As talk in the global auto industry turns to the prospect of rising trade tariffs spurred by Donald Trump’s return as US President, Germany’s auto industry trade association – the VDA – has hailed the conclusion of EU-Mexico negotiations for an updated trade agreement.
The VDA struck a notably pro-trade tone, just as incoming US President Donald Trump has raised the prospect of new US trade tariffs for Canada and Mexico.
The EU has just concluded negotiations with Mexico on an updated trade agreement, the European Commission has announced in a press release.
Mexico is the EU’s second largest trading partner in Latin America after Brazil.
Negotiations for a new modernised agreement started in May 2016 and an agreement in principle on trade aspects was reached in 2018, but was never ratified.
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By GlobalDataThe deal is particularly important in agri-business sectors, but also relevant to the auto industry.
VDA President Hildegard Müller said in statement: “The conclusion of negotiations to update the EU-Mexico trade agreement is good news for the entire European economy, and especially for Germany as an export country. In the German automotive industry, around 70% of jobs depend on exports. This is the basis of our prosperity.
“The conclusion towards a modernisation of the agreement is also an important political signal – especially in times of increasing protectionism. It is now important that the ratification process of the agreement is set in motion quickly and completed as soon as possible.”
The VDA also pointed out that Mexico is a very important location for the German automotive industry. German automotive suppliers have more than 330 locations in Mexico. In addition, German automobile manufacturers have their own plants there, where a new production record of 716,000 cars was set in 2023. This, the VDA said, made Mexico the most important production location for German manufacturers in America, behind the USA and ahead of Brazil and Argentina.
The VDA also noted that since Mexico is part of the USMCA free trade area, it is also important as a factory location for vehicles sold in the USA or Canada. In addition, Mexico still offers great potential as an export market: around 21,000 cars were exported from Germany to Mexico in 2023.
The VDA also maintains that only a ‘strong and export-capable industry will be able to master the major challenges of the transformation and thus make a decisive contribution to climate protection’.
The trade association also says that ‘only with economic strength the EU can play an important role on the world stage. Trade agreements provide an important basis for this. Brussels should conclude further trade agreements and continue to push ahead with negotiations with India, the ASEAN countries and Australia, among others.’
