ship, but it also incorporates fundamental aspects of political
cooperation and coordination that are not included in NAFTA.
NAFTA does not provide any mechanisms for civil-society
involvement in the decision-making process.

(23) Joint declaration by the Free Trade Commission of the North Amer-

ican Free Trade Agreement. 16 July 2004.

(24) Report on Mexico, Área de Estudios de Caja Madrid, May 2002.
The World Bank ‘Lessons From NAFTA for Latin America and the
Caribbean Countries: A Summary of Research Findings’ D.
Lederman, W.F. Maloney and L. Serven, 2003.
(25) World Bank, World Development Indicators Online.
(26) John Audley, ibidem, p. 49.
(27) Press release no. 71/04, Mexican Ministry of

the Interior, 17

December 2004.

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4.6
After five years, trade between the EU and Mexico has
increased considerably although statistics (28) show that it has
not been possible to counterbalance Mexico's predominance of
trade with the USA, which remains its main trade partner.
90 % of Mexican exports in 2003 were to the NAFTA (29) coun-
tries, while exports to the EU represented only 3.4 %. Mean-
while, 64.2 % of Mexico's
imports came from the USA,
compared to only 10.4 % from the EU.

5. Institutionalisation of dialogue with organised civil

society

interest, at all

institutionalises

The Global Agreement

5.1
political
dialogue, which encompasses all bilateral and international
it
matters of mutual
provides for the creation of a Joint Council (Article 45) respon-
sible for supervising the implementation of the Agreement, and
assisted in its tasks by a Joint Committee (Article 48). The
Agreement also stipulates that the Joint Council may decide to
set up any other special committee or body to assist it in
the performance of its duties (Article 49).

In this respect,

levels.

sectors

the three traditional

5.4
The EESC believes that such a committee could be more
easily created and run if Mexico had an independent, repre-
sentative, legitimate body equivalent to the EESC, which
(employers,
would represent
employees and various interests). However, several parliamen-
tary attempts to create a Mexican ESC have thus far come to
nothing, despite the tabling of a federal bill aimed at creating
an Economic and Social Council as a public body domiciled in
Mexico City (31). Nor have trade union, employer and third-
sector organisations reached any consensus to set up such a
body. When it comes to defining the nature of this type of
body, there is some confusion regarding the instruments of
social dialogue (consultation, cooperation and negotiation) and
the consultation of civil society.

5.5
For the government, dialogue (more social than civil)
with part of civil society revolves around the so-called Council
for Productive Sectors Dialogue (CDSP) (32), which represents
trade unions and employers, together with the central and
regional administration. The third sector has a partial, insuffi-
cient presence through academic and agricultural representa-
tives. The government has also been maintaining dialogue with
other platforms incorporating various civil society organisa-
tions (trade unions, chambers of small businesses, NGOs), parti-
cularly as regards the trade agreements signed by Mexico.

5.2
The participation of Mexican and European civil society
must be promoted if the interests of the social sectors on both
sides are to be incorporated in the application of the Global
Agreement. The whole spectrum of civil society organisations
need to be better represented — farmers, consumers, women,
environmental, human rights and professional groups and
SMEs.

5.6
The Mexican government and employers are keen for
the CDSP to be the EESC's discussion partner, although the
government does acknowledge that this would be a means of
testing the water for the involvement of third sector organisa-
tions. The trade unions play an active role and recognise, for
the most part, the CDSP, although they are not unanimous on
whether it should be equivalent to the EESC. The organisations
in the civil society platform are pushing for an ESC to be set
up from scratch.

5.3
Titles VI and VII of the Global Agreement contain the
articles cited above and provide the legal basis for creating an
EU-Mexico joint consultative committee. Firstly, Article 36 is
the need to involve civil
an explicit acknowledgement of
society in the regional integration process. Secondly, Article 39
stipulates the areas on which cooperation should focus, the
first area being the development of civil society. Lastly, Article
49 enables the Joint Council to set up any other consultative
committee or body it deems necessary in order to implement
the agreement. Meanwhile,
the future developments clause
(Article 43) provides for the widening of the scope of coopera-
tion. There is therefore a real possibility of creating this joint
EU-Mexico body, which would provide an opportunity for
involvement in various aspects of the Agreement. The EESC
believes, based on experience (30), that the name of this body
should be the EU-Mexico Joint Consultative Committee (JCC).

(28) Source:

the Mexican Association of

Importers and Exporters

(ANIERM), with data from the Ministry of the Economy.

(29) However, it should be noted that of this 90 % , oil accounted for

10 % and assembled products for 50 %.

(30) Article 10 of the EU-Chile Association Agreement (in force since 1
March 2005, OJ L 352 of 30.12.2002) establishes the ‘Joint
Consultative Committee’ whose role is to ‘to assist the Association
Council
in promoting dialogue and cooperation between the
various economic and social components of organised civil society’
in the EU and Chile.

6. Conclusions and recommendations

6.1
Although the changes occurring in Mexico are to be
welcomed, it is evident that many reforms are still required. For
example, it will be necessary to strengthen the rule of law guar-
anteeing freedom and legal security, deal with problems in the
application of justice, redistribute wealth more fairly, develop
social protection, provide access to high-quality education and
healthcare, and boost
through SMEs
(among other things), making social cohesion the crux of all
the requisite improvements, in order that Mexico be considered
a developed country with all the necessary guarantees.

the internal market

(31) Article 1 of the bill.
(32) For more

information,

see

the

following website: http://

www.stps.gob.mx/consejo_dialogo/cpdsp/frameset.htm.

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6.2
The EESC believes that the full potential of the Agree-
ment, in all its aspects, has not been sufficiently developed. It
therefore considers that the implementation of the Agreement
must pushed forward in order to reduce tariffs, remove tech-
nical barriers to trade and open up new sectors to trade in
services and investment. It is necessary to promote the develop-
ment of businesses on both sides, facilitating institutional rela-
tions, creating a favourable climate for business activity and
promoting forums for dialogue. Bilateral cooperation must be
stepped up in external initiatives of common interest, particu-
larly in the rest of Latin America and the USA. The social and
occupational aspects of the Agreement (training, equal oppor-
tunities, employment, etc.) should be developed through coop-
eration projects.

6.3
In order to enable civil society to participate in the
implementation of these tasks, the EESC believes that an EU-
Mexico JCC could be set up. The EESC is firmly in favour of
the creation of an opposite number in Mexico and, to this end,
calls on the Mexican representatives to continue working
towards this goal.

6.4
In the EESC's opinion, the EU-Mexico JCC could be a
consultative arm of the Joint Council and would be involved in
the development, monitoring and application of the Global
Agreement. It would issue opinions on the basis of referrals
from the Joint Committee or Joint Council, on such topics as
It could also issue own-initiative opinions or
they decide.
recommendations on matters relating to the Agreement. More-
over, it would be required to draw up a periodical report on
the progress of the Agreement and to coordinate the meetings
of
the EU-Mexico Civil Society Forum, with the support
(including financial) of the Joint Committee. The JCC would
hold regular meetings with the EU-Mexico Joint Parliamentary
Committee (formats to be decided) in order to improve follow-
up of the Agreement.

Brussels, 15 February 2006.

6.5
In order to study the possibility of setting up an EU-
Mexico JCC, the EESC believes it necessary to pursue relations
with Mexican civil society — which have thus far been sporadic
— in a more systematic fashion. It therefore calls on Mexican
civil society to appoint, by consensus, three representatives
from each civil society group (employers, employees and the
third sector). For its part, the EESC could appoint three repre-
sentatives from each of its three groups, as a counterpart. The
aim would be to create a joint working group which would
make progress ‘one step at a time’.

6.6
The purpose of this Joint EESC-Mexican civil society
working group would be to draw up a proposal for the estab-
lishment, membership, duties and rules of procedure of an EU-
Mexico JCC. This proposal could be drawn up over the course
of 2006 and submitted to the Joint Council in 2007.

the
6.7 Moreover, bilaterally and outside the Agreement,
EESC would be willing — to the best of its ability and insofar
as there were a consensus within Mexican society — to
support the creation of an equivalent, national body in Mexico.
This would facilitate the development of relations between the
various European and Mexican civil society organisations, and
would be a positive step towards stronger EU-Mexican rela-
tions.

The EESC believes that this body should reflect the plur-
6.8
alism of Mexican civil society and should therefore comprise
the three sectors mentioned above. Like the EESC, it should be
based on the principles of representativeness,
independence
and legitimacy. The EESC's experience has shown that in order
to successfully set up this type of institution, there must be a
concerted effort by the different civil society sectors involved,
and a clear definition of how the various organisations will be
represented therein.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND