Towards a truly global EU-Mexico deal – the role of sugar
As the EU and Mexico approach the end of negotiations, raw sugar can help them over the finishing line
Since June 2016, the European Union and Mexico have been in talks towards the modernisation of the EU-Mexico Global Agreement, which governs their relations on political dialogue, cooperation, and trade.
Already, trade relations between the EU and Mexico have benefited hugely from the existing agreement, which came into force in 2000. Exports from the EU to Mexico have increased a remarkable 416% since the accord entered into force.
The new agreement will see the partners agree to improved and deeper cooperation on complex issues such as digital trade, regulatory cooperation, investment, and intellectual property rights. It is designed to ensure that this important relationship remains strong in the face of the rapidly changing world of globalisation.
And yet, these important steps towards modernity may be held back by objections which hark back to a bygone age of protectionism through high tariffs and import duties – those of the agricultural sector. Recently, EU sugar beet growers called on the European Commission to exclude imports of raw sugar from the agreement. This is unrealistic, unjustified, and unfair.
Unrealistic because the EU is calling on Mexico to make great strides forward on difficult questions such as sustainable development and anti-corruption, and so cannot in the same breath demand the exclusion of one of its most important agricultural products.
Unjustified because a recent report by the European Commission shows that agriculture is in fact one of the sectors which benefits most from free trade. The EU agriculture sector has already demonstrated that when it looks outward, the benefits of free trade are innumerable.
Unfair because the recent abolition of quotas will see producers of sugar from beet gain unlimited access to raw materials and export markets. Meanwhile, EU producers of sugar from imported cane sugar are faced with heavily restricted access to global markets.
Unless European cane refiners have better access to raw sugar through free trade agreements, it will be impossible for them to compete in this half-liberalised EU sugar sector.
Nightmare scenarios of an EU flooded by cheap raw sugar from Mexico are not based in fact. For one, the Mexican sugar market is characterised by small holdings, not massive corporations – hardly a basis for aggressive exporting tactics. What is more, any access granted to EU importers would be strictly defined under a tariff-rate quota (TRQ), meaning the EU will always know the maximum amount of Mexican raw sugar that could enter its market.
The modernised EU-Mexico Global Agreement could well serve as the prototype for EU trade agreements going forward. It could set new standards for projecting values in trade, ensuring sustainable development, and consolidating the fight against protectionism on the global stage.
This agreement looks to the future –vested interests cannot be allowed to make it a prisoner of the past.