The European Union and Mexico have reached a preliminary agreement on a new free trade deal.

Mexico is Ireland's largest trading partner in Latin America, accounting for over half of total merchandise trade with the region.

This trade was worth over €1.7bn in 2016.

The Minister of State for Trade Pat Breen has welcomed the development.

He said: "Ireland is ideally placed to benefit from the removal of tariffs from goods and services to Mexico.

"This preliminary deal between the EU and Mexico is great news.

"The existing deal between the EU and Mexico is 21 years old and mainly covers industrial goods.

"This updated deal seeks to include a wide range of sectors, with agricultural exports from the EU set to benefit the most."

EU Trade flows and balance, 2007-2017 | Source: Eurostat/European Commission

In May 2016, the EU and Mexico launched negotiations to modernise the agreement, including rules on trade.

The first round of negotiations followed in June of that year. The most recent round took place in January this year in Mexico City.

Ireland is a significant exporter to Mexico of powdered milk and milk derivatives, the removal of tariffs "should boost this trade significantly", Minister Breen said.

This deal follows other recent trade deals between the EU and Canada, Japan and Singapore.

The EU is also currently pursuing agreements with Australia, New Zealand and several Latin American nations.

Minister Breen added: "The EU hopes to have the deal with Mexico finalised by the end of the year and is the first EU trade deal that contains an agreement to tackle corruption, very important for businesses hoping to break into a new market."