Doing Business in Mexico, English

Labor and Migration in Mexico

24 Aug , 2020  

Labor, Employment, Assembly, Migration, Mexican Lawyers, USMCA, Manufacturing

Our seventh chapter of Doing Business in Mexico, Labor and Migration in Mexico, will provide a general overview of the relevant labor law provisions on employment, from worker rights, dismissals to unions and collective bargaining, including a brief summary regarding the USMCA, the rapid response mechanism, as well as information on migration.

This Chapter includes the following sections:

  1. Labor and Migration Environment
  2. Individual Employment Agreements
  3. Foreign Employees
  4. Outsourcing
  5. Salary and Wages
    1. Over-working hours
    2. Rest Day
    3. Labor Rights and Premiums
  6. Termination of Employment
  7. USMCA Labor Chapter
    1. Publications
    2. Labor Chapter and its Enforcement Mechanism
  8. Labor Mexican Amendment: Unions and Collective Bargaining
  9. Migration Matters
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Labor and Migration Environment

Mexico’s labor framework is set forth in the Constitution and the Federal Labor Law (hereon “Labor Law”). Accordingly, a “job” or “working relation” is defined as rendering of a subordinated personal service to another person in exchange for a wage.[1] The job definition is quite broad because any person that renders a subordinated service to another, who in turn pays compensation, is deemed as an employee, regardless of the nature of the service performed, and he or she is entitled to labor rights.

Pursuant to the Labor Law, workers are entitled to numerous rights. Employees are entitled, for instance, to profit sharing, which can only be dismissed in a limited number of cases. If a worker is terminated without a justified cause, he or she is entitled to seek job reinstatement or severance pay. Indeed, foreign investors perceive Mexican Labor Law as “overprotective” and costly, as noted in WEF’s Global Competitiveness Index 2019

In addition to the Labor Law, Mexico has the following labor-related laws or regulations that complete its regulatory framework:

  • Social Security Law,
  • Retirement Savings System Law,
  • Institute of the National Housing Fund for Workers Law (INFONAVIT Law),
  • Federal Regulation on the Safety, Hygiene, and Environment at the Workplace,
  • The Mandatory Standard NOM-035-STPS-2018 on Psychosocial Risk Factors at Work – Identification, Analysis, and Prevention,[2] establishing the elements to identify, analyze and prevent psychosocial risk factors, as well as to promote an environment organizational support in the workplace.

The employers are required to register all of their employees before Mexican public institutions, namely the Mexican Social Security Institution (IMSS, acronym in Spanish), the National Housing Fund for Workers (INFONAVIT, acronym in Spanish) and the National Fund Institute for Workers’ Expenditures (FONACOT, acronym in Spanish). As a result, an employer has to pay “social-taxes” to these agencies. Failing to register or make timely payments regarding these social-taxes, the employer is subject to penalties and surcharges.

Also, the employer will have to register before the tax or treasury authority of the State (i.e. local authority).  States collect a Payroll tax that is paid by the employer based on wages and other expenditures. 

Individual Employment Agreements

As a general rule, the Labor Law establishes that an individual employment agreement duration is indefinite (i.e. permanent). Temporary contracts are permitted, however, only when there is a justified cause, such as probationary periods, initial training, among other situations. The employer has the legal duty to have a copy of the agreement.

Foreign Employees

Mexican employers may hire foreign employees. However, the Labor Law provides that employers must comply… Continue reading.

Outsourcing

Outsourcing labor legal schemes are carefully regulated to prevent their abusive use against employees and their labor rights. The 2012 labor reform[3] introduced the “outsourcing or subcontracting regime”, including two very relevant provisions. In essence, a labor-intensive service agreement, for instance, may have far-reaching legal consequences to the extent of deeming service provider’s workers as employees of the contracting company.

In essence, the Labor Law considers that outsourcing entails a “contractor” (i.e. outsourcing company) that performs work or provides services to a “beneficiary”, an individual or enterprise. The beneficiary sets the tasks and supervises the development and execution of the contracted work. In turn, the outsourcing company will carry the services or work with his own employees.

An outsourcing company is responsible for all labor obligations, including social security and tax regarding, his employees. Needless to say, the beneficiary of the outsourcing services is jointly liable in the event that the outsourcing company fails to fulfill its labor obligations (including tax and social security).

The Labor Law considers, for instance, “human resources” companies (e.g. head-hunters) as….Continue reading.

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[1] Article 20 of the Labor Law.

[2] Published on October 23, 2018, in the Official Gazette.

[3] Amendments to Labor Law published on November 30, 2012 and being effective as of December 1, 2012.

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English, News

USMCA Hotline and more | The Trading Room

14 Aug , 2020  

Mexican Economic Newsletter, International Trade News in Mexico

USMCA Hotline for Labor Complaints

 

On Monday, August 3, the United States Embassy in Mexico published, on its Twitter account, the “USMCA Hotline”, which is a platform to receive complaints or information on labor matters. This should not come as a surprise because it was foreseen in article 717 of the USMCA Implementation Act.

 

Through this “Hot-Line”, people will be able to write confidentially, either anonymously or by leaving their contact details, about issues related to “denials” of labor rights.

In essence, this mechanism will allow the gathering of information and testimonies that could eventually be used to present a USMCA “labor case”. Notwithstanding the foregoing, it is important to mention that if a party (e.g. the US) wishes to activate the rapid response mechanism, for example, the complaining party must have “good faith basis”; that is, having credible evidence or causes. In this sense, one or several anonymous complaints – by themselves – can hardly be classified as a good faith basis. However, a complaint through the USMCA Hotline can trigger the investigation by the US labor attaches in Mexico and, therefore, obtain additional evidence or elements to support a USMCA labor review.

Tariffs in North America

On Thursday, August 6, 2020, President Trump announced the “re-imposition” of tariffs on certain Canadian aluminum products because they were “flooding” the American market and, therefore, such measures are necessary to protect the industry from the USA based on section 232 of the Trade Expansion Act.

The proclamation can be found at the following link: Proclamation on Adjusting Imports of Aluminum Into the United States.

Steel and aluminum from Mexico (as well as from Canada) were also subject, at the time, to tariffs in the US for national security reasons. However, these tariffs were eliminated on May 19, 2019, as we reported.

By virtue of the actions of the US government, the Mexican government will increase the “control” of steel and aluminum exports through an automatic license, as reported in a media outlet, for the purpose of avoiding the increase of exports through transshipment.

SAT Requests Retroactive Payment of Fees for Certified Companies

On Monday, our firm organized a webinar on the alert issued by the Tax Authorities (SAT) on Wednesday, August 5, which defines the guidelines for the retroactive payment of fees for those companies that obtained their registration as under the Certified Company Scheme.

Our partner Eduardo Zepeda, leader of the practice regarding the legal aspects of the manufacturing or maquila industry, commented that this issue is “regrettable and worrisome”, pointing out the numerous deficiencies in the legal grounds and reasoning on behalf of the SAT.

For his part, Eduardo González, leader of the litigation practice, presented the recommended legal strategy to avoid possible reprisals from the SAT, such as the non-renewal of the Certified Company Scheme registration (VAT / IEPS Certification, OEA, among others).

Should you wish more information on the recommended legal strategy, please let us know.

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English, News

MEXICAN ANTIDUMPING INVESTIGATION ON TRIETHANOLAMINE

31 Jul , 2020  

Antidumping Investigation in Mexico Notice of initiation TRIETHANOLAMINE from the USA

Notice of Initiation of the Antidumping Investigation on Triethanolamine from the United States of America

Today, July 31st, 2020, the Mexican Ministry of Economy published in the official gazette the notice of initiation of the antidumping investigation regarding triethanolamine imports from the United States of America.

VTZ Law Firm prepared a summary with the most relevant information regarding the notice of initiation:

1. Petitioner:

Industrias Derivadas del Etileno, S.A. de C.V.

2. General Product Description:

Chemical products belonging to the category of ethanolamines, which combined with the properties of amines and alcohol, can create common reactions with both groups or others, such as acids, salts, or soaps. It is technically and commercially known as triethanolamine or TEA.

3. Tariff Item (MHTS):

2922.13.01

4. Period of Dumping Investigation:

January 1st to December 31st, 2019.

5. Period of Injury Analysis:

January 1st, 2017 to December 31st, 2019.

6. Normal Value:

Price references in the domestic market of the United States of America.

7. Date to Submit the Questionnaire:

September 9th, 2020.

Download our summary in the following link: VTZ- Antidumping TEA 31072020 ENG, you can also download the notice of initiation in the following link: Notice of Initiation – Triethanolamine (only available in Spanish)

Do you need more information? Contact us.

For additional information, do not hesitate to contact our members: adrian[@]vtz.mx, vero[@]vtz.mx, emilio[@]vtz.mx and mariana[@]vtz.mx

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English, News

Mexican Investment Promotion Policy – The Trading Room

31 Jul , 2020  

Mexican Economic Newsletter, International Trade News in Mexico

The Trading Room

Mexican Investment Promotion Policy Must Change

Susana Muñoz, director of the VTZ Chinese Desk and former government official of the Mexican Ministry of Economy, prepared a text on the decoupling of the global economy and its implications for Mexico. Taking into account that the 2020 US presidential election approaches, she addresses the growing tension between the US and China and describes recent events affecting the relationship between the two largest economies in the world.

 

Our partner highlights the complexity involved in untangling the two largest economies in the world because the global economic restructuring is yet to come. While China is expanding and looking to develop new markets, China is opposed to US policies, which will mean both the destruction of business models and the reconstruction of entire industries, as well as geopolitical consequences.

 

In this regard, Susana Muñoz reflects on the China-US trade tension and its impact on Mexico by answering the following questions:

 

What do these changes in the geopolitical paradigm mean for Mexican companies? What are the risks to consider?

 

On the one hand, Susana recognizes that the trade tension will impact in the short and medium-term the Mexican investment promotion strategy as an attractive destination for the manufacturing sector that seeks to export to the North American markets.

 

On the other hand, our partner highlights that:

“…it is very necessary to update our approach strategy towards Chinese companies and investors, not only positioning the benefits of the USMCA, but also doing an in-depth job of identifying complementation opportunities in commercial, industrial, technological, and investment projects.

Check the full text of the article here.

Trade Statistics

We consider relevant to note that the National Institute of Statistic and Geography (INEGI, Spanish acronym) on Mexico’s Trade Balance during June 2020 reports that annual growth rate of exports continues to decline when compared with the 2019 figures. In the same sense, imports of capital goods, which entail goods that will serve to produce, have registered a strong decline of (-) 12.3 % compared to last year’s data.

Here is the link to the report.

Changes for IMMEX companies

Last Friday, July 24, 2020, modifications to the General Rules of International Trade were published in the Official Gazette. Some modifications consist of the elimination of benefits and the addition of obligations for manufacturing/maquiladorasI IMMEX companies with VAT Certification. Some of these benefits were transferred to Authorized Economic Operators.

One of the benefits that were eliminated to VAT certified companies is, for example, the 36 months period of legal stay for goods imported temporarily, instead of the 18 months provided in the Customs Law. Regarding the addition of obligations, VAT certified companies, for example, will have to ensure that all their domestic suppliers are up to date with their tax obligations. We prepared an alert in Spanish, which is available here, but if you have any questions do not hesitate to contact us.

Given their relevance and impact to the manufacturing industry, VTZ is organizing a webinar that will take place today at 8:30 am (Mexico City Time), you can register in the following link.

If you cannot or could not attend, contact us so we can send you the link to the video in due course.

Adrián Vazquez & Alliott Group

On Wednesday, June 29, Adrián Vázquez was appointed member of the Alliott Group Latin American Regional Advisory Committee. Our partner’s role will be to help develop and monitor the implementation of Alliott’s strategic plans in the region. This appointment comes at a key moment of Alliott’s growth in the Latin American Region.

 

More information here.

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English, News

New Approach to Mexico Investment Promotion Policy

31 Jul , 2020  

The Decoupling of the Global Economy and its Implications for Mexico: A New Investment Promotion Policy is Needed 

(PDF)

The discourse about the trade war between China and the United States has intensified in recent months not only as an electoral strategy but rather it has extended also into other fronts damaging the bilateral relationship. This means that the decoupling of the global economy is likely to continue during the run-up to the elections in the United States; moreover, it may even accelerate once the winner is announced in November 2020.

 

The Trump administration has adopted a series of measures to stop the expansion of China, for instance, export prohibitions on a wide variety of sensitive products, tariffs, forced relocation of North American companies, and even threatening to withdraw from the WTO. More recently, the closure of the Chinese consulate in Houston was announced alleging intellectual property violations and espionage. In retaliation, the Chinese government ordered to close the American consulate in the city of Chengdu, measures that clearly raise the level of the conflict.

 

However, it is relevant to take into account the complexity to untangle the two largest economies in the world. On the one hand, the restructuring the world economy will have major implications from the destruction of business models to the reconstruction of entire industries. On the other hand, there are geopolitical consequences that are already being drawn on the map.

 

In this regard, Beijing has made significant efforts to strengthen and consolidate economic ties with emerging markets. Just last week, Foreign Minister Wang Yi held meetings with senior officials in Vietnam, while the conclusion of the negotiations of the Cambodia-China FTA negotiations was announced. In response to the crisis caused by the COVID-19 pandemic, it was also announced an important economic aid package for Latin America, which is one of many other ways China is offering support to emerging countries to combat the virus.

 

On the technological side, despite the fact that several countries have excluded or banned Huawei and other Chinese applications from their telecommunications system, the expansion of information giants, such as Alibaba and Tencent, in different commercial formats has not been stopped. Furthermore, the country continues to promote the local development of 5G and semiconductors, as well as technological infrastructure, to reduce its dependence on other countries.

 

What do these changes in the geopolitical paradigm mean for Mexican companies? What are the risks to consider?

Regardless of the current internal discussions of the WTO, Mexican companies can continue to depend on the rules and preferential access that Mexico enjoys under its free trade and investment agreements with more than 50 countries. This allows Mexican companies to continue expanding their operation across borders under clear rules.

 

However, this scenario of trade tensions between China and the United States may have a short and medium-term impact on Mexico’s promotion strategy as an investment destination for the manufacturing sector that seeks to export to the North American markets.

 

Although it is true that Chinese companies will continue to develop new markets for their products and technologies, it is also clear that there is opposition to US policies within China. This situation is not exclusive to mainland China, but it has also spread to the Hong Kong Special Administrative Region, which has been damaged by recent announcements by the Trump administration.

 

This week the Global Times newspaper shared the results of a quick online poll asking readers which American consulate would most likely close. 80% of the responses supported the closure of the United States consulate in Hong Kong. Said result reflects a clear anti-American feeling as a result of the US government’s interference in China’s internal affairs.

 

In this context of political and commercial tensions, it is evident that our closeness and preferential access to the North American market are not enough arguments for Chinese companies to invest in Mexico. By contrast, it is very necessary to update our approach strategy towards Chinese companies and investors, not only positioning the benefits of the USMCA, but also doing an in-depth job of identifying complementation opportunities in commercial, industrial, technological, and investment projects.

 

On the other hand, it is essential to offer guarantees for Chinese investments in sectors of interest such as mining, energy, infrastructure, and manufacturing; as well as incentives in sectors where there is still very little Chinese presence.

 

As the US elections approach, the candidates’ speech will intensify and so will the tensions rise between China and the United States and, in consequence, retaliatory measures between both economies. If Mexico, therefore, does not update its strategy and approach with a new speech, such as highlighting our economic openness, commitment to free trade, supply chain integration, privileged geographical location, and legal certainty for investors, our country runs the risk of disappearing from the Chinese map as an attractive investment destination under this scenario.

 

Susana Muñoz,
Partner of Chinese Desk

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English, News

Army Forces in Charge of Customs in Mexico? – The Trading Room

17 Jul , 2020  

Mexican Economic Newsletter, International Trade News in Mexico

Issues at Mexican Customs and Ports?

Customs is a source of concern for the current administration, which has had three customs directors so far. On Monday, the President recognized that his administration has not been able to control corruption at customs. According to his statements, synthetic drugs are entering through the port of Manzanillo, Mexico’s most important port, while “anti-corruption” actions are taking place in the Nuevo Laredo customs.

 

While visiting Manzanillo today, President AMLO made a “general” announcement in his daily press conference that the armed forces will be “in charge” of the customs located in land or ports because they have been poorly “managed”. The specificities of the plan as well as what will be the powers of the armed forces at customs are yet to be announced.

 

In the words of the president:

 

“We have taken the decision… that the land and sea customs will be in charge of the Ministry of Defense, and the Ministry of the Navy will be in charge of the customs in the ports.”

 

This is not the first time that armed forces have intervened in customs or ports. For instance, we recall that the Ministry of Navy took “control” of the Lazaro Cardenas Port and Manzanillo in 2013 and 2014 (news reports in Spanish), respectively. Furthermore, a decree was published in the Official Gazette that authorized the intervention of the navy in the ports in 2014, but their powers were limited to “policing in ports”. Nevertheless, we are aware that during this period international operations, such as exports regarding certain products (e.g. minerals),  faced “difficulties” at customs.

 

Based on past experiences, we wonder whether importers or exporters in Mexico will face difficulties if the operation of customs or ports is indeed in charge of Mexican armed forces.

 

Experts propose to review internally USMCA

 

On Tuesday, Reforma published an article where experts called to review USMCA internally and periodically. Among the experts, Adrian Vázquez, our managing partner, considered that this review would allow to evaluate, for instance, if imports are integrating value chains or displacing national production.

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English, News

AMLO – Trump meeting : A review on Trade and USMCA

10 Jul , 2020  

USMCA, Labor, Trump, AMLO, Adrian Vazquez, Investment

AMLO – Trump: Trade and USMCA

In what was a highly expected meeting regarding the celebration of USMCA’s entry into force, AMLO and Trump held a bilateral meeting and had a “trade-dinner” with numerous executives from the US and Mexico. We highlight the following matters during Wednesday’s event:

 

Joint Speech: Trade-Related

  • Trump highlighted that USMCA “includes groundbreaking labor protections for workers in both nations”, that it would bring back overseas jobs to the USA; close cooperation to stop the illicit cross-border flow of drugs and guns, cash, and contraband, and very importantly, stopping human trafficking.

  • AMLO highlighted that North America is a trade-deficit region. USMCA seeks to address this issue by increasing the regional content value through its rules of origin; new and current investments in the region will have to provide fair working conditions, and “comply” with the rules of origin.

Joint Declaration Between the US and Mexico

  • Mexico was the largest goods trading partner of the US in 2019, “supporting American and Mexican businesses, jobs, and workers.”

  • The USMCA is the ideal instrument to provide “economic certainty”.

  • “The USMCA reaffirms our shared understanding that North America is a region that generates prosperity for all of its citizens and it strengthens our cooperation in fighting corruption[…]”

  • “The USMCA marks the beginning of a new era that will benefit the workers, farmers, engineers, and entrepreneurs of both countries,[…]”

 

Trade Dinner

Although the dinner was closed to the media, an attendee, Patricia Armendáriz CEO of Financiera Sustentable, tweeted what was going on during the dinner. In her tweets, she quotes speakers. For instance, AMLO mentioned that “[We] are in the best disposal to favor your investments in Mexico”.

Ms. Armendáriz tweeted that a representative of the US Steel industry expressed their intent to expand in Mexico.

 

Ms. Armendáriz also noted that a representative of the US dairy expressed their interest in Mexico as a result of the USMCA.

 


“Democrats” React to AMLO’s Visit

In a letter dated July 8, 2020, US house representatives issued a letter to AMLO, expressing their “serious” concerns regarding the implementation of the labor reform. We highlight the following statements:

 

  • The letter mentions that “new cases of freedom of association violations arise”;

  • The letter claims “…failure to address flaws in collective bargaining agreements contract legitimation protocols threaten the possibility of independent and democratic worker voices.”

 

The letter makes other somewhat specific statements, for instance, regarding reports of illegal firings and protection unions signing new contracts for the workplace before employees are hired, as well as “obstruction” in collective bargaining agreements on behalf of employers and “protection unions”. These issues are the “core” of Annex 23-A in the USMCA, which may be subject to the facility-specific rapid response labor mechanism. Needless to say, the letter recognizes that COVID may have posed an obstacle to implementing the labor reform, which it has, and another issue Mexico is that the labor reform implementation was planned in several phases that would conclude in 2022.

VTZ Comments

 

Away from the political controversy regarding some statements or the visit, the trade-related matters that were publicly discussed had a strong “labor” footprint. Both heads of states highlighted USMCA’s labor provisions, and that such rules will benefit workers in both countries.

Having failed to visit Joe Biden, the Democratic candidate to US President, democrats may take a more aggressive “labor” stance against the Government of Mexico. From our perspective, it is clear that labor matters will continue to be one of the main themes in the US – Mexico trade relations, and the private sector must avoid denying labor rights recognized in Mexican Labor Law, just as we stressed in our Labor & Trade webinars.

 

What also caught our attention is how AMLO welcomes investment in the light of the USMCA, but his administration has made “controversial” investment decisions regarding, for instance, energy policies.

 

We are also curious as to what the US steel industry might have meant regarding “expanding” in Mexico. Steel products are constantly targeted in trade remedy matters in Mexico. As for the dairy industry, we recall that Mexico recently introduces some technical standards or Official Standards on powder milk, cheese, and yogurt.

USMCA & VTZ in the news

 

The day arrived and USMCA has finally replaced NAFTA on July 1st, 2020. USMCA modernizes trade and investment rules and, thus, seeks to promote economic development in the region. Given that USMCA is attracting the media, a prestigious Mexican news outlet, Reforma, has interviewed and quoted Adrian Vázquez, VTZ managing partner, regarding USMCA’s entry into force and the Labor Chapter.

 

On the day USMCA entered into force, July 1st, 2020, Adrian Vázquez was quoted in an article regarding the rule of law. Mexican attorneys have expressed that Mexico must uphold the rule of law established in the USMCA provisions to reap its benefits. Our managing partner emphasized that Mexico must have the will to respect the rule of law established in the USMCA, and he expressed that the private sector also plays an important role since it must demand compliance of trade and investment provisions.

On July 6,  2020, Adrian Vázquez was quoted in an article of Reforma on the labor dispute settlement mechanisms in the USMCA, particularly regarding “anonymous witnesses”.

 

Our managing partner expressed that “[I]f this tool is used by American unions in order to submit an anonymous testimony, sending any person as a witness,  that is a danger and not whether if they are or not anonymous.”

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English, News

USMCA Labor Disputes | The Trading Room

19 Jun , 2020  

USMCA Labor Disputes, WTO, Webinar, VTZ, Trade Lawyers, Mexico

In our Trading Room economic newsletter, we address Robert Lighthizer’s appearance before the U.S. Senate to share the 2020 Trade Policy Agenda, where he commented on possible USMCA Labor Disputes and the use of the rapid response labor mechanism as well as WTO actions; we also address the selection process for the WTO Director-General.

 

Future Labor Disputes in the US Trade Policy Agenda in 2020

On Thursday, June 17, the US Trade Representative, Robert Lighthizer, appeared before the Senate to share the Trade Policy Agenda 2020. We highlight the following two points of his participation:

USMCA Labor Disputes

Lighthizer noted that as of July 1, the U.S. will meet with the corresponding committees to discuss the possible use of TMEC’s ​​enforcement mechanisms in environmental and labor matters.

In labor matters, the dispute settlement mechanisms are essentially the State-State dispute settlement panels (chapter 31 of the TMEC) and the rapid response labor mechanism

Mexican news outlets have reported that the possible first labor disputes could relate to child labor and forced labor issues, particularly in the agricultural sector; however, the freedom of association (i.e. unions) and collective bargaining should not be excluded.

The US-Mexico Bar Association (USMBA) earlier this month organized the webinar “Labor & Trade: Is Mexico Ready for USMCA’s Labor Chapter?”, where our Jr. Partner Emilio Arteaga participated. The panelists discussed the rapid response labor mechanism as well as the current labor environment in Mexico, the video of the webinar is available in the USMBA’s website:

USMBA, Labor and Trade, USMCA Labor Chapter, Video, Lawyers, Bar Association, Mexico, Labor Disputes

In addition, VTZ will organize a series of Labor & Trade webinar (in Spanish) on the specific challenges for the Mexican manufacturing industry. If you are interested in attending, please click the following link:

TMEC, Capítulo Laboral, Industria Maquiladora, Contratos Colectivos, Sindicatos

Regarding environmental disputes, it is reported that it could be about agricultural biotech products because Mexico has not granted the necessary permits to import said goods since 2018.

 

U.S. Bound Tariffs in the WTO

 

Robert Lighthizer also noted that the U.S. bound tariffs in the WTO are outdated; U.S. bound tariffs are notoriously low with an overall 4.6%.

 

In this sense, Mr. Lighthizer pointed out that the U.S.’ bound tariffs no longer reflect the economic and political conditions of WTO members, some who continue to maintain very high tariffs compared to the U.S.

 

In short, the U.S. may seek to increase its bound tariffs in the WTO. If such event occurs, such change would impact products originating from WTO members that do not have a Free Trade Agreement with the U.S., such as China However, all WTO members must agree with any change regarding in the Schedule of Concessions (i.e. the bound tariffs) of another WTO Member. In other words, the process is not unilateral and requires negotiations.

 

It should be noted that since last year, President Trump has questioned the developing status of certain WTO members (e.g. China) and the benefits that it entails.

 WTO Director-General Selection Process

On June 8, 2020, the Mexican government formally submitted Jesús Seade, USMCA chief negotiator and current Under Minister for North America, as a candidate for the Director-General of the World Trade Organization.

 

Seade’s candidacy sparked diverse opinions among renowned Mexican professionals in the international trade arena that were reported on a news outlet. For example, an opinion is that the Director-General must have a certain status, that is being an ex-minister or former head of state, and he must have sufficient leadership to overcome the paralysis situation in the WTO.

 

It is expected that the selection process will last 3 months, so the WTO may have a new Director-General by the 1st of September. So far, three other candidates appear along with the Seade: the Nigerian Ngozi Okonjo-Iweala, the Egyptian Abdel-Hamid Mamdouh, and the Moldovan Mr. Tudor Ulianovschi.

In the end, how much will the Mexican reactions affect Seade’s aspirations to Director-General?

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English, News

Labor and Trade: USMCA Labor Chapter

2 Jun , 2020  

USMBA webinar, trade and labor, USMCA, comercio y laboral, VTZ, despacho de abogados comercio internacional

USMCA’s Labor & Trade Relevant Materials

Welcome, thank you for attending the USMBA’s webinar on “Labor & Trade: Is Mexico Ready for the Labor Chapter?.” VTZ law firm has prepared the following parallel and supporting material so that you can review it during or after this event.

 

USMCA Labor Chapter: Labor Dispute Flowchart and Other Proceedings

USMCA Text

English

If you want to see a markup of the labor chapter, you can review the document made by Professor Kathleen Claussen.

 

USMCA”Labor” Texts in Spanish – Texto TMEC

Mark-up of USMCA’s text (in Spanish) made by our Jr. Partner, Emilio Arteaga, available through google docs:

  • Capítulo 23 – Laboral Integrado
  • Capítulo 31 – Solución de Controversisas Integrado
  • Anexo 31 – A  (Mexico-EEUU) – Texto

 

USMCA Implementation Act: US Congress

To access the US-Mexico-Canada Implementation Act, click the following link: USMCA Implementation Act

 

USMCA Labor Chapter: An Introduction.

USMCA Labor Chapter

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English, News

Trade & COVID-19 – THE TRADING ROOM: AN ECONOMIC NEWSLETTER

29 May , 2020  

Trade Balance, Mexico, Exports, Imports, COVID-19, USMBA, USMCA

Trade & COVID-19

(PDF Version)

The National Institute of Statistics, Geography, and Information (INEGI) released on Monday the data on Mexico’s trade balance during April 2020. According to the figures, Mexico’s trade balance had a trade deficit of 3,087 million dollars during  April. Compared with the same month of the previous year, INEGI reported that Mexico had a surplus of $ 1.51 billion.

This negative monthly performance is, of course, explained due to the measures implemented by the COVID-19 pandemic, both nationally and internationally.

Mexican Trade Balance, April 2020, INEGI

 

The monthly deficit of the Mexican trade balance is explained by the annual decline in exports of 40.9%, this has been the worst drop in the indicator since 1986. When comparing to April 2019, oil and non-oil exports decreased by 66.4% and 39.4%, respectively.

Among non-oil exports, the following data stand out:

1. Export Destination

Exports to the United States decreased by 40.7%, while those directed to the rest of the world decreased by 33.4%.

On this, Fernando Ruiz Duarte, general director of the Mexican Business Council of Foreign Trade, Investment, and Technology (COMCE), commented “the April figures were already expected since around 80% of sales abroad are directed to the United States and its economy was practically paralyzed, so it is logical that exports decrease. ” He also called for the need to diversify export markets.

2. Manufacturing Industry

The other noteworthy data is that exports from the manufacturing industry decreased by 41.9%, whereby 79.1% correspond to the automotive industry and 20.9 % correspond to non-automotive manufacturing exports decreased.

3. Imports

Imports decreased by 30.5% when compared to the figures in April 2019. According to the type of goods,  consumer goods, intermediate-use goods, and capital goods decreased by 46.5%, 28.1%, and 26.7%, respectively.

Source: https://www.inegi.org.mx/contenidos/saladeprensa/boletines/2020/balcom_o/balcom_o2020_05.pdf

Webinar USMCA Labor Chapter & Trade

Just another friendly reminder that on June 2nd, 2020, the free webinar on “Labor & Trade: Is Mexico ready for USMCA’s Labor Chapter?” will take place organized by the US-Mexico Bar Association, in conjunction with VTZ.

The Panel will be made up of Ricardo Aranda from the Ministry of Economy, Gabriela Peregrina from DeForest Abogados, Olga Torres from Torres Law and will be moderated by our Jr. partner Emilio Arteaga. The members of the panel will discuss the results of USMCA’s labor chapter, the rapid response mechanism as well as whether there is any other labor-related risk to Mexico-US international trade relation.

Register to the Webinar: https://docs.google.com/forms/d/e/1FAIpQLSfFxcD_hJCmCFAGuBhj2YdbYeHU8Gf6el5cKC67x1hYy-gslQ/viewform

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