FILE PHOTO: European Trade Commissioner-designate Phil Hogan of Ireland speaks as he attends his hearing before the European Parliament in Brussels, Belgium September 30, 2019. REUTERS/Yves Herman

MEXICO CITY/BRUSSELS (Reuters) - The European Union and Mexico finalised a major upgrade to their free trade deal on Tuesday after the two sides agreed to grant reciprocal market access to each other’s tenders for public contracts.

The two parties are seeking to update their trade accord from 2000, which only covers industrial goods, with services, government procurement, investment and farm produce such as Mexican chicken and European dairy products.

EU and Mexican negotiators reached an initial deal two years ago, but Mexico’s change of president at the end of 2018 appears to have slowed down progress on finalising the last remaining topic - access to public procurement.

European Trade Commissioner Phil Hogan and Mexican Economy Minister Graciela Marquez agreed on the scope of access in a telephone call on Tuesday.

An EU source said Mexico had agreed to open up access to procurement beyond the federal level for the first time, with 14 states ready to open up their procurement markets to EU companies.

The agreement will need to be revised and then, in Brussels, translated into all EU languages before being submitted to EU governments and the European Parliament for approval.

That submission might normally be done by the end of the year, although could be delayed due to coronavirus restrictions.

For the European Union, the Mexico agreements adds to deals struck with Japan and the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay, while trade tensions with the United States persist.

For Mexico, an upgraded deal with the EU is part of a strategy to reduce its reliance on the United States, the destination of 80% of its exports.