Vazquez Tercero & Zepeda (VTZ) has contributed for the fourth time with Thomson Reuters Practical Law in the International Trade and Commercial Transactions Global Guide. Our partners, Adrián Vázquez and Emilio Arteaga, responded to a Q&A that covers key matters relating to the regulation of international trade in Mexico.
VTZ also contributed with the guide on Sale and Storage of Goods in Mexico. The International Trade and Commercial Transactions Global Guide is a compilation of guides in which local law firms answer the essential questions on commercial regulation from all over the world.
The Q&A guide covers key matters on International Trade in Goods and Services in Mexico, including:
To access the guide, click the following link: International Trade in Goods and Services in Mexico.
The Q&A guide covers key matters on the Sale and Storage of Goods and Services in Mexico, including:
To access the guide, click the following link: Sale and Storage of Goods in Mexico.
VTZ is a boutique law firm with a specialized practice in international trade, customs law, tax law, regulatory (sanitary & food-safety law), commercial, and administrative litigation with offices in the most important cities in Mexico. Do not hesitate to contact us in case of questions regarding the content of the guides or other related topics.
CPTPP, import and exports requirements, International Trade in Goods and Services in Mexico, international trade restrictions, Thomson Reuters Practical Law, USMCA
This week in our Mexican economic newsletter, VTZ reports the fresh potato imports and the Mexican Supreme Court ruling, Mexico’s WTO proposal on the Appellate Body, and a new initiative on Cinematography and Audiovisual Services, the Outsourcing Reform, Mexican international trade statistics, and the Mexico-UK Continuity Agreement.
On 28 April, the First Chamber of the Mexican Supreme Court ruled on the potato “controversy”, which derives from an Amparo judgment that was favorable to the domestic potato producers that prevented the importation of fresh potatoes from the United States
The Amparo judgment was challenged by Mexican President in 2017 since a Judge declared that phytosanitary measures provided in the Regulations of the Federal Plant Health Law (RLFSV) were unconstitutional.
In its ruling, the Supreme Court unanimously overturned the Amparo judgment and declared constitutional the provisions of the RLFSV and the phytosanitary measures. The ruling will allow the importation of fresh potato from the United States.
However, the injunction issued by the Judge still remains in force as long as the Supreme Court “notifies” its rulings. In other words, the potato imports are not yet imminent.
To find out all the details of the case, our partner Emilio Arteaga prepared a podcast episode “The Potato Case: Foreign Trade in the Supreme Court” (available in Spanish).
The issuance of a new Cinematography and Auodivisual content Law is currently being discussed in the Senate. The initiative contemplates the obligation to reserve 15% of spaces in movie theaters and streaming services for domestic (Mexican) content.
Brian Pomper, executive director of the Alliance for Trade Enforcement, has already spoken out against the initiative, stating that it violates trade commitments with the U.S. and Canada. We are surprised that this potential issue was not included in the USTR’s trade barrier report.
In our opinion, this obligation may violate international commitments. For example, in the USMCA, Mexico only reserved the right to grant mandatory space to national productions of 10% for national cinema, but not for streaming services. The 15% domestic content requirement is a potential violation of the Investment, Digital Trade, and/or Cross-Border Trade in Services Chapters.
Source: El Economista.
The Covid-19 pandemic had a negative impact on the economy as it led to significant restrictions in production and mobility in Mexico and the World. According to the National Institute of Statistics and Geography (INEGI), Mexico’s GDP registered a drop of 8.2% in real terms during 2020.
Despite this, the International Monetary Fund (IMF) estimates growth for the Mexican economy of 5% in 2021.
This can be seen in the gradual recovery of international trade figures in this quarter, particularly in March. On the one hand, Mexican exports of goods registered a year-on-year growth of 12.2%, which is the highest rate recorded since November 2018; on the other hand, imports registered a rise of 31.4% with their best performance recorded since September 2010, this figure is explained by a 24% increase on non-petroleum goods and 104% in petroleum goods.
Notwithstanding these positive results, a trade deficit was recorded, which is significant compared to the surplus in March 2020.
Sources: El Economista, Milenio, INEGI
The Twelfth Ministerial Conference of the World Trade Organisation is just around the corner, which will take place from 30 November to 3 December 2021 in Geneva, Switzerland. The Ministerial Conference is the “highest” body of the WTO, addressing the most pressing issues and a forum for trade negotiations.
As you may recall, there is currently a “crisis” in the WTO because the United States has blocked the selection of the members of the Appellate Body, which reviews the decisions of Panels. Today, the Appellate Body is inoperative and there are trade disputes whose decisions have been appealed to the “void”.
Since 11 December 2019, Mexico has submitted a proposal to request the reinstatement of the inoperative Appellate Body, as have many countries. Mexico’s proposal has so far the support of 121 member states, including the European Union and China. However, the bloc will try to gain wider adherence with the aim of pushing for change at the Ministerial Conference.
Source: El Economista.
On Friday 23 April, the Senate’s approval of the UK-Mexico Continuity of Trade Agreement was published in the Official Gazette. An important step, but not yet final, as the text of the agreement needs to be published in the Official Journal of the Federation.
VTZ prepared an alert on the trade relations between Mexico and the UK, tariff preferences, and a possible tariff refund mechanism.
Finally, the Labor Outsourcing reform was published in the Official Gazette on Friday 23 April. This reform will overhaul the Mexican labor and tax environment, and VTZ has prepared its legal alert, available here:
Cinematography Law, Mexico, phytosanitary measures, potato, supreme court, trade, USMCA, WTO
A series of decisions and regulations trade-related were published in December 2021. The most relevant in our opinion are the following:
Should you need more information, do not hesitate to ask us.
Do you remember that when the union AFL-CIO announced, in September, that it was going to submit a Labor Complaint against Mexico within 30 days?
Well, this week Trumpka, AFLI-CIO leader, claims that they will submit said labor complaint to trigger the facility-specific rapid response mechanism as soon as Biden takes office. Apparently, it is being reported that the AFL-CIO perceived resistance on behalf of Trump’s USTR regarding the labor complaint. If submitted, this will probably be the first USMCA task that the new Mexican Minister of Economy will have to oversee.
The Mexican president has submitted the idea that independent and autonomous bodies must cease to exist per “austerity” policies. These bodies are the Anti-trust Commission, Telecommunications Institute (IFT), Transparency Institute, and the Human Rights Commission.
As a result of this idea, which is being discussed in the cabinet, experts have expressed, that eliminating the IFT, in particular, puts Mexico at risk of not complying with relevant USMCA obligations.
The Under-minister of International Trade, Luz de la Mora, expressed in an interview that the Federal Government will seek to bring any proposed public policy into compliance with Mexico’s international obligations, including anti-trust.
In VTZ, we consider that this sudden public policy proposal and its reach, which requires constitutional amendments, will affect democratic institutions and rule of law.
The Mexican Ministry of Economy and Senate published an e-book titled “Implementing the USMCA : A test for North America ”, which contains chapters in Spanish and English.
If your interested, you can access the e-book: here.
In December, we organized a webinar in a round table format (in Spanish) that discussed trade and tax-related matters. You can access the video at the following link: Webinar.
Free Trade Zone, Labor Reform, Tax Benefits in Mexico, USMCA, USMCA Implementation
VTZ in collaboration with experts from Torres Law, DeForest Abogados, National Customs Brokers & Forwarders Association of America, Inc. and International Compliance Professionals Association organized the Panel Discussion (Webinar) USMA Fast Response Mechanism, which will take place on September 9, 2020 at 1:00 PM.
Expert Panel
The expert panel will be composed by: Olga Torres, who is the Managing Member of Torres Law, she concentrates her practice in the areas international trade and national security law, anticorruption compliance, and Customs matters; Emilio Arteaga, who is a Partner at Vazquez Tercero & Zepeda Abogados, a prominent trade law firm in Mexico, his practice focuses on trade and customs law, devoting a significant amount of his practice to trade remedy investigations, as well as regulatory and Commercial Law issues; Gabriela Peregrina Espino, who is a Partner and Head of the Labor Department at DeForest Abogados, Mexico City, her practice areas include Labor and Social Security Law; as well as, Tequila Brooks who is an international labor and human rights lawyer in Washington, DC. She has written extensively on the intersection of trade, labor, and women’s rights and is co-author of the 2019 book NAFTA and NAALC: Twenty-Five Years of Trade-Labour Linkage (2d Edition).
USMCA Panel Discussion
The panelists will discuss the rapid response mechanism with a focus on what American companies need to know to ensure issues are avoided. This novel mechanism provides a new tool in the U.S. – Mexican labor disputes and it is the first of its kind in a free trade agreement. Ultimately, a successful petition could end up in denial of USMCA preferential treatment, denial of entry, and other sanctions.
This webinar will provide:
-Overview of mechanism and requirements
-Overview of Mexican labor law
-Tips on how American companies can prepare
-Recommendations for Mexican Covered Facilities
-Procedural Requirements
-Q&A
Register
Please clic the following link: https://register.gotowebinar.com/register/248680252288745486
Doing Business in Mexico, English
Our third chapter of Doing Business in Mexico, International Trade, will provide a general overview of ton Mexican International Trade Policy considering international context, as well as customs aspects.
This chapter includes the following sections:
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As a member of international organizations and Free Trade Agreements, Mexico has, to a certain extent, a predictable trade and customs policy. Mexican laws on customs and trade are normally compatible with international rules. The President and his ministers are not only in charge to apply these laws, but they also have powers to regulate international trade and customs, including emergency actions.
Since the inception of the World Trade Organization and the North American Free Trade Agreement, Mexico’s trade and customs legal framework has not been subject to a substantial overhaul; seldom reforms particularly to the customs law have occurred from time to time.
However, Mexico is currently embracing modern free trade agreements, such as the Comprehensive and Progressive Transpacific Partnership (CPTPP) or USMCA, that have and will bring certain legal changes in intellectual property, de minimis, e-commerce, etc.
Needless to say, trade and customs programs or regulations are subject to frequent changes that seek to adapt to new trends, risks, or policy objectives. Mexico has in place, for instance, duty deferral and tariff reduction programs that allow manufacturing or export-oriented industries to be more competitive. However, such programs are subject to strict government controls.
Mexico is a party to the World Customs Organization and to the International Convention on the Harmonized Commodity Description and Coding System (HS Convention).
As a result of the sixth amendment to the HS, Mexican congress discussed a new law that replaced its General Import and Export Tariff Act (LIGIE, acronym in Spanish), i.e. Mexico’s Harmonized Tariff Schedule. The Ministry of Economy conducted an exhaustive review and proposed to compact or unfold tariff items for statistical purposes into 10 digits that will be called Commercial Identification Number, instead of an 8 digit tariff item (known as fracción arancelaria). The new General Import and Export Tariff Act was published on July 1, 2020.
Mexico’s average WTO bound tariff is 35%, and duties rates vary from 0% to 100%. According to Mexico’s most recent Trade Policy Review (2017), the average MFN tariff on agricultural and non-agricultural products was 14.3% and 4.6%, respectively. The General Import and Export Tariff Act establishes the import tariff or “General Import Tax” (Impuesto General de Importación, or IGI) as well as the export tariff “General Export Tax” (Impuesto General de Exportación, or IGE).
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Mexico has an extensive network of Free Trade Agreements (FTAs) with 50 countries and is also a party to regional agreements within the framework of the Latin American Integration Association (ALADI).
The main FTAs and trade agreements to which Mexico is currently a party are as follows:
….. Read more
Long before NAFTA came into existence, Mexico had into effect duty deferral policies that allowed manufacturing companies, known as maquiladoras, to import goods, such as raw materials, parts, containers, etc., without paying import duties. The maquiladoras had to use said imported goods in the production of exported manufactured goods and, in turn, they could temporally import said goods and defer customs duties.
Eventually, NAFTA introduced drawback provisions to promote the use of regional goods and “to reduce the incentive for third countries to use a NAFTA country as an ‘export platform.” Article 303 NAFTA, replicated in article 2.5 USMCA, introduced a general prohibition on refunding or exempting customs duties owed on non-originating goods imported into the territory of a party.
In essence, these provisions have as a purpose to avoid double ‘taxation’ on non-originating materials that are used as an input in the production of a finished good subsequently exported to another NAFTA or USMCA party.
Thank you for your interest, if you wish to continue reading please fill out the form below or contact us.
For more information about VTZ Law Firm services, visit our website or contact us info[@]vtz.mx
CPTPP, customs, Doing Business in Mexico, Duty Deferral, Free Trade Agreement, import duties, International Trade, International Trade and Customs, Trade Policy, USMCA, WTO
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.
El Comité Laboral Interinstitucional para Monitoreo y Aplicación Laboral de #EEUU ha establecido un sitio electrónico multilingüe para recibir información confidencial sobre cuestiones laborales de partes interesadas en países integrantes del #TMEC. https://t.co/fEhcRJbD1J
— Embajada EU en Mex (@USEmbassyMEX) August 4, 2020
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.
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.
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.
232, aluminium, labor, steel, tariffs, The Trading Room, Trading Room, 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:
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.
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,[…]”
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”.
“Estamos en la mejor disposición de favorecer sus inversiones en Mexico” @lopezobrador_ para eso está nuestro canciller @m_ebrard y @AlfonsoRomo1 pic.twitter.com/Wh12LqydoH
— Patricia Armendáriz (@PatyArmendariz) July 9, 2020
Ms. Armendáriz tweeted that a representative of the US Steel industry expressed their intent to expand in Mexico.
La industria de acero en EEUU expresando optimismo en expandirse en Mexico pic.twitter.com/8XXFiaokwm
— Patricia Armendáriz (@PatyArmendariz) July 8, 2020
Ms. Armendáriz also noted that a representative of the US dairy expressed their interest in Mexico as a result of the USMCA.
Los productos lácteos expresando su interés en Mexico a través del tmec pic.twitter.com/CX3Gb2Cl8c
— Patricia Armendáriz (@PatyArmendariz) July 8, 2020
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.
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.
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.”
Adrian Vázquez, AMLO, Labor Chapter, Mexico, Trump, US, USMCA, Vázquez Tercero y Zepeda
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.
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:
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:
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:
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.
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.
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?
labor, Labor Chapter, Manufacturing Industry, Mexico, Seade, USMCA, Webinar, WTO
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.
English
If you want to see a markup of the labor chapter, you can review the document made by Professor Kathleen Claussen.
I’ve done a markup of the labor chp. This is my understanding of the not-just-cosmetic amendments to the chapter itself (but tell me if I got it wrong): https://t.co/M7zjqKpAO3
(And then you can read the 14 p. of *new* annexes on labor enforcement mechs yourself in the protocol)— Kathleen Claussen (@Claussen_K) December 11, 2019
Mark-up of USMCA’s text (in Spanish) made by our Jr. Partner, Emilio Arteaga, available through google docs:
To access the US-Mexico-Canada Implementation Act, click the following link: USMCA Implementation Act
Labor and Trade, Rapid Response Labor Mechanism, USMBA, USMCA, USMCA text
(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.
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:
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.
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.
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
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
exports, imports, International Trade, Labor and Trade, Mexico, Trade Balance, USMBA, USMCA
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