English, News

Mexican Newsletter: FDI in Mexico, USMCA and EUMexFTA

21 Feb , 2020  

Newsletter, International Trade and Investment News in Mexico, Foreign Investment in Mexico, FDI, China, Coronavirus, USMCA, Secretaría de Economía, EUMEXFTA, Free Trade Agreement, International Trade

Trading Room: Mexican Trade and Investment News

(Download the PDF: Trading Room -21022020)

  Foreign Investment in Mexico during 2019

In UNCTAD’s 2019 investment report, it was mentioned that “Foreign Investors were reassured by the final signature of the revised [NAFTA] (now called the USMCA).” Now, the Mexican Ministry of  Economy issued a newsletter reporting the preliminary Foreign Direct Investment (FDI) results. FDI in 2019 increased 4.2% in relation to that of 2018; specifically, Mexico received  32.912 billion USD of inward investment in 2019, while in 31.604 billion USD in 2018.

 
We highlight that 53% of the FDI was reinvestment earnings, while 39% correspond to new equity flows; also, almost half of the FDI was absorbed by the manufacturing sector, meanwhile, the FDI inward flows mainly originated from USA (36.8%), Spain (12.1%), Canada (9.7%), Germany (9.2%), Italy (4.5%).

 

Bearing in mind this context, the Minister of Economy, Graciela Marquez, mentioned in a meeting with Senators that there is an expectation that foreign investment will react positively to the incentives that were established in USMCA; and, the Ministry has two tasks to help activate the economy: implementing USMCA and relocating companies that are in China to Mexico. However, the Minister noted that the global economy presents signs of the economic deceleration, not only pertaining to growth but also due to the unknown impact of the coronavirus.

 

 

USMCA Uniform Rules

As reported in a previous edition, the Ministry of Economy is organizing a seminar about USMCA (as well as CPTPP). This week’s session was about market access, rules of origin and trade facilitation. During the event, it was announced that Mexico has approached the USA and Canada on the matter regarding USMCA’s uniform regulations that have to be adopted and published in the near future. The rules will detail how the parties will interpret and apply the relevant Chapters, such as customs procedures and the rules of origin chapters, e.g. remanufactured goods, recovery of raw materials, auto, etc.

 

 

 Signature of the European Union-Mexico Free Trade Agreement  in 2020

In an event organized by the Spanish Chamber of Commerce in Mexico, it was announced that the Underminister of International Trade, Luz Maria de la Mora, announced that the negotiations regarding the update of the European Union-Mexico Free Trade Agreement are close to being concluded and that it will be signed at the end of 2020. It has been two years since the Mexican Ministry of Economy and the European Commission announced that there was an agreement in principle, Mexican authorities had also announced that the signature of the update was soon; however, some details had not been sorted out, such as government procurement. One of the main features of the update of the EUMEXFTA is the full liberalization of tariffs since the agricultural sector had been excluded from the original FTA.

 

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English, News

WTO and Mexico Food Labeling & BIT with Hong Kong

24 Jan , 2020  

Download our newsletter in PDF: Trading Room -24012020

WTO Members Express concerns on Mexico’s Food Labeling Project

According to media outlets such as Inside U.S. Trade and Grupo Reforma, the US issued comments regarding Mexico’s project of overhauling the labeling scheme for food and nonalcoholic beverages in the WTO. VTZ has prepared Trade Alerts regarding this topic.

 

In essence, we highlight that the US, as well as other WTO members (including the European Union), questions Mexico’s draft labeling project in a handful of matters, which suggests whether this labeling draft-project may not comply with article 2.2 of the Technical Barriers to Trade (TBT) Agreement as well as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, an issue that was raised by our members, other Mexican trade law experts as well as foreign companies in Mexico. Moreover, this topic was discussed in a panel during the V Biennial Conference of the Latin American Network of International Economic Law, which was held in ITAM last year.

 

It must be noted that the period to submit comments to the project concluded in early December. According to government officials, 4, 775 comments were submitted which will have to be studied by the Ministry of Economy. If the labeling project is subject to modifications, such modifications must be done within a 45 natural day term pursuant Mexican Law, though this may be unlikely given the international attention and the number of comments. The responses to the comments and the modifications to the draft-labeling project, if any, will have to be published in Mexico’s official gazette.

 

In its face, Mexico’s draft labeling project does not violate the national treatment principle since it will apply to both domestic and foreign products. However, we wonder whether this project, if adopted as such or with minor amendments, will trigger a WTO dispute because it creates unnecessary obstacles to international trade? Do you need more information? Do not hesitate to contact us.

México Signs BIT with Hong Kong

Yesterday, the Bilateral Investment Treaty (BIT) between Mexico and the Hong Kong Special Administrative Region was signed in Davos, Switzerland. This Agreement will grant legal protection to investments from investors from both economies in the host economy, and, as a consequence, this will increase investor confidence.

Among the commitments agreed in the document, the two governments undertake to provide investors with fair and equitable treatment in accordance with the international customary law minimum standard of treatment of aliens, non-discriminatory treatment, compensation in case of expropriation of investments, and the right of free transfers abroad of capital. The Agreement also provides a dispute settlement mechanism under internationally accepted rules.

Being China Mainland the main investor in Hong Kong, this BIT will allow Mexico not only to increase trust among investors in this Special Administrative Region but also to expand investment flows and strengthen trade with the Asian country.

Mexico offers important opportunities for Hong Kong and Chinese companies in the logistics, manufacturing, tourism and services sectors. As of June 2019, the Ministry of Economy reported in Mexico 1,203.8 million dollars of investment from mainland China and 991.2 million dollars of Hong Kong investment since 1999.

Internal processes are still pending to approve the APRI in both countries, but this Investment Agreement will be 22nd for Hong Kong, while for Mexico it adds to the 29 previously signed.

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English, News

National Development Plan & International Trade, US representatives visit Mexico to discuss USMCA-THE TRADING ROOM

19 Jul , 2019  

National Development Plan, International Trade, US representatives visit Mexico to discuss USMCA’s approvals

The Trading Room

(Download the PDF version of our newsletter: Trading Room)

National Development Plan & International Trade

Last Friday 12th of July, the Mexican National Development Plan (NDP) for 2019-2024 was published in the official gazette. The NDP is a document, prepared every six years by the new President and approved by the legislative branch, that aims to guide policymakers of the Federal Government in their decisions. Unlike the previous NDP 2013-2018, the new NDP is a short document that lacks data and strategies, lists the government programs and projects, and focuses on criticizing the recent history. We highlight the following from the NDP:

Trade: Trade was only mentioned in the “Foreign Affairs” section when addressing the US-Mexico relationship. It is unfortunate that the NDP does not include an explanation of the so-called three trade policy pillars: diversification, inclusion, and innovation.

WTO: The NDP mentions that Mexico will accept the decisions made by International Organizations, such as the WTO.

Customs: The NDP did not mention a customs policy.

Investment: The NDP states that the federal government will promote private investment, domestic and foreign, and that a “framework for legal certainty, honesty, transparency, and clear rules will be established[.]”; it is unclear what is the government’s strategy to establish said “framework”.

Taxes: The NDP mentions that taxes on fuels will not increase, but lacks to mention if other taxes will not be increased.

Regional Projects: The NDP lists the Mayan Train, Development Program for the Tehuantepec Isthmus (DPTI), and the Northern Border Free Trade Zone. As noted in our previous editions, the DPTI aims to modernize the Inter-oceanic Corridor between the states of Veracruz and Oaxaca, creating “free zones” to attract private investment, and lowering the income tax and VAT rates.

Agriculture: The PND announces several programs, but we highlight the support for sugarcane producers, the support price mechanism for corn, beans, wheat, rice and milk, and the creation of SEGALMEX.

 

Sources:

http://www.dof.gob.mx/nota_detalle.php?codigo=5565599&fecha=12/07/2019

US representatives visit Mexico to discuss USMCA

On Wednesday, the president of Mexico, AMLO, announced during his morning conference that he would meet this Friday with a delegation of US Congress representatives to discuss USMCA approval process.

As several news portals have reported, the House of Representatives will first receive and discuss USMCA and then the Senate, however, President Donald Trump has not yet submitted the agreement to Congress. Needless to say, Democratic representatives are showing concerns regarding the following matters: dispute resolution, provisions related to the pharmaceutical, environmental sector and the effective implementation of the labor reform. Therefore, the US delegation will meet officials from the Mexican Ministries of Economy, Foreign Affairs, Labor, and Environment.

It is interesting that the delegation of representatives has the concern that Mexico may block the establishment of panels from dispute resolution mechanisms like the US did in the past with NAFTA. Unlike CPTPP, USMCA does not clearly solve the possibility that a Party may block the establishment of a panel. Hence, we hope that the US representatives return convinced that Mexico is fully committed to complying with all of USMCA’s provisions.

Sources:

https://www.milenio.com/politica/amlo-hablara-legisladores-eu-viernes-t-mec

https://www.reuters.com/article/us-usa-trade-mexico-canada/trump-presses-for-usmca-passage-as-lighthizer-lawmakers-prepare-to-meet-idUSKCN1UA1YZ

https://www.dineroenimagen.com/economia/mexico-no-aceptara-cambios-al-t-mec-ya-esta-negociado/112186

https://www.wsj.com/articles/lighthizer-charms-congress-but-struggles-to-sell-usmca-11563355920

https://www.elfinanciero.com.mx/economia/amlo-se-reunira-esta-semana-con-representantes-democratas-y-republicanos

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English

VTZ Chinese Desk in Mexico

25 Feb , 2019  

Chinese Desk, VTZ, China, Mexico, Investment

Chinese Desk in Mexico

VTZ is proud to announce that it is opening a Chinese Desk with the purpose of assisting Chinese companies that are interested to do business in Mexico.

 

Today, China is a major exporting capital country in the world, the second biggest provider of global Foreign Direct Investment in 2016, according to CEPAL. Chinese investment in Latin America and the Caribbean has had a sharp increase in the last years, but that has not been the case in Mexico as it only represents around 0.1% of the total foreign direct investment in Mexico, according to official statistics of the Mexican Ministry of Economy.

 

Given recent events in Mexico, the economic ties between Mexico-China may be strengthened as a result of the vision of the new Mexican Administration and recent international events regarding Free Trade Agreements (like USMCA and CPTPP).

 

VTZ aims to help Chinese investors to seize new business opportunities in Mexico. Our Chinese Desk, which will be led by Ms. Lizette Ramos Garduño (lizett[@]vtz.mx or chinesedesk[@]vtz.mx ), will guide Chinese individuals and companies through Mexico’s complex legal system.

 

Ms. Lizette Ramos Garduño (李莎) is an experienced Mexican Lawyer, who concluded her Ph.D. in International Law at Zhongan University of Economics and Law in Wuhan, China. She is fluent in Spanish, English, and Chinese.

 

 

 

 

 

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English, News

USMCA, the New NAFTA

1 Oct , 2018  

Late night Sunday, an agreement was reached by the United States and Canada, alongside Mexico, regarding the modernization of the North America Free Trade Agreement, which will now be called the United States-Mexico-Canada Agreement (USMCA).

The USMCA text was published yesterday. You can access the text of this free trade agreement through the following link of the United States Trade Representative website: USTR – USMCA

USMCA is composed of 34 chapters, 12 more than the original NAFTA. VTZ will prepare a working paper about this new deal, which should be available in the upcoming days. Please let us know, through an email, if you would like to receive it.

 

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News

VTZ Trading Room – 10/08/2018

10 Aug , 2018  

This week on The Trading Room:

  • Mexican investment and trade projects.
  • NAFTA: Complex and Sensitive Issues.

Want to suscribe to our newsletter? Leave a comment or send us an email.

Esta semana en Trading Room:

  • Proyectos de Inversión y Comercio en México.
  • TLCAN: Temas Complejos y Sensibles.

¿Quieres suscribirte a nuestro boletín? Déjanos un comentario o envíanos un correo electrónico.

The Trading Room -10.08.2018

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News

VTZ Trading Room – 03/08/2018

3 Aug , 2018  

This week on the Trading Room:

  • Wages in NAFTA’s autos rules of origin.
  • A new China-Mexico relation?

Want to suscribe to our newsletter? Leave a comment or send us an email.

Esta semana en “Trading Room”:

  • Salarios en la Regla de Origen de automóviles del TLCAN
  • ¿Una nueva relación México-China?

¿Quieres suscribirte a nuestro boletín? Déjanos un comentario o envíanos un correo electrónico.

Trading Room -2018.08.03

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English, Publications, Reports

VTZ: Special Economic Zones

16 Jan , 2017  

Mexico is about to implement its Special Economic Zone policy, and VTZ has developed a report with the aim to assist potential investors to have a general idea on the applicable legal framework. In light of the recent international events, particularly regarding the new US administration, Mexico will probably use this new policy to respond to restrictive trade and investment policies by granting aggressive tax, customs, and business incentives.

To access the report, please click the following link: VTZ Report on Special Economic Zones

 

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