Mexico reached a new free trade deal with the EU amid increased protectionism from the U.S. as the Latin American country seeks to reduce its reliance on the U.S., which buys 80% of Mexico's exports.

The new deal covers farm products, services and investment and government procurement in addition to the industrial goods covered under a 1997 trade accord between Mexico and the EU. The latest agreement in principle also includes provisions on labor and environmental standards and fighting corruption.

Under the new deal struck April 21, the European Commission said all trade in goods with Mexico will be duty-free, and Mexico will remove its high tariffs on key EU food products.

"With this agreement, Mexico joins Canada, Japan and Singapore in the growing list of partners willing to work with the EU in defending open, fair and rules-based trade," European Commission President Jean-Claude Juncker said, as reported by Reuters.

The agreement will let Mexican companies bid for government contracts in Europe and vice versa.

The EU is Mexico's third-biggest trading partner, and Mexico, with 128 million people, is the EU's second-largest trading partner in Latin America after Brazil, according to the commission. Total EU-Mexico trade amounted to €62 billion for goods in 2017, and the EU exported goods worth €38 billion to Mexico in 2017.

The new Mexico-EU deal comes as the Latin American country, Canada and the U.S. hold talks to renegotiate the North American Free Trade Agreement. The EU struck a trade deal with Japan in 2017 and is due to engage in talks next week with the Mercosur bloc of Argentina, Brazil, Paraguay and Uruguay, Reuters reported.