COVID and USMCA entry into force, Mexican Measures, Health Emergency, International Trade

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COVID and USMCA and Mexico Relief Measures – The Trading Room

3 Apr , 2020  

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USMCA Status

Since the Canadian Parliament approved USMCA in March, it was thought that USMCA would enter into force on June 1, 2020, as long as all parties formally notified that they had concluded their internal legislative procedures. On Monday, however, it was reported that US congressmen sent a letter to Lighthizer, the US Trade Representative, requesting a new date to be set for USMCA’s entry into force due to the public health crisis and interruptions in the supply chain caused by COVID. The Congressmen pointed out that USMCA should not come into effect until Mexico and Canada have fulfilled their prior commitments (e.g. reforming laws) and until industries can effectively implement the new rules. The Mexican Association of the Automotive Industry (AMIA), for instance, to reconsider the date of entry into force until 2021.

 

Notwithstanding the foregoing, it is reported that yesterday (Thursday) Canada notified Mexico and the US the conclusion of its domestic USMCA approval process. A Mexican high-level official has called July 1, 2020, to be the entry-into-force since there are pending matters to be resolved.

 

 

COVID-19 Relief Measures in Mexico?

 

The President of Mexico, AMLO, announced since last Monday, March 23, that there are no relief plans for companies, tax exemptions or other mechanisms. Also, AMLO stated the following:

 

 “We are developing a plan, only that it is different from the recipes that were applied in times of crisis; for example, credit was always used, from the International Monetary Fund, fortunately, we have no need to do that, because we have reserves, we have savings, we can finance our development. “

 

This position has been reiterated in several of the president’s morning conferences, particularly in response to an economic plan presented by business associations to address the economic crisis; some of the proposals are reducing 5% the income tax, the government should facilitate payment regarding outstanding balances with suppliers, provision of loans from the Development Bank to SMEs. However, this Thursday the president, AMLO, announced that this Sunday he will present an “Economic Plan.”

 

Sanitary Emergency in Mexico

 

In the face of the COVID-19 pandemic, the Federal Government has issued the following agreements and decrees published in the Official Gazette of the Federation on March 23, 24, 27, 30 and 31, respectively:

 

  • Agreement by which the General Health Council recognizes the epidemic of disease due to the SARS-CoV2 virus (COVID-19) in Mexico, as a serious disease of priority attention, as well as the activities of preparation and response to the said epidemic. 
  • Agreement establishing the preventive measures that must be implemented to mitigate and control the health risks involved in the disease caused by the SARS-CoV2 virus (COVID-19).
  • Decree declaring extraordinary actions in the affected regions of the entire national territory in terms of general health to combat the serious disease of priority attention generated by the SARS-CoV2 virus (COVID-19).
  • Agreement by which the epidemic of disease generated by the SARS-CoV2 virus (COVID-19) is declared as a health emergency due to force majeure.
  • Agreement establishing extraordinary actions to attend to the health emergency generated by the SARS-CoV2 virus.

 

The most relevant agreement, so far, is that that Declares a Health Emergency due to force majeure caused by COVID-19 (highlighted above). The importance is explained, firstly, by the legal labor implications of the declaration; although the text is subject to interpretation, high-level authorities indicate that the declaration does not modify labor rights (e.g. reduction of wages) or suspend labor relations or rights.

 

As a result of the aforementioned declaration, the Agreement establishing extraordinary actions was issued and ordered the immediate suspension, from March 30 to   April  30,  2020, of non-essential activities; thus,  the agreement defined in “detail” those activities considered essential that will have to continue to operate.

 

Mexican Tax Authority

 

Tax collection was considered as an essential activity for the performance of the Mexican economy. Therefore, the Mexican Tax Authority (SAT) is operating, and all its administrative procedures and procedures, including tax and international trade audits, are being carried out “as if in “normal” circumstances.

 

Ministry of Economy

 

As a result of COVID, the Ministry of Economy suspended, as a general rule, all legal deadlines. However, some of its procedures and departments will continue to operate, e.g. international trade matters. The relevant department has issued facilitation measures, regarding certificate of origins, import licenses, quotas, etc., enabling electronic submissions as well as the issuance of e-government documents in order to avoid gatherings in government offices.

 

 COVID-19 – Let us Help.

Alliott Group

 

As a member of Alliott Group: Alliance of Accountants & Lawyers Worldwide, VTZ puts at your reach relevant information on government relief measures, tax incentives or the like offered in countries due to the COVID-19 pandemic. We are convinced that having a global vision on relief measures in different parts of the world will undoubtedly help business rethink their plans and contractual commitments.

We, our colleagues of Alliott Group located in 65 countries and VTZ, are ready to face and overcome the effects of this health crisis with you. So, tell us, how can we help?

 

COVID and Alliott, Relief Measures,

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