Washington: The European Union and Mexico have announced a major update to their free trade pact signed nearly two decades ago, a development that will allow almost all goods, including agricultural products, to move between Europe and Mexico duty-free.

The deal, which has yet to be formally signed, is expected to increase trade in dairy, pork, services, digital goods and medicines between the economies. It will also give Mexico greater access to an advanced consumer market, as negotiations with the Trump administration over the modernisation of the North American Free Trade Agreement still appear to be on uncertain ground.

European Commission President Jean-Claude Juncker says trade can and should be a win-win process. Credit:AP

And it sends a message to President Donald Trump that some of the United States' closest trading partners are moving ahead with deals of their own — potentially leaving US exporters on the losing end in foreign markets.

In its announcement, Mexico said the agreement would help modernise its commercial relationship.