PART III (TRADE) TITLE I INITIAL PROVISIONS ARTICLE X.X. Establishment of a Free Trade Area ARTICLE X.X. Objectives

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1 Disclaimer: In view of the Commission's transparency policy, the Commission is publishing the texts of the Trade Part of the Agreement following the agreement in principle announced on 21 April The texts are published for information purposes only and may undergo further modifications including as a result of the process of legal revision. The texts are still under negotiations and not finalised. However, in view of the growing public interest in the negotiations, the texts are published at this stage of the negotiations for information purposes. These texts are without prejudice to the final outcome of the agreement between the EU and Mexico. The texts will be final upon signature. The agreement will become binding on the Parties under international law only after completion by each Party of its internal legal procedures necessary for the entry into force of the Agreement (or its provisional application). PART III (TRADE) TITLE I INITIAL PROVISIONS Establishment of a Free Trade Area The Parties to this Agreement hereby establish a free trade area, consistent with Article XXIV of GATT 1994 and Article V of GATS. Objectives The objectives of Part III of this Agreement are: a) the expansion and the diversification of trade in goods, in conformity with Article XXIV of the GATT 1994, between the Parties, through the reduction or the elimination of tariff and non-tariff barriers to trade; b) the facilitation of trade in goods through, in particular, the agreed provisions regarding customs and trade facilitation, standards, technical regulations and conformity assessment procedures as well as sanitary and phytosanitary measures, while preserving the right of the Parties to regulate within their territories and the Parties' flexibility to achieve public policy objectives; c) the liberalisation of trade in services, in conformity with Article V of GATS; d) the development of a climate conducive to increased investment flows by providing transparent, stable and predictable rules governing the conditions for establishment of enterprises and the related movement of capital, and guaranteeing an appropriate

2 balance between the liberalization and the protection of investments, and the right of the Parties to regulate in order to achieve legitimate policy objectives; e) the establishment of a Court System to solve investor-state disputes in an effective, impartial and predictable manner; f) the effective and reciprocal opening of government procurement markets of the Parties; g) the promotion of innovation and creativity by ensuring an adequate and effective protection of intellectual property rights, in accordance with international obligations in force between the Parties, and the balance between this protection and the public interest; h) the conduct of trade and investment relations between the Parties in conformity with the principle of free and undistorted competition; i) the promotion of sustainable development and of the development of international trade in a manner that contributes to sustainable development, encompassing economic development, social development and environmental protection; j) the establishment of an effective, fair and predictable dispute settlement mechanism to solve disputes on the interpretation or application of this Part of the Agreement. Definitions of General Application For the purposes of Part III of this Agreement, and unless otherwise specified, the below terms shall have the following meaning: administrative ruling of general application means an administrative ruling or interpretation that applies to all persons and fact situations that fall generally within its ambit and that establishes a norm of conduct but does not include: a) a determination or ruling made in an administrative or quasi-judicial proceeding that applies to a particular person, good or service of the other Party in a specific case; or b) a ruling that adjudicates with respect to a particular act or practice; Agreement on Agriculture means the Agreement on Agriculture, contained in Annex 1A to the WTO Agreement; agricultural good means a product listed in Annex 1 to the Agreement on Agriculture Anti-dumping Agreement means the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement Customs Valuation Agreement means the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement; days means calendar days, including weekends and holidays;

3 DSU means the Understanding on Rules and Procedures Governing the Settlement of Disputes, contained in Annex 2 to the WTO Agreement; existing means in effect on the date of entry into force of this Agreement; GATS means the General Agreement on Trade in Services, contained in Annex 1B to the WTO Agreement; GATT 1994 means the General Agreement on Tariffs and Trade 1994, contained in Annex 1A to the WTO Agreement; goods means both materials and products; good of a Party means a domestic good as this is understood in the GATT 1994, and includes originating goods; Harmonised System or HS means the Harmonised Commodity Description and Coding System, including its General Rules of Interpretation, Section Notes, Chapter Notes and Subheading Notes and amendments thereto; enterprise means any legal entity duly constituted or otherwise organised under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association; measure includes, inter alia, any law, regulation, rule, procedure, decision, administrative action, requirement or practice; national means a natural person who has the nationality of one of the Member States of the European Union or of Mexico according to their respective legislation, or is a permanent resident of a Party; originating means qualifying as originating under the rules of origin set out in the Chapter on Rules of Origin XX person means a natural person or an enterprise; preferential tariff treatment means the rate of customs duty applicable to an originating good pursuant to the tariff elimination schedules in Annex X; Safeguards Agreement means the Agreement on Safeguards, contained in Annex 1A to the WTO Agreement; SCM Agreement means the Agreement on Subsidies and Countervailing Measures, contained in Annex 1A to the WTO Agreement; service supplier means a person that supplies or seeks to supply a service; SPS Agreement means the Agreement on the Application of Sanitary and Phytosanitary Measures, contained in Annex 1A to the WTO Agreement;

4 state enterprise means an enterprise that is owned or controlled by a Party; TBT Agreement means the Agreement on Technical Barriers to Trade, contained in Annex 1A to the WTO Agreement; territory means the territory where this Agreement applies as set out under Article [Scope of territorial application X.X/Global A]; third country means a country or territory outside the geographic scope of application of this Agreement; TRIPS Agreement means the Agreement on Trade-Related Aspects of Intellectual Property Rights, contained in Annex 1C to the WTO Agreement; Vienna Convention on the Law of Treaties means the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969; WTO means the World Trade Organization; and WTO Agreement means the Marrakesh Agreement Establishing the World Trade Organization, done on 15 April [.] Relation to the WTO Agreement The Parties affirm their rights and obligations with respect to each other under the WTO Agreement. Relationship to Other Agreements References to laws and other Agreements 1. When Part III of this Agreement refers to laws, either generally or by reference to a specific statute, regulation or directive, the reference is to the laws, as they may be amended, unless otherwise indicated. 2. When Part III of the Agreement refers to or incorporates by reference other agreements or legal instruments in whole or in part, those references include, unless otherwise indicated:

5 (a) related annexes, protocols, footnotes, interpretative notes and explanatory notes; and (b) successor agreements to which the Parties are party or amendments that are binding on the Parties, except where the reference affirms existing rights. Fulfilment of Obligations For greater certainty, except in cases of special urgency as provided for in paragraph [X] of Article [X] of this Agreement, if a Party considers that the other Party has failed to fulfil the obligations under this Agreement, suspension of rights and obligations under Part [Trade] of this Agreement shall only take place for violations of Part [Trade] and conform to provisions of such Part, including Chapter [Dispute Settlement].

6 TITLE XXX ADMINISTRATIVE AND INSTITUTIONAL PROVISIONS/SPECIFIC TASKS IN TRADE MATTERS OF THE BODIES ESTABLISHED UNDER THIS AGREEMENT ARTICLE X.1 Specific Functions/Tasks of the Joint Council 1. When the Joint Council performs any of the tasks conferred upon it in Part III of this Agreement, it shall be composed, at ministerial level, of representatives of the EU Party with responsibility for trade-related matters, on the one side, and of the representative of the Ministry of Economy Mexico, on the other, in accordance with the Parties' respective legal frames, or by their designees. 2. The Joint Council may modify, in fulfilment of the objectives of Part III of this Agreement: (a) the lists of goods contained in Annex XXX (Elimination of Customs Duties), with the object of [ ]; (b) the Schedules attached to Annex XXX (Elimination of Customs Duties) in order to [ ]; (c) Appendixes XXX to Annex XX (Concerning the Definition of the Concept of "Originating Products" and Methods of Administrative Cooperation in the Chapter on Rules of Origin and Origin Procedures; (d) Annex XXXX to Chapter X (Government Procurement); (e) Annex XXXX to Chapter X (Protected Geographical Indications); (f) Annex XXI (Sub-Committees); (g) the Rules of Procedure referred to in Chapter X (DS/Rules of Procedure), where appropriate; (h) the Code of Conduct referred to in Chapter X (DS); (i) the Code of Conduct referred to in Chapter X (Investment). 3. The Joint Council may also, in fulfilment of the objectives of Part III of this Agreement: (a) issue interpretations of the provisions of Part III of this Agreement; (b) take such other decision if so provided in Part III of this Agreement; and (d) take any other action in the exercise of its functions as the Parties may agree. 4. Each Party shall implement, in accordance with its applicable legal procedures, any modification referred to in subparagraph 2(a) within such period as the Parties may agree. ARTICLE X.2 Specific Functions/Tasks of the Joint Committee

7 1. When the Joint Committee performs any of the tasks conferred upon it in Part III of this Agreement, it shall be composed of representatives of the EU Party with responsibility for trade-related matters, on the one side, and of the representative of the Ministry of Economy of Mexico, on the other, in accordance with the Parties' respective legal frames, at senior official level or by their designees. 2. The Joint Committee shall: (a) assist the Joint Council in the performance of its functions regarding trade-related matters; (b) be responsible for the proper implementation and application of the provisions of Part III of this Agreement and for the evaluation of the results obtained from its application. (c) without prejudice to Chapter Dispute Settlement, seek to prevent and solve differences or disputes that may arise regarding the interpretation or application of Part III of this Agreement; (d) supervise the work of the Sub-Committees and other bodies established under Part III; and (e) discuss ways to further enhance trade and investment between the Parties. 3. In the performance of its duties under paragraph 2, the Joint Committee may: (a) establish additional Sub-Committees and other bodies from those established in Part III of this Agreement, composed of representatives of the Parties, and assign them responsibilities within its competence. It may also decide to modify the functions that are assigned to the Sub-Committees and other bodies it establishes, as well as dissolve them; (b) recommend the adoption of decisions in compliance with the specific objectives of Part III of this Agreement, to the Joint Council, including the modifications referred to in paragraph 2 a) of Article X.1 (functions of the Joint Council), or adopt such decisions in the intervals between the meetings of the Joint Council, including when the joint Council is not able to meet; and (c) take any other action in the exercise of its functions as the Parties may agree or as instructed by the Joint Council. ARTICLE X.3 Coordinators of Part III of this Agreement 1. The European Commission and Mexico shall appoint a Coordinator for Part III of this Agreement, within sixty days after the entry into force of this Agreement. 2. The coordinators shall facilitate communications between the Parties on any matter covered by Part III, as well as other contact points as required by Part III, including work jointly to develop agendas and make all other necessary preparations for the meetings of the Joint Council and the Joint Committee according to the above provisions, and shall follow-up on the decisions of such bodies, as appropriate.

8 ARTICLE X.4 Sub-Committees of Part III of this Agreement 1. The Sub-Committees shall be composed of representatives of the [European Commission], on the one side, and of representatives of Mexico, on the other. 2. The Sub-Committees shall meet [once per year] or at the request of either Party or of the Joint Committee, at an appropriate level. When in person, meetings shall be held alternately in Brussels or Mexico. Meetings may also be held by any technological mean available to the Parties. 3. The Sub-Committee shall be co-chaired by both Parties. Decision making 1. For the purposes of attaining the objectives of this Agreement, the Joint Council and the Joint Committee have the power to make decisions as specified in Part III of this Agreement. The decisions shall be binding on the Parties, subject to the completion of any necessary internal requirements and procedures, and the Parties shall implement them. 2. For the purposes of attaining the objectives of this Agreement, the Joint Council and the Joint Committee have the power to make appropriate recommendations in respect of all matters covered by this Part III of this Agreement. The sub-committees and other bodies established under Part III of the Agreement may also make appropriate recommendations in the cases provided for under this Part of the Agreement. 3. Decisions and recommendations shall be made by mutual consent. ARTICLE X Relationship with Civil Society 1. Each Party shall meet its domestic advisory group referred to in Article XXX to discuss matters related to the application of this Part of the Agreement at least once a year. 2. When the Joint Council or the Joint Committee meets in its trade configuration, it shall convene a meeting of the Civil Society Forum referred to in Article XXX in order to conduct a dialogue on the application of this Part of this Agreement.