British goods remain eligible for reduced or zero tariffs to Mexico after UK secures extension to ‘rules of origin’ provisions

  • British goods remain eligible for reduced or zero tariffs to Mexico after UK secures extension to ‘rules of origin’ provisions 
  • Automotive and food and drink sectors expected to benefit after extension secures certainty for manufacturers and keeps goods competitive in Mexican market 
  • UK also in talks with Mexico on a new, modern trade deal to boost our £6.2 billion trade relationship

The UK has secured an extension to arrangements that were due to expire, helping British manufacturers access lower or zero tariffs when selling their products to Mexico. 

The arrangement will come into effect from 1 January 2024 and will remain in place until a new UK-Mexico Free Trade Agreement enters into force.  

The deal will provide welcome certainty for UK businesses, helping them to continue avoiding high tariffs imposed by Mexico and maintain their competitive edge in the market. The announcement is particularly welcome news for the automotive and food and drink sectors, with road vehicles accounting for almost £300 million in exports to Mexico, almost 20% of all goods exported. 

Mexico is the 14th largest economy in the world and second largest in Latin America, and its demand for imports is forecast to grow by 42% between 2021 and 2035 as its economy continues to grow. With a population of over 130 million people, its market is larger than France and Italy combined. 

Minister for Industry and Economic Security Nusrat Ghani said:

Ensuring UK goods avoid higher tariffs is essential for British businesses to stay competitive in this huge and dynamic market of over 130 million people. 

This extension will provide UK businesses exporting to Mexico with certainty as they plan for next year and beyond while the UK and Mexico negotiate an exciting new trade deal covering the 21st century economy.” 

When the UK negotiated its current trade agreement with Mexico, rolled over from our membership of the EU, time-restricted provisions were agreed to allow for the use of EU inputs in UK products in meeting the UK-Mexico rules of origin. The extension will apply until the entry into force of new, permanent rules as part of a new, enhanced free trade agreement with Mexico. 

Protecting our integrated supply chains with longstanding trade partners like Mexico is vital for both British and Mexican businesses as we continue to see supply chain disruption impact the global economy. This extension will therefore benefit businesses in both countries. 

The UK and Mexico launched negotiations on the new deal in May 2022. The deal is intended to replace our existing, outdated trade deal which was agreed over 20 years ago and boost our £6.2 billion trading relationship. 

Chief Executive of the Society of Motor Manufacturers and Traders Mike Hawes said: 

We welcome this pragmatic decision as it avoids duty liabilities from January 2024 which, given the long standing and productive relationship between the UK and Mexican automotive industries, would have undermined our mutual trade. Mexico is among the top 10 global markets for UK car exports and we now look forward to the swift agreement of a modernised trade deal as this would deliver even more benefits for both sides, boosting bilateral trade in hybrid and ICE technologies as well as zero emission vehicles.”  

Director of Sustainability and Growth at the Food and Drink Federation Balwinder Dhoot said:

This is welcome news for UK food and drink manufacturers, avoiding any disruption to an increasing export market worth almost £175 million to the UK, our third largest in Latin America. It helps maintain important partnerships that are already established between UK and Mexican businesses, and allows continuity and certainty to exporters until a new and ambitious agreement is negotiated. This will help businesses to export more and ensures continued access to seasonal imported ingredients that complement our industry’s use of domestic produce.” 

The news comes as International Trade Weeks comes to a close. Businesses from across the UK participated in over 170 events and activities across the week aimed at supporting them sell internationally for the first time.

Published 10 November 2023