The Government has welcomed a provisional free trade deal that has been agreed between the EU and Mexico. 

The agreement updates a previous accord and will result in practically all trade between EU countries and Mexico being duty-free, including agricultural products. 

With a population of almost 130 million, Mexico is Ireland's largest trading partner in Latin America and trade was worth over €1.7 billion in 2016. 

Minister of State for Trade and Business Pat Breen said he had no doubt that the deal would present "a plethora of opportunities for Irish business". 

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The EU and Mexico have said they have reached an "agreement in principle" to modernise an existing free trade deal, as Mexico faces pressure from protectionist measures threatened by US President Donald Trump.

Under the updated terms of the 2000 deal, "practically all bilateral trade in goods will now be duty-free, including in the agricultural sector," the European Commission, the EU's executive arm, said in a statement.

Since its plans for a trade alliance with the US were frozen after Mr Trump's election victory, the EU has focused on trying to champion open markets and seal accords with other like-minded countries. 

The move is also seen as sending a strong signal to Mr Trump who last year launched renegotiations of what he has previously referred to as Mexico's "cash cow" - the North American Free Trade Agreement (NAFTA).

The US leader's threat to even axe NAFTA altogether if he is not happy with the new conditions has stoked tensions and uncertainty among signatories to the deal, which also include Canada.

A deal with the EU is part of Mexico's strategy to reduce its reliance on the US, the destination of 80% of its exports.

The EU-Mexico agreement was reached after "months of intense negotiations, said a statement co-signed by EU Trade Commissioner Cecilia Malmstrom, her agriculture counterpart Phil Hogan, and Mexico's Economy Minister Ildefonso Guajardo Villarreal.

While some "technical issues" remained, Brussels said it expected to finalise the full legal text by the end of the year.

"In less than two years the EU and Mexico have delivered a deal fit for the economic and political challenges of the 21st century," said Mr Malmstrom. 

"Today's agreement also sends a strong message to other partners that it is possible to modernise existing trade relations when both partners share a clear belief in the merits of openness, and of free and fair trade."

The pact, which is modelled on a recently agreed trade deal between the EU and Canada, will then need to be green-lighted by the EU's member states and the European parliament. 

On Wednesday, the EU unveiled plans to fast-track deals with Japan and Singapore, saying it was leading the defence of free trade in the face of US "protectionism".