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Virtual Trade Summit USTR-Mexico | Mexican Economic Newsletter

26 Mar , 2021  

Mexican Economic Newsletter, International Trade News in Mexico

Trade Summit USTR-Mexico 2021

On March 23, Tatiana Clouthier, head of the Ministry of Economy, met virtually with U.S. Trade Representative (USTR), Katherine Tai, to discuss the importance of the bilateral trade relationship and the full implementation of the USMCA. 

Both sides committed to future engagement on shared priorities such as economic recovery in the context of the Covid-19 pandemic and the full implementation of Mexico’s labor reform. Both sides also agreed on the mutual benefit derived from strong bilateral agricultural trade.

US Associations Trade Express Concerns Before and After USTR-Mexico Trade Summit 

One day before this meeting, a group of 27 U.S. agricultural associations sent a letter to Secretary of Agriculture Tom Vilsack and the USTR that is available on the National Potato Council’s website. In addition, the Alliance for Trade Enforcement also issued a letter to the USTR this Wednesday.  

Both associations have expressed their concerns about certain measures issued by the Mexican government that has already or will negatively impact a portion of U.S. agricultural exports and other sectors.

What are the main trade concerns?

  • Glyphosate /GM Corn Barn
  • Increasing Obstacles to Dairy Trade
  • Organic Export Certification Requirements
  • Corn Product Disparagement
  • Biotechnology Approvals
  • Meat Industry Market Access and Geographical Indications
  • Potato Import Ban
  • Front-of-Pack Labeling (NOM-051)
  • Telecommunications, Broadcasting, and Audiovisual Services
  • Biopharmaceuticals
  • Energy and Power Generation
  • Customs and Trade Facilitation
  • Electronic Payment Services

Will one of these issues spark a trade dispute? 

VTZ has addressed some of these issues in our previous newsletters and /or digital content. If you have any questions, please let us know. 

International Reactions to the Electrical Industry Law Reform 

Prior to the Electrical Industry Law reform publication in the Official Gazette on March 9, 2021, some of Mexico’s trading partners expressed their concerns about the impact of said reform on energy investments. If you wish to know more about this controversial reform, we consider this content relevant: Wilson Center

US Reactions

The Vice President for the Americas of the U.S. Chamber of Commerce, Neil Herrington, expressed that the reform was deeply troubling because it would reestablish a monopoly in the sector and affect Mexico’s commitments to the U.S. under the USMCA.

Canadian Reactions

Mary Ng, Canadian Trade Minister, expressed through a letter sent to the Mexican Ministry of Economy, emphasizing Mexico’s obligation to maintain a stable and predictable business environment for Canadian companies.

European Union Reactions

In the same vein, EU’s representatives in Mexico recognized Mexico’s sovereign right to define its energy policy. However, they pointed out that this could lead to international arbitration, as well as a loss of confidence on behalf of investors.

Mexican Judges Grant Injunctions Against the Reform

Meanwhile, some companies in Mexico filed a constitutional remedy (amparo) against the electrical reform requesting the suspension of the reforms effects. A couple of Judges have granted suspensions (injunctions) and with general effects. In other words, the suspensions protect all companies that may be affected by the electrical reform in order to avoid market distortions.

VTZ Comment

At VTZ, we certainly believe that this reform could eventually trigger Investor-State disputes per FTAs and/or BIT. Furthermore, we consider it possible that the U.S. and Canada could initiate a USMCA (State-State) dispute, so there trade retaliation is possible in the event that an international panel rules against Mexico.

Investment in Mexico: 200 Projects

During the inauguration of the 104th General Assembly of the American Chamber of Commerce (Amcham), the Minister of Economy, Tatiana Cloutier, mentioned that the Mexican Government has a list of 200 studies and projects in which U.S. companies will be invited to invest. These projects have been worked in coordination with international organizations and focus on nine states in the southeast of Mexico. 

In this regard, the incoming president of Amcham, Vladimiro de la Mora, added that Amcham members are committed to Mexico; however, to continue being a reliable, attractive, and safe partner for investment, Mexico needs to ensure an essential level of security, respect for the law and legal certainty. 

Eventually, the projects will be announced, and we deem that such projects will be open to all companies, regardless of their nationality or origin. We expect that some projects will be related to the Isthmus Corridor project.

Sources: El UniversalLa JornadaEl Informador 

Changes in the Ministry of Economy

Last week, the Ministry of Finance issued a statement to inform that as of April 1, Ernesto Acevedo Fernández will be appointed as Alternate Executive Director of the World Bank.

As of the 1st of April Ernesto Acevedo Fernández will represent Mexico before the World Bank (@BancoMundial) as Alternate Executive Director of that institution.

— Hacienda 🇲🇽 (@Hacienda_Mexico) March 18, 2021

Ernesto Acevedo is currently acting as undersecretary of Industry, Trade and Competitiveness at the Ministry of Economy. Mr. Acevedo is going to be substituted by Héctor Guerrero. According to the declarations of the Ministry of Economy, Tatiana Clouthier, Mr.  Guerrero has worked in the private sector for a long time and joined the public sector when Andrés Manuel López Obrador became president. 


 


At this time, Mr. Guerrero is the Coordinator of the National Council for Investment, Employment and Economic Growth (COFINECE, acronym in Spanish), which is chaired by the Head of the Presidential Office. During the announcement, the Ministry also mentioned Alfonso Romo, who used to be in charge of the Presidential Office and is currently a sort of liaison between the private and public sectors. 
 

What are the responsibilities of the Undersecretary of Industry?

  • Coordinate trade remedy investigations.
  • Design industrial development and innovation policies.
  • Design policies to promote domestic trade, business growth, and production chains
  • Design actions, plans, and programs for the industry and trade sectors, and also for the services and productive chains sectors.
  • Policies to promote international trade competitiveness.
  • Trade regulations, standardization, and conformity assessment.
  • National content requirements in the energy sector.

Cannabis Law Regulation

Last week, the Chamber of Deputies approved the Federal Law for the Cannabis Regulation project. This law will allow the recreational use of marijuana (up to 28 grams), and the possibility of self-cultivation, including importation, through permits.
 

The project-law will return to the Chamber of Senators for the approval of the changes made by the Chamber of Deputies in order to conclude the legislative process.

Source: El Economista

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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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