Directorate-General for External Policies of the Union Directorate for Interparliamentary Delegations and Policy Support Interparliamentary Delegations – Non-European Countries

ECONOMIC PARTNERSHIP, POLITICAL COORDINATION AND COOPERATION AGREEMENT

EU - MEXICO

INFORMATION NOTE

‘2007 – 2008 Results’

The Global Agreement lays the foundations for closer relations between the EU and Mexico. It covers the areas of political dialogue, economic affairs and cooperation. The year 2007 was a significant one for EU-Mexico bilateral relations: political dialogue took place on all levels and the second EU-Mexico cooperation strategy for 2007-2013 came into force. As part of this strategy, a number of programmes and projects have been launched while the industrial products and automotive sectors have been fully liberalised.

NT\722986EN.doc PE 405.661 External Translation This document is published in the following languages: ES, DE, EN

Authors: *** and Mónica Velasco Pufleau

Manuscript completed in May 2008

Copies can be obtained from: *** or [email protected]

Brussels. European Parliament, May 2008

NT\722986EN.doc 2 PE 405.661 External Translation CONTENTS ______

SUMMARY.…….…………………………………………………………………….4

CONTENTS…..……………………………………………………………………….5 1. The context of European Union-Mexico relations...... 5 1.1. Background ...... 5 1.2. The Global Agreement...... 5 1.2.1. The EU-Mexico Free Trade Area...... 6 2. Application of the Global Agreement in 2007 and 2008...... 8 2.1. Political dialogue ...... 8 2.1.1. Political dialogue at presidential level ...... 8 2.1.2. Political dialogue at ministerial level...... 9 a. Ministerial visits ...... 9 b. The EC-Mexico Joint Council ...... 9 2.1.3. Political dialogue at senior civil servant level...... 10 2.1.4. Political dialogue at parliamentary level...... 11 2.2. The Economic Partnership ...... 11 2.2.1. EU-Mexico bilateral trade...... 12 a. The trade balance...... 12 b. Direct foreign investment ...... 13 2.3. Cooperation...... 13 2.3.1. EU-Mexico cooperation strategy 2007-2013 ...... 13 2.3.2. Cooperation projects and programmes for priority sectors and issues ...... 14 a. Cooperation on human rights and democracy...... 14 b. Trade sector cooperation...... 15 c. Cooperation on the environment and natural resources...... 15 d. Cooperation on social affairs and poverty eradication ...... 16 e. Cooperation in the SME sector...... 17 f. Cooperation on science and technology...... 17 g. Cooperation on training and education...... 18 h. Cultural cooperation ...... 18

BIBLIOGRAPHY…………………………………………………………………..20

NT\722986EN.doc 3 PE 405.661 External Translation SUMMARY ______

Relations between the European Union (EU) and Mexico are governed by an Economic Partnership, Political Coordination and Cooperation Agreement (Global Agreement) that has been in force since 1 October 2000.

Following the signing of the Global Agreement on 8 December 1997, and until it came into force, a fast-track Interim Agreement on trade and trade-related matters (Interim Agreement) was in place.

The Interim Agreement enabled the establishment of a Free Trade Area (FTA), anticipated as an integral part of the Global Agreement. This was implemented by means of two decisions of the EC-Mexico Joint Council1.

During 2007 and the first part of 2008, EU-Mexico political dialogue took place on all levels: (i) visit of the President of the European Commission, José Manuel Barroso, to Mexico and of the President of Mexico, Felipe Calderón Hinojosa, to the Community institutions; (ii) meetings of the Mexican Minister for Foreign Affairs, Patricia Espinosa Cantellano, with the Commissioner for External Relations and European Neighbourhood Policy, Benita Ferrero-Waldner; (iii) visit of the Commissioner for External Trade, Peter Mandelson, the Commissioner for Science and Research, Janez Potočnik, and the Commissioner for Employment, Social Affairs and Equal Opportunities, Vladimir Špidla, to Mexico; (iv) meetings of the Joint Council, Joint Committee and the EU-Mexico Joint Parliamentary Committee.

The cross-cutting issues of political dialogue included the environment and climate change, human rights, international migration and social cohesion.

The year 2007 was a highly important one for bilateral EU-Mexico trade, as complete liberalisation of the industrial goods and automotive sectors was achieved.

Between 1999 (the year immediately prior to the entry into force of the Global Agreement) and 2006, bilateral trade between the EU and Mexico grew by around 130% to 29.5 billion euros in 2006.

EU-Mexico cooperation takes place within the framework of the 2007-2013 Country Strategy Paper for Mexico along with the Memorandum of Understanding for cooperation covering the same period. The priority sectors for the 2007-2013 cooperation strategy are: social cohesion; sustainable economic development and competitiveness; education and culture. The priority cross-cutting issues are human rights, gender and the environment.

During 2007 and the first four months of 2008, cooperation programmes and projects were commenced in all sectors and for all cross-cutting issues that had been defined as priorities for the 2007-2013 cooperation strategy, as well as in the science and technology and trade sectors.

1 Decision No 2/2000 of the EC-Mexico Joint Council of 23 March 2000 and Decision No 2/2001 of the EC-Mexico Joint Council of 21 February 2001. NT\722986EN.doc 4 PE 405.661 External Translation CONTENTS ______

‘Mexico is one of the emerging powers of Latin America, a bridge between two worlds and a country capable of having a wide-ranging role in the multilateral context. It’s an ally and a friend of Europe in the multipolar world of the future.’

José Manuel Barroso, President of the European Commission.

1. The context of European Union-Mexico relations

1.1. Background

The origin of relations between the European Union and Mexico, in terms of an international agreement, dates from 1975, when what was then the European Economic Community (EEC) and Mexico signed an agreement to develop their trading relations2.

Subsequently, both parties decided to replace this agreement with another, the content of which was comparable to that of a so-called Third Generation Agreement3. They consequently signed the 1991 Framework Agreement for Cooperation4 which, in addition to extending the terms of reciprocal trade, included among other things economic, trade, science and technical cooperation.

However, the biggest quantitative and qualitative leap forward came with the signing of the 1997 Economic Partnership, Political Coordination and Cooperation Agreement5 (Global Agreement), in force since 1 October 2000. This agreement established the bases on which to institutionalise political dialogue, strengthen trade and economic relations and consolidate and broaden cooperation.

Following the signing of the Global Agreement on 8 December 1997, and until it came into force, a fast-track6 Interim Agreement on trade and trade-related matters (Interim Agreement) was in place7.

1.2. The Global Agreement

The Global Agreement was the first of its kind to be signed with a Latin American country and the broadest that had ever been signed by the European Community (EC) outside its own area8.

2 OJ L 247 of 23.09.1975. 3 The Agreement signed with Mexico at that time could not be officially called ‘Third Generation’ because it did not include what was known as the ‘democratic clause’. 4 OJ L 340 of 11.12.1991. 5 OJ L 276 of 28.10.2000. 6 To enter into force the Interim Agreement simply needed to be ratified by the European Parliament and the Mexican Congress. The Global Agreement needed to be ratified by the parliaments of the then 15 Member States of the EU, along with the EP and the Mexican Congress. 7 OJ L 226 of 13.8.1998. NT\722986EN.doc 5 PE 405.661 External Translation Its conclusion was the result of a commitment made by the EC and Mexico in the Solemn Joint Declaration of 2 May 1995, signed in Paris, by means of which both parties decided to give their relationship a long-term perspective and take all steps and procedures necessary to reach a new political, economic, trade and cooperation agreement.

The Interim Agreement was also signed at the same time, along with the Final Act for both instruments and various joint and unilateral declarations.

In its resolution on the Commission Communication ‘Towards Closer Relations between the European Union and Mexico’9, the European Parliament (EP) welcomed the Solemn Joint Declaration of 2 May 1995. In its document the EP supported the agreed strategy for negotiating the new agreement, highlighted the fact that Mexico’s link with one of the two most important economic blocs in the world (the North American Free Trade Agreement – NAFTA) meant that it was one of the most promising emerging economies, and recognised Mexico’s efforts to modernise its economy.

The Global Agreement covers aspects of political dialogue, economic partnership and cooperation and is based on respect for democratic principles and fundamental human rights. In this regard, the EP stressed in particular that the European Commission should include the so-called ‘democratic clause’ in the Global Agreement, which had not been included in any agreement previously signed with Mexico.

The content of the Global Agreement forms a general framework within which the EC-Mexico Joint Council, the highest body governing application of the Global Agreement, establishes the paths to follow in order to achieve the agreement's objectives. The Global Agreement expressly instructs the EC-Mexico Joint Council to adopt decisions in specific areas that will be binding on both parties. The most significant decisions adopted by this Joint Council to date have been those enabling the establishment of a Free Trade Area (FTA) between the EU and Mexico.

1.2.1. The EU-Mexico Free Trade Area

The Interim Agreement enabled trade negotiations to commence in 1998 in order to adopt measures and a timetable for liberalisation that would govern the FTA between the EU and Mexico.

The rounds of negotiations, nine in all, lasted little more than a year10. In a speech made by the Commissioner for Trade at the time, Pascal Lamy, on the conclusion of the negotiations, he stated that ‘the role of the European Parliament, which had been the first to request a Free Trade Area with Mexico, was crucial’11.

The results of these trade negotiations were favourably received by the EP, which gave its assent on 16 March 2000, and by the Congress of the Union of the Mexican

8 The signing of the North American Free Trade Agreement (NAFTA), as a result of the process of Mexican liberalisation and opening up to trade during the 1990s, had a significant influence on the EU's decision to sign this agreement with Mexico. 9 A4-0270/1995 of 17.11.1995. 10 From 9 November 1998 to 24 November 1999. 11 ‘Commissioner Lamy and Mexican Trade Minister Blanco conclude EU - Mexico FTA negotiations’, EU-Mexico negotiations, 24 November 1999, Brussels, Belgium. NT\722986EN.doc 6 PE 405.661 External Translation Republic, which approved them, along with the Global Agreement12, on 20 March of the same year.

In order to fulfil these achievements and establish the FTA - an integral part of the Global Agreement - the EC-Mexico Joint Council13 adopted Decision No 2/2000 of the EC-Mexico Joint Council on trade in goods, government procurement, cooperation in the field of competition, consultation on intellectual property and dispute settlement of 23 March of 2000,14 in force since 1 July 2000, and Decision No 2/2001 of the EC-Mexico Joint Council on trade in services, investment and protection of property rights of 21 February 200115, in force since 1 March 2001.

All of these decisions together are known as the Free Trade Area between the European Union and Mexico (FTAEUM).

Since the signing of the Global Agreement, both parties have shown considerable interest in strengthening and deepening their bilateral relations. This situation is reflected in the dynamism that has been demonstrated in bilateral relations to date.

With regard to political dialogue, five ministerial meetings have formally been held over this period, along with six at senior civil servant level and five at parliamentary level. In addition, four EU-Mexico Summits have taken place.

The bilateral relations have continued to bear fruit in the area of trade. A timetable for gradual liberalisation, mutually agreed between the parties, has enabled these bilateral relations to develop successfully and has enabled the asymmetries existing between both parties to be addressed.

In terms of cooperation, a sum of 56.2 million euros was put into an initial phase undertaken over the period 2002-2006. This focused on the following priority areas: (i) social development and the reduction of inequalities; (ii) economic growth; (iii) technical and scientific cooperation; and (iv) consolidation of the rule of law and institutional support. In addition, in relation to this last sector, in 2001 Mexico was established as a priority country for what was then known as the European Initiative for Democracy and Human Rights16.

In this context, Mexico was able to benefit from various cooperation projects and programmes such as the first phase of the European Commission-Mexico Human Rights Cooperation Programme and the PRODESIS ‘Integrated and Sustainable Development, Chiapas, Mexico’ Project, along with the signing of an Agreement for Scientific and Technical Cooperation17, which has laid the foundations for the start of new programmes and projects.

12 The EP approved the Global Agreement on 6 May 1999 and the European Council approved it on 28 September 2000. 13 In accordance with Article 60 of the Global Agreement, following its entry into force all decisions adopted by the Joint Council for the Interim Agreement must be considered as having been adopted by the Joint Council for the Global Agreement. 14 OJ L 157 of 30.06.2000. 15 OJ L 70 of 12.03.2001. 16 Council Regulations (EC) Nos 975/1999 and 976/1999 of 29 April 1999, OJ L 120 of 8.05.1999. 17 OJ L 290 of 4.11.2005. NT\722986EN.doc 7 PE 405.661 External Translation The results have been so good in all respects that the EC-Mexico Joint Council declared at its last meeting that ‘relations between the EU and Mexico constitute now a very good example of cooperation on the global scene’.18

2. Application of the Global Agreement in 2007 and 2008

2.1. Political dialogue

Political dialogue is the most powerful tool for application of the Global Agreement. Its institutionalisation, in accordance with the Joint Declaration by the European Union and Mexico on Political Dialogue19, enables both parties to take up any issues of interest regularly, as and when necessary. This dialogue contributes to a mutual understanding between both parties and a strengthening and deepening of their bilateral relations, as well as to achieving the objectives of the Global Agreement.

According to this declaration, political dialogue can be established at presidential, ministerial, senior civil servant or diplomatic level by means of contacts, exchanges of information and consultations. Its objective is to encourage a climate of understanding and tolerance between peoples and their respective cultures, in the context of respect for democratic principles and human rights, and a desire to maintain peace and establish a fair and stable international order.

In addition, by means of the Joint Declaration on the Dialogue at Parliamentary Level,20 the Global Agreement institutionalised dialogue between parliamentary members of the Mexican Congress and the European Parliament.

In this context, the Global Agreement establishes an institutional framework, made up primarily of the Joint Council and Joint Committee, in which political dialogue will take place at ministerial and senior civil servant levels respectively. Interparliamentary dialogue will take place through the EU-Mexico Joint Parliamentary Committee (EU-Mexico JPC).

The cross-cutting issues of political dialogue considered within the institutional framework in 2007 included: the environment and climate change, human rights, international migration and social cohesion.

2.1.1. Political dialogue at presidential level

To date, four EU-Mexico summits have been held,21 most recently in Lima, Peru in May 2008, in the context of the 5th EU-LAC Summit.

In particular, two presidential visits took place during 2007. The first, by the President of the European Commission, José Manuel Barroso, was to Mexico in April and the

18 ‘Joint Communiqué of the EC-Mexico Joint Council’, 8671/07, Presse 87, 19 April 2007, Santo Domingo, Dominican Republic. 19 OJ L 226 of 13.08.1998. 20 Ibid. 21 The first EU-Mexico Summit was held in Madrid, Spain in 2002; the second in Guadalajara, Mexico in 2004; and the third in Vienna, Austria in 2006. NT\722986EN.doc 8 PE 405.661 External Translation second, by the President of Mexico, Felipe Calderón Hinojosa, to the Community institutions in June.22

During these visits, the Presidents had an opportunity to share their points of view and interests with regard to bilateral relations over the coming years.

In terms of the priority sectors and cross-cutting issues established for 2007-2013, both Presidents agreed primarily on the importance of the issues of international migration and climate change.

2.1.2. Political dialogue at ministerial level a. Ministerial visits

More ministerial visits have taken place during 2007 and the first few months of 2008 than at any time since the Global Agreement came into force, particularly on the part of EU Commissioners to Mexico23.

Mrs Patricia Espinosa Cantellano, Mexico’s Foreign Affairs Minister, and Mrs Benita Ferrero-Waldner, EU Commissioner for External Relations and European Neighbourhood Policy, met on three occasions: the first was in the context of the 5th Meeting of the EC-Mexico Joint Council; the second, in order to sign the Memorandum of Understanding for Cooperation 2007-2013, in the context of the visit of the President of Mexico to the Community institutions in June 2007; and the third, in the context of the 3rd National Italy-Latin America Conference in October 2007.

The External Trade Commissioner, Peter Mandelson, visited Mexico in December 2007 with the principle aim of addressing the issue of strengthening Mexico’s role in the Doha Development Round and the negotiations for the review clauses on outstanding issues relating to the economic partnership: agriculture, services and investment.

The Science and Research Commissioner, Janez Potočnik, visited Mexico in February 2008 with the aim of launching the EU-Mexico Science and Technology International Cooperation Fund (FONCICYT).

Lastly, the Employment, Social Affairs and Equal Opportunities Commissioner, Vladimir Špidla, visited Mexico in April 2008 to launch a new dialogue on employment and social policy between the EU and Mexico (Social Cohesion), through the holding of a first joint seminar. b. The EC-Mexico Joint Council 24

The 5th Meeting of the EC-Mexico Joint Council took place on 19 April 2007 in Santo Domingo, Dominican Republic.

22 The President of Mexico met with the President of the European Commission in the context of the G-8+5 Summit in Heiligendamm, Germany. 23 The Commissioner for External Relations and European Neighbourhood Policy, Benita Ferrero- Waldner, had only visited Mexico in 2006. 24 Based on the ‘Joint Communiqué of the EC-Mexico Joint Council’, 8671/07, Presse 87, 19 April 2007, Santo Domingo, Dominican Republic. NT\722986EN.doc 9 PE 405.661 External Translation In the context of political dialogue, the EC-Mexico Joint Council agreed to strengthen discussions around issues of global importance such as climate change, human rights, energy supply and infrastructure in the field of foreign policy.

In terms of cooperation, the European Commission highlighted the objectives and content of the Mexico Country Strategy Paper 2007-2013. The EC-Mexico Joint Council agreed to focus particularly on sectoral policy dialogue on social cohesion and stated its interest in a sectoral policy dialogue on environment, and on education and culture. It also recognised the progress achieved in the implementation of the ongoing projects in the fields of social development, administration of justice and human rights. It undertook to strengthen bilateral cooperation in this last area.

With regard to the scope of the economic partnership (trade aspects), the EC-Mexico Joint Council assessed the evolution of flows of trade and bilateral investment. It also examined the state of play of negotiations on the review clauses regarding agriculture, services and investments, and confirmed that it intended to improve and enhance cooperation around competition-related issues.

Lastly, the EC-Mexico Joint Council expressed its interest in continuing technical contacts in the area of civil aviation in order to adapt Mexican legislation to that of the Community in this regard.

The next meeting of the EC-Mexico Joint Council will be held during the first half of 2009.

2.1.3. Political dialogue at senior civil servant level25

The Joint Committee held its 7th Meeting in Brussels, Belgium on 26 and 27 November.

Amongst the issues considered in the field of cooperation, the Joint Committee highlighted the progress made in ongoing projects, particularly in the areas of justice, social development, economic cooperation, human rights and science and technology, and agreed to strengthen bilateral cooperation in these last two areas.

Mexico provided information on the legislative proposal being discussed in the Mexican Congress Republic to create a Mexican cooperation agency.

In addition, the Joint Committee discussed the commencement of political dialogue on social cohesion and on environment and climate change policies in 2008. The possibility of creating a working group on climate change was mentioned in this regard. It also announced its intention to increase bilateral cooperation in the field of education and culture, with the possibility of launching a sectoral dialogue in the fields of education, culture and youth.

The Joint Committee considered, too, the issue of multilateralism in terms of strengthening its cooperation within the United Nations Organisation (UNO) and working together more closely in Doha Development Round negotiations.

25 On the basis of the ‘Joint Communiqué of the EC-Mexico Committee’, 26-27 November 2007, Brussels, Belgium. NT\722986EN.doc 10 PE 405.661 External Translation The Committee further stated its desire to continue the technical consultations on civil aviation and noted its intention to commence negotiations for a horizontal civil aviation agreement between Mexico and the EC.

On trade issues, the Joint Committee assessed the general economic situation of both parties and the achievements of the FTAEUM, agreeing that the negotiations on the review clauses on agriculture, services and investments needed to be stepped up. It also acknowledged the results obtained in the meetings of the special committees created by the EC-Mexico Joint Council to help it in its tasks26.

The next meeting of the Joint Committee is to be held in Mexico City in the second half of 2008.

2.1.4. Political dialogue at parliamentary level27

The 5th Meeting of the EU-Mexico Joint Parliamentary Committee (EU-Mexico JPC) was held in Brussels, Belgium on 27 and 28 November 2007.

At the start of the meeting there was a discussion on the support Mexico had received from the EU following the natural disasters in Chiapas and Tabasco. In this regard, special emphasis was placed on the start of sectoral dialogues in the fields of environment and social cohesion. Climate change was also discussed.

The first block of discussions in this meeting focused on political and social issues: the EU on its way towards a new treaty; a political assessment of the application of the Global Agreement; multilateralism; human rights; and social cohesion. The second block, focusing on economic and trade issues, looked at cooperation in the field of business dialogue, energy policies and climate change. The third block focused on cooperation issues: cooperation in the field of student exchanges; cooperation on business dialogue; and cooperation on research and development.

In the framework of this 5th Meeting, the EU-Mexico JPC, in association with the European Commission, organised a seminar on emigration involving the following speakers: Martin Schieffer of the European Commission; Fernando Fernández Martín from the EP delegation; and Carlos Jiménez Macías from the Mexican delegation. Meetings were also held with different political groups in the EP and a visit to the Port of Antwerp, Belgium was organised.

2.2. The Economic Partnership

The objectives of the Global Agreement include establishing a framework for (i) encouraging bilateral and preferential, progressive and reciprocal liberalisation of trade in goods and services, in accordance with the relevant WTO rules, and (ii) encouraging the progressive and reciprocal liberalisation of capital movements and

26 Special Committees have in particular been created in the areas of: Technical Rules and Regulations; Sanitary and Phytosanitary Measures; Customs Cooperation and Rules of Origin; Financial Services; Public Procurement, Industrial Property; and Steel Products. 27 Based on the ‘Minutes of the 5th Meeting of the EU-Mexico Joint Parliamentary Committee’, OJ/662811ES, 27 and 28 November 2007, Brussels, Belgium. NT\722986EN.doc 11 PE 405.661 External Translation payments between Mexico and the EC. Another of its objectives is the gradual and mutual opening of government procurements markets on a reciprocal basis.

According to the Global Agreement, the following must be agreed as cross-cutting measures: (i) those that prevent distortions or restrictions of competition that may significantly affect trade between Mexico and the Community and (ii) those that ensure adequate and effective protection of intellectual property rights in accordance with the highest international standards. In addition, it advises adopting a specific mechanism for resolving trade and trade-related matters that is compatible with the relevant WTO provisions.28

In this context, the EC-Mexico Joint Council adopted the Decisions mentioned above, enabling the FTA between the EU and Mexico to be established, namely: Decision No 2/2000 of the EC-Mexico Joint Council of 23 March 2000 and Decision No 2/2001 of the EC-Mexico Joint Council of 21 February 2001.

One of the main features of these Decisions is that they include review clauses enabling the services, investment and agriculture sectors to be reviewed once the agreement has entered into force.

2.2.1. EU-Mexico bilateral trade

Between 1999 (the year immediately prior to the entry into force of the Global Agreement) and 2006 bilateral trade between the EU and Mexico grew by around 130%.29 According to Eurostat,30 EU-Mexico bilateral trade (imports and exports) for 2006 totalled 29.5 billion euros.

The trend in Mexico’s exports to the EU in 2006, compared with 2005, reflected a pronounced growth in transport equipment, which grew by 57%, whilst the evolution of Mexican imports from the EU noted growth in mineral fuels, lubricants and related materials, and chemicals.31

In addition, 2007 was a particularly significant year for EU-Mexico bilateral trade relations due to the fact that both the industrial goods sector and the automotive sector achieved their complete liberalisation. a. The trade balance32

Mexico was the EU’s 22nd largest trading partner in 2006, while the EU was Mexico’s 2nd largest trading partner (after the United States).

Over this period Mexican exports to the EU totalled 10.6 billion euros and the EU’s exports to Mexico amounted to 19 billion euros. This led to a goods deficit in Mexico’s trade balance with the EU of 8.5 billion euros.

28 In the case of the Global Agreement, the EC-Mexico Joint Council agreed on the establishment of an arbitration procedure. 29 See footnote 25. 30 ‘Mexico. EU Bilateral Trade and Trade with the World’ (EU25), European Commission, DG Trade, 7 August 2007. 31 ‘Europe in Mexico 2007’, European Commission Delegation in Mexico, March 2008, Mexico City. 32 See footnote 30. NT\722986EN.doc 12 PE 405.661 External Translation The largest goods component of bilateral trade during 2006, even greater than mineral fuels, lubricants and related materials, was machinery and transport equipment. In this regard, EU imports from Mexico totalled almost 4.1 billion euros and EU exports to Mexico 8.3 billion euros.

Manufactured goods was the most significant group of products. It accounted for 66.4% of Mexico’s exports to the EU and 84.4% of the EU’s exports to Mexico. At the forefront of this group were machinery and transport equipment.

However, notwithstanding the increase in bilateral trade between Mexico and the EU, with trade totalling just over 29.5 billion euros in 2006, this still only accounted for 7.9% of Mexico’s total trade with the world, compared with the 261.8 billion euros of bilateral trade between Mexico and the US, equivalent to 69.9% of all Mexico’s foreign trade. b. Direct foreign investment33

As of 2007 the EU occupied was the second largest source of direct foreign investment (DFI) in Mexico. There is currently a register of around 7 000 companies with EU participation in their share capital, representing 22% of all companies with DFI established in Mexico.

The three main Member States of the EU that invest in Mexico are, firstly, Spain with 41%, followed by Holland with 35%, and then the United Kingdom with 9%.

2.3. Cooperation

The Global Agreement enables EU-Mexico cooperation in 29 different sectors. Moreover, through its ‘future development clause’, the Global Agreement leaves the door open to increasing the levels of cooperation and/or complementing them through agreements on specific sectors or activities. In addition, it grants the possibility of concluding sectoral agreements in specific areas such as education and culture; the environment; science and technology; and fisheries.

Mexico is also able to benefit from the regional cooperation programmes anticipated in the corresponding cooperation strategy for Latin America, along with specific thematic programmes.

2.3.1. EU-Mexico cooperation strategy 2007-2013

Given Mexico’s specific features – largest economy in Latin America; one of the region’s emerging countries; member of NAFTA and the Organisation for Economic Cooperation and Development (OECD); a middle-income country with one of the highest per capita GDPs in the region – ‘the EU cooperation with Mexico ought thus to be conceived as a dynamic additional support, aimed at helping Mexico in setting up specific policies to tackle the problems linked to its present stage of development’.34

33 See footnote 31. 34 ‘Country Strategy Paper Mexico 2007-2013’, European Commission, E/2007/1063, 25 May 2007, Brussels, Belgium. p. 1. NT\722986EN.doc 13 PE 405.661 External Translation The EU-Mexico cooperation strategy 2007-2013, drawn up by the European Commission, is contained in the 2007-2013 Country Strategy Paper for Mexico, and the bases for its implementation are set out in the Memorandum of Understanding for cooperation, covering the same period and signed by Mexico and the European Commission. The specific objective of the EU-Mexico cooperation strategy 2007- 2013 is ‘to support Mexico’s evolution towards a more advanced stage of development which combines environmentally sustainable economic growth, integration in the world market and social cohesion’35.

The European Commission has allocated 55 million euros to this strategy, financed under the financing instrument for development cooperation (DCI)36. Mexico has to contribute equivalent resources to comply with the objective of cofinancing on an equal and shared basis.

The EU-Mexico cooperation strategy 2007-2013 consolidates and extends the cooperation of the first phase that ran from 2002-2006.

The priority sectors for the current cooperation strategy are:

1) Social cohesion; 2) Sustainable economic development and competitiveness (particularly among small and medium-sized enterprises (SMEs)); 3) Education and culture.

This cooperation strategy also establishes the following priority cross-cutting issues: human rights, gender and the environment.

The year 2007 and the first few months of 2008 have been a very active period with regard to commencement of cooperation projects and programmes. The first four projects were approved in December 2007 for a total amount of 6.25 million euros: (i) Programme of Dialogue on Social Cohesion; (ii) Second Phase of the Human Rights Programme; (iii) Erasmus Mundus External Cooperation Window for Mexico and (iv) EU-Mexico Cultural Fund.

The sectors defined as priorities, including the cross-cutting issues, in the 2007-2013 cooperation strategy, are those that stand to gain the most, along with the scientific and technological cooperation sector and the trade cooperation sector.

2.3.2. Cooperation projects and programmes for priority sectors and issues a. Cooperation on human rights and democracy

The renewal of the Mexico-European Commission Human Rights Cooperation Programme is important in this regard, as it will help to consolidate the progress made in the fields of legislative harmonisation, administration of justice and combating gender violence that was achieved through implementation of the first EU-Mexico

35 Ibid. p. 12. 36 Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006, OJ L 378 of 27.12.2006. NT\722986EN.doc 14 PE 405.661 External Translation cooperation strategy (2002-2006). This cooperation is being undertaken within the framework of the European Instrument for Democracy and Human Rights (EIDHR)37.

The most recent call for proposals in the context of this instrument, known as the EIDHR Country-Based Support Scheme, was open for the financing of micro-projects in Mexico until 1 April last. The objective was to help civil society to develop greater cohesion in its work on civil, political, economic, social and cultural rights b. Trade sector cooperation

In the context of economic cooperation, the EU and Mexico have launched the Capacity Building Project for the EU-Mexico Free Trade Agreement (PROTLCUEM), which aims to strengthen economic, trade and business relations between both parties by building the capacity of the government institutions responsible for implementing the FTAEUM in Mexico. Project funds total some 16 million euros. The project will run until October 2010.

The PROTLCUEM activities focus on seven components, each involving different government institutions, under the cross-cutting issue of information, transparency and communication:

1. Customs: the Administración General de Aduanas (AGA); 2. Technical rules and regulations: the Dirección General de Normas (DGN); 3. Sanitary and phytosanitary measures: Servicio Nacional de Sanidad, Inocuidad y Calidad Agroalimentaria (SENASICA); 4. Investment: Servicio de Administración Tributaria (SAT); 5. Competition: Comisión Federal de Competencia (CFC); 6. Consumer protection: Procuraduría Federal del Consumidor (PROFECO); 7. Industrial and intellectual property: Instituto Mexicano de Propiedad Industrial (IMPI).

Between 2007 and 2009 more than 300 activities will be implemented in the context of these components. Most of these activities consist of organising studies, workshops, seminars, forums and training, as well as the purchase of equipment.

Lastly, it should be noted with regard to trade cooperation that the EC-Mexico Joint Council has adopted Decision No 1/2008 of the EC-Mexico Joint Council of 15 January 200838 implementing Article 9 of Joint Council Decision No 2/2001 of 27 February 2001 on the establishment of a framework for the negotiation of mutual recognition agreements. c. Cooperation on the environment and natural resources

The EU-Mexico environment and climate change sectoral policy dialogue was launched in January 2008, with a first meeting being held between representatives of the Ministry for the Environment and Natural Resources (SEMARNAT) and the European Commission in Brussels, Belgium. The agenda included issues of mutual interest such as environmental governance, sustainable natural resource management,

37 Regulation (EC) No 1889/2006 of the European Parliament and of the Council of 20 December 2006. OJ L 386 of 29.12.06. 38 OJ L 31 of 5.02.2008. NT\722986EN.doc 15 PE 405.661 External Translation the environmental impact of economic activity and climate change, along with the promotion of technologies to reduce greenhouse gas emissions. Some of the most important conclusions of this dialogue were: (i) to reiterate support for the Kyoto Protocol; (ii) to hold consultations at the highest level that will be able to contribute to the success of the negotiations held as part of the UN Convention on Climate Change; (iii) to promote a more ambitious post-Kyoto international climate change regime; and (iv) to agree positions in the context of the UN Commission on Sustainable Development and the Conference of the Parties to the Convention on Biological Diversity, to be held in Berlin in May 2008. At this meeting the parties also agreed on the creation of a working group on climate change to exchange experiences in this area, encourage cooperation around science and technology, and promote vulnerability studies and strategies for adapting to climate change, among other things.

In the context of the EU’s 2007-2010 environmental cooperation strategy for Latin American and Caribbean (LAC) countries and the Asia and Latin America Mandate (ALA IV), the European Investment Bank (EIB) plans to offer approximately 2 800 million euros in loans to projects for environmental sustainability, climate change mitigation, greenhouse gas emissions reduction, renewable energies and energy efficiency, as well as carbon capture and storage in Latin America. In this context, on 6 March 2008, the EIB announced that it had granted the Banco Nacional de Comercio Exterior (BANCOMEXT) a credit line of 50 million euros to finance small or medium-sized public or private sector environment projects in Mexico. This funding is within the context of the Framework Agreement for Financial Cooperation signed between Mexico and the European Investment Bank on 17 March 2006, in accordance with Article 44 of the Global Agreement (resources for cooperation).

In line with the ALA IV Mandate, this credit line is also available to support the EU’s direct investment in Latin America either through projects from subsidiaries of EU companies or joint companies controlled by EU companies and Mexican private bodies, or through projects that include a high level of transfer of technology or know-how from the EU. d. Cooperation on social affairs and poverty eradication

In April 2008 the Minister for Work and Social Welfare, Javier Lozano Alarcón, and the Commissioner for Employment, Social Affairs and Equal Opportunities, Vladimir Špidla, launched a sectoral dialogue on social and employment issues, through a joint seminar entitled the ‘First EU-Mexico Employment and Social Policy Dialogue Seminar’, held on 21 April 2008 in Mexico. This seminar was aimed at identifying how employment can help to reduce poverty and improve social cohesion, as well as identifying common challenges and future issues for cooperation. The next meeting of these civil servants will take place in the context of the 97th meeting of the International Labour Conference next June in Geneva, Switzerland.

The start of this new dialogue marks the first time that the EU and Mexico have widened their cooperation to the social sphere.

NT\722986EN.doc 16 PE 405.661 External Translation e. Cooperation in the SME sector

The Integrated Programme of Support to Small and Medium-sized Enterprises (PIAPYME), currently being implemented in the field of SME sector cooperation, was launched by the European Commission and the Mexican Ministry of Finances in 2004. It is managed by the EU-Mexico Business Centre (CEMUE). Its objective is to strengthen economic, trade and business relations between both parties by increasing the competitiveness and export capacity of Mexican SMEs. The programme's financial envelope is 24 million euros.

The PIAPYME was relaunched in 2007 with a renewed portfolio of services. These currently consist of:

1.- Business assessments through the Integrated Modular Assessment (Diagnóstico Integral Modular - DIMO2), which is a global business assessment applicable to SMEs that enables areas and factors to be assessed, thus establishing the companies' levels of productivity and competitiveness. 2.- Specialist technical assistance: (i) to improve the production, administration and commercial processes of Mexican SMEs; (ii) in each of the export production processes; (iii) for implementing Organic Certification and HACCP safety certificates. 3.- Business meetings between SMEs from both parties, along with the search for, and facilitation of, potential European clients for Mexican SMEs.

In addition, through the PIAPYME, the CEMUE and other national Mexican bodies have implemented a Strategy to Promote the International Competitiveness of the Mexican Export Fisheries and Aquatic Sector, which, as its name suggests, is aimed at increasing the competitiveness of these sectors by means of the certification of processing plants by European experts and technicians from the Federal Commission for Protection against Sanitary Risks (COFEPRIS), and thus increasing fish exports to the EU. The CEMUE provides the necessary technical assistance for implementation of the certifications.

This strategy falls within the context of the International Project to Increase the Competitiveness of the Export Fisheries Sector to the EU created in 2006 which, among other things, plans to establish the Hazard Analysis and Critical Control Points System (HACCP) to guarantee the safety of products, facilitating their entry into the European market. f. Cooperation on science and technology

Scientific and technological cooperation is being conducted in the context of the EC’s Seventh Research Framework Programme (7PM)39 2007-2013, and under the terms of the EU-Mexico Agreement for Scientific and Technological Cooperation.

In this context, in February 2008, the Commissioner for Science and Research, Janez Potočnik, visited Mexico to launch the EU-Mexico Science and Technology International Cooperation Fund. This fund is cofinanced by the European Commission and the National Council for Science and Technology (CONACYT), and represents the sum of 20 million euros over the period 2008-2010. Its objectives are to

39 http://cordis.europa.eu/fp7/home_es.html. NT\722986EN.doc 17 PE 405.661 External Translation create joint research projects, create and strengthen research networks, and embark on strategic coordination activities between both partners and develop human resources. The areas of common interest are: environment and climate; health and biomedical research; fisheries, agriculture and forestry; industrial technology and manufacturing; electronics; materials and meteorology; non-nuclear energy; transport; technologies in the information society; social and economic development; biotechnology; aeronautics and space research. The first call for proposals will be launched in May 2008.

In addition, the European Commission is financing a Liaison Office, based within CONACYT, the task of which will be to publicise the possibilities offered by 7PM to Mexican researchers and seek out future partners for research projects.

A Joint Science and Technology Committee has been created within the framework of the EU-Mexico Agreement for Scientific and Technological Cooperation, and this body held its second meeting on 21 January 2008 in Brussels, Belgium. Some of the most important agreements reached were to seek to set up a fund of 10 million euros for energy research, and another fund totalling 3 million euros for joint research in the field of economic and social sciences. In addition, the creation of a cofinanced bilateral programme will be sought in the field of agriculture, food and biotechnology, plus another in the field of mobility. Work will also be undertaken to create a fund totalling 20 million euros in the field of nanotechnology for projects of mutual interest to Mexico, Latin America and the EU, to present a transport experts mobility project for 2008 and to organise an Information Forum in Mexico at the end of 2008, along with a Seminar Workshop on Transport for 2009. g. Cooperation on training and education

In December 2007 it was announced that the Erasmus Mundus Programme would be extended to Mexico through the External Cooperation Window for Mexico, totalling 4 million euros. Under this programme EU cooperation with third countries aims to foster intercultural understanding and strengthen international links in the field of higher education.

The aim of this window is to ‘foster institutional cooperation in the field of higher education between the EU and Mexico, through a mobility scheme addressing student and academic exchanges for the purpose of studying, teaching, training and researching’40. The programme’s activities include creating institutional associations of European and Mexican teaching centres to carry out the exchanges. The grants will be awarded as a priority to applicants from the 10 most underdeveloped states in Mexico: Chiapas, Oaxaca, Guerrero, Michoacán, Veracruz, Hidalgo, Zacatecas, Puebla, Tlaxcala and Nayarit. h. Cultural cooperation

The first cooperation activity took place on 14 April 2008, with the launch of the EU- Mexico Cultural Fund, proposed by the European Commission with the support of the Mexican Ministry of Foreign Affairs and the National Council for Culture and the Arts (CNCA). Its aim is to support projects on cultural promotion, dialogue on

40 European Commission. Call for Proposals - EACEA/34/07. OJ C 291 of 05.05.2007, Brussels, Belgium. NT\722986EN.doc 18 PE 405.661 External Translation cultural policies and cultural management meetings. In its initial phase (2008-2009) the Fund will have an indicative global budget of 1 million euros for the organisation of cultural exchanges from the EU to Mexico and for non-profit-making cultural festivals in Mexico.

In addition, various cultural events were held in Mexico during 2007 to promote the cultures of the Member States of the EU, such as a literature festival, a European cinema season, the 10th Eurojazz Festival, the European Cinema Festival and the 19th International Festival of Music in Morelia.

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