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EU and Mexico finalize trade deal ahead of Trump’s return

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The EU and Mexico have agreed on a long-delayed trade deal as they seek to reduce their dependence on the US, hours before Donald Trump returns to the White House.

After nine years of negotiations, the two sides announced on Friday that they would modernize their existing agreement. The announcement came just weeks after Trump threatened tariffs and follows a similar trade deal signed in December between the EU and the South American trade bloc Mercosur.

“This landmark agreement proves that open, rules-based trade can ensure our prosperity and economic security, as well as climate action and sustainable development,” said European Commission President Ursula von der Leyen.

EU-Mexico trade in goods reached €82 billion in 2023, while two-way trade in services amounted to €22 billion in 2022.

Under the agreement, Mexico will eliminate tariffs of up to 100% on EU exports, including cheese, poultry, pork, pasta, jams, marmalades, chocolate, and wine.

Mexican producers will no longer be able to use the protected names of more than 500 products, such as champagne, Parma ham, and Rioja wine.

The agreement will allow Mexico to export duty-free electric vehicles to the EU if they contain at least 60% Mexican or EU-made components by value. This will make it more difficult for China to use Mexico as a production base for electric vehicles exported to the EU, as they will pay a standard 10% tariff if they use Chinese batteries.

“Companies will prefer to source from Europe rather than China,” an EU official told the Financial Times (FT).

The EU will also increase low-tariff quotas on Mexican exports such as beef, poultry, and ethanol.

The two sides had reached a preliminary agreement to extend the 20-year agreement in 2020, but the decision was delayed in part because of Mexico’s reluctance to open its energy market to EU companies.

EU companies will be treated the same as Mexico’s other preferential trading partners, including the US and South Korea, the official added.

Mexico, which exports more than 80% of its goods to the US, is one of the most vulnerable countries in the world to Trump’s tariff threats. The agreement with the EU could help provide exporters with alternatives if the new president implements his promised 25% tariffs.

Carlos Serrano, chief economist at BBVA Mexico, said: “This is very positive because it will give certainty to investors, as it will include protection mechanisms. It’s a vote of confidence in Mexico, and it also shows that Mexico wants to be aligned with the US and Europe.”

Dmitry Grozoubinski of the consultancy ExplainTrade said “turbulent times” had pushed the two sides to resolve the last remaining issues.

The EU stated that the deal, which also includes investment provisions, would help boost the bloc’s exports of services in key areas such as financial services, transport, e-commerce, and telecommunications, while also protecting intellectual property rights more effectively.

The agreement also includes legally binding commitments on labor rights, environmental protection, climate change, and responsible business conduct, overseen by a dispute settlement procedure.

The agreement still needs to be signed and then ratified by EU and Mexican lawmakers.

European farmers have protested against the Mercosur agreement and are likely to pressure their governments not to ratify the agreement with Mexico.

Diplomacy

Ukraine faces demographic collapse as fertility rates slide

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British magazine The Economist reported that mobilization, conflict casualties, and pervasive uncertainty have left Ukraine confronting the threat of demographic collapse.

According to data cited by the magazine, Ukraine’s fertility rate has declined from 1.2 children per woman in 2020 to between 0.8 and 0.9.

This rate marks a lower level than that of any major nation except South Korea.

In the first half of 2026, the number of deaths in Ukraine surpassed the number of newborn babies threefold.

The report noted that ever since independence was gained in 1991, the number of births in the country has lagged behind the number of deaths every year.

The Economist emphasized that the demographic collapse driven by the ongoing fighting constitutes an “existential threat.”

The magazine identified mass refugee migration as the principal driver of the population loss.

More than 5 million Ukrainians reside abroad, predominantly in Europe.

The proportion of those wishing to return among those who left the country is also steadily shrinking.

According to data from the Centre for Economic Strategy (CES), the share of those seeking to return dropped from 74% in 2022 to 43%.

The fact that the majority of refugees consist of Ukrainian children and women under the age of 44 further aggravates the demographic picture.

The Kyiv government decided to exempt men under the age of 25 from mobilization to alleviate the demographic decline.

The magazine reported, however, that many young people have fled the country, while those who remain do not plan to start families.

Projections cited in the report indicate that even if hostilities cease in the coming years, Ukraine can, at best, expect merely a deceleration of depopulation.

Olga Duhnich, an expert at the Ukraine-based think tank Frontier Institute, stated that the generation born in the 1990s and 2000s is the least populous in Ukraine’s modern history, meaning the country cannot expect a post-conflict baby boom.

The United Nations (UN) projects that Ukraine’s population will decline by 0.7% to 0.9% each year over the next two decades.

Under this projection, Ukraine’s population will fall to approximately 25 million by 2040.

If hostilities drag on, people are expected to abandon plans to have children, deepening the crisis even further.

Beyond exempting men under 25 from mobilization, the Kyiv government is rolling out various support packages to boost birth rates.

Under legislation enacted in the country, parents who have children receive a direct payment of 50,000 hryvnias (around $1,100).

Parents are also paid 7,000 hryvnias each month during the first year.

Other state programmes subsidize childcare costs, while Ukrainian soldiers are granted free freezing of egg and sperm cells.

Ukrainian Minister of Social Policy Denis Ulyutin said in May to the Livyi Bereh media outlet that roughly 22 to 25 million people lived in government-controlled territories.

Ulyutin characterized the prevailing picture by saying: “This is a catastrophe.”

Ella Libanova, Director of the Institute for Demography and Quality of Life Research, estimated the population at 29 million during the same period.

Libanova attributed the steep fall from a population of 30 million in 2025 to high death rates and the demographic crisis.

In a statement in October, Libanova announced that Ukraine’s population had slipped to 28.5 million.

Institute Director Libanova said: “The population is already at 28.5 million; we lost half a million people. We lost them, but thankfully this was still caused by migration rather than casualties.”

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Diplomacy

Armenian opposition urged to form joint front against constitution

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Narek Karapetyan, a lawmaker and head of the Strong Armenia faction in the Armenian parliament, has urged opposition parties to unite around four core principles set out in a joint declaration.

The key points of the declaration include resisting territorial concessions and blocking the adoption of a new constitution, which the opposition has termed the “Aliyev constitution”.

According to a report by Aysor.am, Narek Karapetyan stated that the opposition meeting was originally planned to be led by his uncle, businessman and Strong Armenia movement leader Samvel Karapetyan.

“We initiated the meeting, but the authorities took preemptive steps to prevent Samvel Karapetyan from launching the national unification process,” Narek Karapetyan said.

Noting that, despite these events, opposition representatives convened and signed a joint declaration based on four agreed articles, Narek Karapetyan invited other opposition forces and members of the public to join the alliance.

“We will not allow them to implement the Aliyev constitution in Armenia. We must unite,” Karapetyan said.

Ahead of these developments, Armenian National Security Service personnel detained Strong Armenia Party leader Samvel Karapetyan following a search of his home.

The party’s press secretary, Agavni Sukiasyan, announced that on the morning of the same day, the Investigative Committee of Armenia searched the homes of both Samvel Karapetyan and Narek Karapetyan.

In a report citing the Investigative Committee, Armenpress stated that Samvel Karapetyan was detained as part of a case involving allegations of causing large-scale financial damage to the Electric Networks of Armenia (ENA) company, embezzling entrusted property, and money laundering.

According to committee figures, the total damage inflicted on the company exceeds $179 million.

Narek Karapetyan’s home was also searched at the end of July as part of a criminal case.

On 22 July, Armenia’s Central Electoral Commission approved the Prosecutor General’s request to strip Narek Karapetyan of his parliamentary immunity, and Karapetyan was charged with large-scale money laundering.

According to information reported by Sputnik Armenia, the investigation is linked to charges brought against Strong Armenia supporter Aleksan Aleksanyan.

Investigative authorities allege that Aleksanyan received approximately $4.4 million and €230,000 from the Karapetyan-owned Tashir Foundation under the guise of gifts and loans.

Several criminal cases had previously been opened against Samvel Karapetyan.

In 2025, Karapetyan was charged with publicly calling for the violent seizure of power after backing the Armenian Apostolic Church, which had been criticized by Armenian Prime Minister Nikol Pashinyan.

In January, legal proceedings were also launched against Karapetyan on charges of large-scale tax evasion and money laundering.

Separately, in early July 2025, the Armenian parliament approved a bill enabling the nationalization of the Electric Networks of Armenia company.

In March, Armenia’s Constitutional Court ruled that the nationalization process in question complied with the law.

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Putin approves standard-gauge rail link on China border

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According to analysts, the use of the same standard track gauge as China on the new railway line demonstrates Moscow’s ‘pragmatic’ approach toward strengthening ties with Beijing.

Russian President Vladimir Putin has signed into law an agreement providing for the construction of a second standard-gauge railway line at a key border crossing with China. Moscow aims with this move to accelerate its eastward pivot and bolster relations with Beijing ahead of the Asia-Pacific Economic Cooperation (APEC) Summit.

According to a document published on Monday on Russia’s official legal information portal, Putin signed the law ratifying the railway agreement reached with Beijing during his visit to China in May.

The two sides agreed to jointly construct a new line along the cross-border railway connecting Zabaykalsk in southeastern Russia with the city of Manzhouli in northern China.

The defining feature of the new line is that it will use the 1,435-millimetre standard gauge, the most widely used track gauge globally and the one adopted by China, rather than the 1,520-millimetre broad gauge predominantly employed across Russia’s national rail network.

Speaking to the South China Morning Post, Li Lifan, a specialist in Russian and Central Asian affairs at the Shanghai Academy of Social Sciences, said the second standard-gauge line will help ease freight transit capacity constraints at the border crossing. This will reduce waiting times for cargo trains and enhance the speed and reliability of transport services along the eastern corridor.

Freight trains running from China to Russia currently rely on a single 1,435-millimetre gauge track at the Manzhouli-Zabaykalsk border crossing. This transit point handles more than 60% of rail freight trade between China and Russia, as well as a significant share of Europe-bound cargo traffic.

Because trains travelling in opposite directions must take turns using the same track to cross the border, bottlenecks occur periodically.

Zoey Wang, a director covering corporate, infrastructure, and project finance ratings at international credit rating agency Fitch Ratings, said the project is expected to provide more stable transport conditions for two-way shipments of commodities, machinery and electrical goods, consumer products, and cross-border e-commerce cargo.

According to Wang, the project will make corporate shipping schedules more predictable and help reduce costs arising from delays, cargo detention, and supply chain disruptions.

According to Russian media reports, Moscow expects the second line to increase annual transport capacity at the Zabaykalsk border crossing to 39 million tonnes by 2030, an increase of 11 million tonnes over current levels.

With Western sanctions curtailing its access to European markets, Russia has increasingly redirected its trade toward Asia in recent years.

However, experts caution that putting the new line into operation does not necessarily ensure a substantial increase in trade volume. In the view of analysts, the true significance of the decision lies in the strategic calculations underpinning it.

According to Li, despite Russia’s stated target, inadequacies in the country’s domestic railway infrastructure will constrain actual growth. This is because cargo will still need to be transhipped onto 1,520-millimetre gauge rolling stock to move further into Russia.

“This decision does not indicate a shift in the country’s railway gauge system. Rather, it represents a pragmatic choice made at a time when Russia’s pivot to the East is entering its implementation phase,” Li said.

In Li’s assessment, Moscow concluded that the benefits of easing bottlenecks along the trade corridor with China outweighed the costs of preserving existing procedural barriers at the border.

Li also noted that the timing of Putin’s signing was a deliberate choice. The decision came ahead of the Asia-Pacific Economic Cooperation Summit to be held later this month in Shenzhen.

According to Li, Moscow wants to “demonstrate that it can deliver on its commitments to Beijing and set an example that could be replicated elsewhere.”

Zhao Long, director of the Institute of International Strategic and Security Studies at the Shanghai Institutes for International Studies, offered the following assessment:

“Although Russia has long adhered to the broad-gauge standard, the depth that strategic trust and coordination between China and Russia have reached today leaves no real reason to resist laying standard-gauge railways on specific connecting sections, particularly across critical border segments.”

Zhao continued:

“This situation also reflects the growing influence and gravitational pull of China’s economic, trade, and transport connectivity networks, not only over Russia, but across the entire Eurasian continent.”

Wang also said the project demonstrates that China’s railway technical standards and associated services are finding increasingly broad application internationally.

However, Wang cautioned that increasing border crossing capacity does not automatically guarantee a corresponding rise in trade volume.

According to Wang, the actual impact of the project will depend on a range of factors, including freight rates, inter-customs coordination, European demand, regulatory policies, and operating conditions along the corridor.

According to Russian media reports, construction on the Russian section of the second line is already under way and is expected to be completed by the end of 2026. The section on the Chinese side is scheduled for completion in early 2027.

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