Stop the “modernised” Global and Free Trade Agreement between the European Union and Mexico
On 22 May, the Global and Free Trade Agreement will be signed between the EU and Mexico, strengthening the power of large investors, deepening extractivism and threatening local production.
Over 70 organisations from Latin America and Europe reject the agreement and signed the statement below:
"We, the civil society organisations, trade unions, human rights defenders, animal welfare campaigners and environmentalists who have signed this letter, are writing to the political leaders of Mexico and the European Union (EU) to urge them not to ratify either the “modernised” Free Trade Agreement (FTA) between the European Union and Mexico or the Global Agreement, which contains a section on investment and the controversial investor-state dispute settlement mechanism (ISDS).
The text was negotiated behind closed doors without debate or public consultation. It was finalised in April 2020, in the midst of one of the world’s worst health, social and economic crises, triggered by the COVID-19 pandemic. Six years later, amidst multiple further crises and conflicts, European and Mexican leaders are rushing to sign this “modernised” agreement even though it will have worse consequences than its previous version, in force since 2000, for the following reasons:
1. It privileges foreign investors over the local population, the environment and the climate.
The Global Agreement includes a section on investment that allows for investor-state disputes. This mechanism, commonly known as ISDS, grants foreign investors privileged and exclusive access to an international tribunal to challenge states. Mexico is the third most frequently sued country before ISDS tribunals worldwide. Over 500 million dollars have been spent on lost awards and defence costs, and there are still pending claims totalling at least 5.5 billion dollars. The Global Agreement extends ISDS to investors from other European countries and restricts the EU´s and Mexico’s sovereignty to decide on public policies in favour of citizens, the environment and the climate.
2. It promotes an extractive model without strengthening local production.
The FTA contains a chapter on raw materials that would undermine Mexico's efforts to support value addition and foster local development. The chapter prohibits investors being required to, for instance, employ local people or source local inputs. It would also prevent setting different prices for the domestic use of minerals and energy resources compared to when these are exported - something that can encourage local productions and value addition. Measures to guard against capital flight would also be ruled out. For Mexico in particular, a country with resources of interest to the European Union, this implies a restriction on measures that promote economic and social development at national and local levels.
3. It weakens Mexican agriculture.
In exchange for securing a mere three years’ right to regulate its energy market, Mexico has eliminated even more tariffs on food imports into its domestic market, particularly on meat and dairy products. Combined with the concessions already granted for the import of more dairy products and other agricultural goods or processed foods, this threatens local food production in Mexico and the situation of small-scale farmers. Furthermore, it promotes unnecessary trade, contributing to climate change – Mexico does not need to import more meat or dairy products to meet domestic demand.
4. It promotes offshoring, without guaranteeing environmental and labour standards.
The EU-Mexico FTA provides a framework enabling European companies to relocate their production to Mexico more easily. In fact, many European companies already manufacture in Mexico. Electrolux’s record in Ciudad Juárez, with its repression of workers seeking to form a trade union, is well known. Recently, Volkswagen announced the relocation of further parts of its car production to Mexico, where workers earn considerably less and environmental laws are less strictly enforced. At the same time, the corporation announced it would reduce its personnel by 30,000 workers at its plants in Germany until 2030.
Currently, 50 areas in Mexico are in a state of health and environmental emergency. The reason: indiscriminate industrial production. One of the most affected areas is Puebla-Tlaxcala, where Volkswagen and other European companies have their plants. The EU-Mexico FTA, like all trade agreements recently signed by the EU, includes only one chapter on sustainable development with non-binding provisions. The weakening of the EU’s due diligence law (CSDDD) exacerbates this situation.
Added to this is the fact that gender issues are sidelined. Even though the way trade between the EU and Mexico is structured by the agreement directly affects many women in Mexico, not only with regard to employment and consumption, but also in environmental terms.
These are just a few of the worrying aspects of this agreement. One could also mention the unprecedented opening up of Mexican public tendering at national and provincial levels to European companies, which undermines SMEs and has a serious impact on human rights. In fact, the “modernization” of the Mexico–EU Global Agreement has been carried out without a comprehensive assessment of its impact on human rights. By limiting the analysis to the commercial sphere, it obscures the responsibility of the bilateral relationship in contexts of serious human right violations, such as enforced disappearance, forced displacement or the murder of human rights defenders in Mexico. Ratifying the agreement under these conditions constitutes a political decision that bears responsibility for the continuation of such violence.
The Global Agreement and the FTA are instruments that entrench a destructive economic model in Mexico and the European Union, granting privileges to investors whilst harming the population. They do not address the existing asymmetry between the two economies, nor do they promote sustainable development or trade that respects planetary boundaries. Therefore, we urge policy makers on both sides of the Atlantic NOT to ratify these agreements!"