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
Today, June 11, 2021, the Mexican Government published in the Official Gazette of the Federation, the Mexico-Hong Kong Bilateral Investment Agreement. This treaty will enter into force on June 16, 2021, and will protect investments and investors from Mexico and Hong Kong.
Our partner and director of VTZ Chinese Desk, Susana Muñoz, was part of the Mexican negotiating team for this BIT. Our partner highlights that the entry into force of this Agreement comes at a time when hundreds of Hong Kong-owned manufacturing companies from southern China are seeking to bring their operations closer to the US.
With this new treaty, Hong Kong will increase to 22 Bilateral Investment Treaties (BITs) that cover 31 foreign economies. Mexico, on the other hand, will have 30 BITs.
Currently, there are more than 200 companies registered in Mexico with Hong Kong capital, representing an investment of 1.18 billion USD.
This Treaty will serve as a regulatory framework to offer investors from both regions fair, equitable, and non-discriminatory treatment in their investments; compensation in case of expropriation of investments; and the right to free transfers abroad of their investments and returns.
In addition, this BIT also provides dispute settlement mechanisms under internationally accepted rules, including arbitration. In light of the above, we expect this BIT to be an ideal instrument for attracting Hong Kong investment into Mexico.
The Mexico-Hong Kong Bilateral Investment Treaty will increase investor confidence, expand investment flows between these two economies, and further strengthen bilateral economic and trade ties.
If you have any questions, please feel free to contact us: info[@]vtz.mx
Bilateral Investment Treaties, BIT, Doing Business in Mexico, FDI
Doing Business in Mexico, English, News
Vázquez Tercero & Zepeda (VTZ) is a proud member of Alliott Global Alliance, an international alliance of independent accounting, law, and specialist firms. VTZ joined this international alliance in 2020.
VTZ is the sole law firm member in Mexico of Alliott Global Alliance (‘AGA’), a leading multidisciplinary alliance of independent accounting, law, and specialist firms.
Our membership of Alliott Global Alliance, which has 290 offices in 80 countries, enables VTZ to place our clients with trusted, vetted professionals across the world with whom we can coordinate their international needs.
Moreover, Adrian Vázquez, our managing partner, was appointed as a member of the Advising Committee of Latin America.
By working in close collaboration with our AGA colleagues across the world, we will ensure our clients can navigate complex tax, legal, financial and regulatory issues. Whether our clients are taking their first step into a new market or expanding their cross-border operations, AGA professionals make the world smaller and businesses stronger.
AGA member firm services will help our clients to apply the right strategies that will reduce their costs and maximize growth opportunities.
Wherever in the world our clients need help, their business will be
handled with the same high standards they expect from VTZ.
The Alliance’s Service Promise Agreement also ensures our clients’
business will be treated on a priority basis by our colleagues across the globe. With expertise and knowledge of local language and culture, member firms respond expeditiously to each other’s
client enquiries or requests to be referred, often within hours,
and certainly within one working day.
The alliance’s member firms are rich with talented and highly experienced professionals who know their jurisdictions, practice areas, clients, and alliance colleagues.
The reach of the alliance extends deep into Europe, Africa, the Middle
East, North America, Latin America and the Asia Pacific. Alliance professionals are more than just colleagues or members; we are a kinship of professionals.
AGA member firms are among the leading independent firms in their jurisdictions. Their expertise lies in representing a range of corporate clients, including middle-market private companies, public companies, private equity and venture capital firms, individual investors and entrepreneurs on a local, regional and global scale.
Selected clients served by AGA member firms include:
Air France-KLM, Alitalia, Astex Pharmaceuticals, British Airways, Calloway Golf, Carl Zeiss, Crabtree & Evelyn, Credendo, Croda International Plc, Douglas Cosmetics, Ericsson Telecommunications, Fossil, HILTI Hungaria, Konica Minolta, LeMaitre, Lufthansa Group, Mango, MindMed, Prada, Rolls Royce Group, Sélection Retraite, Shire Plc, Simoco, STS Aviation Group, TATA, Toni & Guy, Uber Hellas, Volvo.
Alliott Global Alliance, Doing Business in Mexico, featured, International Alliance, International Legal Services, International Services
With the United Kingdom´s (UK) withdrawal from the European Union (EU), a new trade agreement was necessary between Mexico and the UK to maintain preferential tariffs and market access.
For this reason, in December 2020, the Trade Continuity Agreement between Mexico and the UK was signed, as well as the Agreement related to Article 12 of the Trade Continuity Agreement between Mexico and the UK. Both agreements are aimed at maintaining and expanding preferential market access between the two countries.
As mentioned in our Legal Alert of April 30, the Trade Continuity Agreement had to be published in the Official Gazette of the Federation (DOF) to become legally binding in Mexico.
Today, Tuesday, June 1, 2021, the Trade Continuity Agreement was finally published, entering into force on such date. The following decrees were published in the DOF:
In addition, the Mexican Ministry of Treasury also issued the Resolution that establishes the General Rules related to the application of the customs provisions of the Continuity of Trade Agreement between Mexico and the UK.
In this regard, Rules 2.2.2 and 2.2.3. provide the mechanism for the refund or compensation of duties paid by importers of goods that qualified as originating in the UK and were imported into Mexico as of January 1, 2021; as noted, this is the date that the UK’s exit from the European Union became effective, and prior to the entry into force of the Trade Continuity Agreement in Mexico.
In addition to the publication of the aforementioned decrees, the following five instruments necessary to guarantee preferential access for products between Mexico and the UK were published in the DOF:
The purpose of these instruments is to provide the necessary information to economic operators in Mexico regarding the requirements to access the preferential quotas provided in the Continuity Agreement.
The Trade Continuity Agreement establishes that Mexico and the UK will begin negotiations for an ambitious, modern and comprehensive free trade agreement as soon as there is an opportunity and within one year of the entry into force of this Agreement. In other words, before June 1, 2022, both countries commit to start negotiations for a free trade agreement that will seek to strengthen and expand preferential access between both markets.
Finally, both countries commit to make every effort to conclude the negotiations of the free trade agreement within a period of three years from the entry into force of this Agreement, that is, before June 1, 2024.
Import & Export, Mexico-UK Trade Relation, trade, Trade Continuity Agreement, United Kingdom
This week, two events related to the USMCA’s Facility-Specific Rapid Response Mechanism (RRM) were raised against the following companies in the auto industry:
Per reports, on Monday the AFL-CIO filed, in conjunction with the Sindicato Internacional de Empleados de Servicios (SEIU), SNITIS, and Public Citizen, a Rapid Response petition against Tridonex, an auto-part manufacturer located in Matamoros, Tamaulipas (near Brownsville, Texas).
According to the news reports, the petition claims that workers have been denied their right of freedom of association to create a new union because of the State government’s inactions. Also, the media reported that about 600 employees that sought to have a new union were fired last year.
Though the Mexican Labor Law reform on unions and collective bargaining matters is in force, its implementation is phased. Accordingly, the State of Tamaulipas will start to implement the reform by 2022.
The Interagency Labor Committee for Monitoring and Enforcement (the “Committee”) will review the petition, per the interim guidelines, and has to decide within 30 (calendar) days whether or not there is sufficient, credible evidence of a denial of labor rights at said facility. If affirmative, the Committee will inform the USTR to trigger RRMs, requesting Mexico to review such denial of rights.
Per Article 31-A.4 USMCA, Mexico must be informed about this petition and/or review process. As a result, the Ministry of Economy, in conjunction with the Ministry of Labor, will proceed to investigate for internal purposes.
We highlight that the USTR has not yet requested Mexico to review the alleged denial of rights.
On Thursday, the USTR announced that it had requested Mexico to review of Alleged Worker’s Rights Denial at General Motor’s Facility in Silao.
For the first time, the United States is using USMCA’s Rapid Response Labor Mechanism to review if workers at a General Motors facility in Silao, Mexico, are being denied the right of free association and collective bargaining. Read here: https://t.co/Y07uoC9Hix
— United States Trade Representative (@USTradeRep) May 12, 2021
The request claims that the workers at this facility are being denied the right of free association and collective bargaining. In particular, the US has concerns about the process regarding the vote on the collective bargaining agreement between GM and the Union; this process is known as (“legitimación” or “legitimization”).
The US is aware that the Mexican Ministry of Labor suspended the vote as a result of concerns about irregularities, including the destruction of ballots.
Given the above, the US requests Mexico to review “all actions and statements, by or on behalf of the Union or the Company, with respect to the legitimization process […]” including any action or statement against any worker’s right to a personal, free, and secret vote on the legitimization of the collective bargaining agreement.
According to the Press Release, the USTR has requested the Secretary of the Treasury to suspend the final settlement of customs accounts related to entries of goods from GM’s Silao facility. If there is an agreement that there has been a denial of benefits, it is possible that goods from GM’s Silao facility will not enjoy preferential tariffs per USMCA.
According to the media, the Mexican Ministry of Labor on Wednesday ordered to reinstate the legitimization process on Wednesday 12th of May (just one day before the USTR’s request!).
Also, we share the following reports:
GM stated that it did not have any involvement in any alleged labor violations and that it will cooperate with the US and Mexican authorities.
Mexico has 10 days to accept the USTR’s request to review the alleged denial of rights per the RRM. The government of Mexico issued a press release stating that it will start reviewing (internally) the case, but we expect Mexico to formally engage in the RRM process and, thus, Mexico will eventually have to share its findings within 45 (calendar) days since USTR’s request.
For more information about the process, see our Rapid Response Mechanism flow chart and our presentations:
Interestingly, Katherine Tai, head of the USTR, congratulated yesterday Mexico for “stepping in when it became aware of voting irregularities earlier this year”. If Mexico’s course of action is implemented successfully, it is possible that the USTR agrees with the remedial actions and, thus, GM’s Silao goods continue to enjoy preferential tariffs.
Proud to be using the Rapid Response Labor Mechanism for the first time to review workers’ free association and bargaining rights in a factory in Silao, Mexico. I commend the Mexican government for stepping in to suspend the vote when it became aware of voting irregularities.
— Ambassador Katherine Tai (@AmbassadorTai) May 12, 2021
In VTZ, we believe that these are the first of many labor cases. Katherine Tai is a strong “enforcement” advocate and promoter of the rapid response mechanism. Therefore, it is imperative for Mexican companies covered by the rapid response mechanism, such as in the manufacturing industry, not to interfere with their workers’ rights of freedom of association and collective bargaining, but also to cooperate with the labor authorities as appropriate. Failure to do so, the USTR may initiate the rapid response mechanism, jeopardizing preferential tariff treatment per USMCA.
Labor and Trade, Labor Chapter, Labor Reform, Rapid Response Labor Mechanism, USTR
With the United Kingdom´s (UK) withdrawal from the European Union (EU), the need to sign a new transitional trade agreement between Mexico and the UK arises so that the rights and obligations, which established preferential trade conditions as well as a platform to promote greater trade liberalization between the parties, are maintained between the two countries.
On the one hand, the 1997 Economic Partnership, Political Coordination and Cooperation Agreement between Mexico and the European Community and its Member States (hereinafter referred to as the EU-Mexico FTA) ceased to govern trade relations between Mexico and the UK. On the other hand, the Withdrawal Agreement signed between the UK and the European Community, which extended the period in which the UK would be treated as a member state of the EU, ended on December 31, 2021.
Therefore, taking into account that the UK is Mexico’s sixteenth trading partner, the Ministry of Economy (SE) signed the Trade Continuity Agreement with the UK and Northern Ireland in December 2020 with the aim of maintaining and improving preferential trade conditions while these countries negotiate a new trade agreement, i.e., this agreement governs the relationship on a transitional basis.
The Senate of the Republic approved the Trade Continuity Agreement between Mexico and the United Kingdom, as well as the Agreement related to Article 12 of such agreement, which was published in the DOF on April 23, 2021.
However, both agreements have not yet entered into force in Mexico because the text has not been published in the DOF.
Agreement relating to Article 12 of the Continuity of Trade Agreement between Mexico and the United Kingdom.
The Agreement relating to Article 12 establishes that the United Kingdom will apply the provisions of the Continuity Agreement as of January 1, 2021. In other words, imports from Mexico into the United Kingdom enjoyed uninterrupted preferential access.
In Mexico, the situation for products from the United Kingdom is different. Per Mexican Law, the Continuity Agreement and the Agreement relating to Article 12 not only has to be approved by the Senate, but their text has to be published in the Official Gazette in order to produce legal effects.
Although the text of the agreement has not yet been published, the Trade Continuity Agreement at the time they are published in Mexico will have retroactive effects until January 1, 2021. In other words, during the period between January 1, 2021 and until the publication of the trade agreements in the DOF, imports originating in the United Kingdom have to pay the General Import Tax (IG).
That said, a Mexican importer will be able to benefit from the retroactive application of the Continuity Agreement in Mexico through a system for the refund of duties paid on goods that qualified as originating from the UK and that were imported into Mexico as of January 1, 2021. Such mechanism was announced by the Ministry of Economy (explanation in webinar) and will be subject to the provisions determined by the Ministry of Finance and Public Credit (SHCP) in conjunction with the Tax Administration System (SAT).
The Continuity Agreement establishes that the trade-related provisions of the EU-Mexico FTA will be incorporated into and be a part of this Continuity Agreement, with some changes. Therefore, its ratification and application in Mexico does not entail the modification of laws or regulations that are currently in force.
However, for the proper implementation of the Continuity Agreement, the publication of the following in the DOF is required:
Furthermore, as a result of the implementation of this agreement, it will be feasible for Mexican producers to expand preferential access for agricultural products such as bananas, asparagus, honey, molasses, among others.
Likewise, preferential access will offer a benefit to exports from the south-southeast of Mexico in states such as Tabasco, Chiapas, Veracruz and Yucatan.
Brexit, EUMexFTA, import duties, International Trade, Mexico, Trade Continuity Agreement, UK
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
This week in our economic newsletter, we highlight the report of the USTR that identifies international trade barriers in Mexico, among other matters.
On March 31, the USTR published its annual report “Barriers to Foreign Trade 2021“, which lists different trade concerns either identified by USTR and expressed by the business sector. The report includes a handful of matters about Mexico on issues such as trade, services, and investment.
We highlight the following matters:
Despite that Mexico ratified the WTO Trade Facilitation Agreement in 2016, US exporters continue to express concern about Mexican customs procedures. In particular, the problems identified are (i) changes in procedures with insufficient prior notification, (ii) inconsistent interpretation of the regulatory requirements in the different border ports, (iii) labeling rules, (iv) limitations on customs agencies (v) parcel services, among others.
On October 23, 2019, the Ministry of Economy modified Annex 2.4.1 of the General Rules and Criteria on Foreign Trade, identifying tariff items of the goods subject to compliance with the NOMs at the point of entry to Mexico. This created testing and certification requirements for products that previously did not require them.
The Ministry introduced additional changes to Annex 2.4.1 in October 2020, eliminating three exemptions for compliance with 14 labeling NOMs. These changes affected different sectors with customs delays, including the hotel industry and the manufacturing sector. While the Ministry clarified certain rules, the report says the US will continue to review this issue.
The report also mentions the new food labeling requirements, namely the Front-of-Package Nutrition Labels. We highlight that the US raised its concerns at the TBT committee in May 2020 and October 2020.
The Mexican Ministry of the Environment and Natural Resources has rejected import permits for products containing glyphosate, a controversial herbicide. According to the US, Mexico has not given the opportunity to make public comments, nor has it submitted the corresponding notification to the WTO, nor has it provided scientific evidence to justify its decisions to this international trade barrier. The presidential decree of December 31, 2020, that establishes a lag period for glyphosate was also indicated in the report.
The US identifies that COFEPRIS has not issued an authorization for biotech products for human food or livestock purposes since May 2018. The report also informs concerns related to the rejection of authorizations related to transgenic corn – derived from the Presidential decree of December 31, 2020 – and biotech cotton.
The report mentions the new government policy to centralize almost all federal government purchases under the Ministry of Finance. In this regard, US companies expressed concerns that the tenders are less transparent, had inadequate timing, and that there were multiple messy tenders.
Finally, the USTR notes that US energy companies have complained of significant delays in issuing permits, discriminatory application of regulations, and lack of advance notice of reforms. And we note that the report says that the US government is committed to ensuring that its investors receive fair treatment.
The World Trade Organization (WTO) forecast an increase in the volume of world merchandise trade of 8% for the current year. This is because merchandise trade expanded beyond what was expected in the second half of 2020 following the pandemic shock. However, Covid-19 and possible new waves of infection remain the biggest risk to the prospect of trade recovery.
Likewise, the WTO warned that in the short term this positive outlook is not guaranteed as regional disparity, weakness in trade in services, and lags in vaccination, particularly in developing countries, continue to exist.
Last week, the Ministry of Labor and Social Welfare (STPS) announced an agreement with the labor and business sectors on the initiative to prohibit labor outsourcing. The agreement covers the following topics:
Thus, the Chamber of Deputies resumed its analysis and approved labor outsourcing reform this Wednesday, for which it was turned over to the Senate of the Republic. Derived from the agreements, the labor outsourcing reform now includes new issues, such as “profit-sharing” and “labor services between companies of the same group”, as was being announced unofficially last week.
Biotech products, Energy, Food Labeling, Glyphosate, labor outsourcing, NOMs, trade barriers
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.
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.
VTZ has addressed some of these issues in our previous newsletters and /or digital content. If you have any questions, please let us know.
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
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.
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.
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.
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.
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.
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 Universal, La Jornada, El Informador
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
A partir del 1 de abril Ernesto Acevedo Fernández representará a México ante el @BancoMundial como director ejecutivo alterno de esa institución. pic.twitter.com/lQhIWIT9rP
— 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.
La secretaria @tatclouthier felicita al subsecretario de Industria, Comercio y Competitividad, Ernesto Acevedo, por su nueva encomienda como representante de México en el Banco Mundial, y da la bienvenida a Héctor Guerrero, quien asumirá el cargo de subsecretario el 1 de abril. pic.twitter.com/zzsyXa93AK
— Economía México (@SE_mx) March 18, 2021
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.
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
Amendment NOM-051, antidumping, Cannabis, Doing Business in Mexico, Energy, International Trade, Investing in Mexico, Labeling, Marihuana
The Trading Room is a Mexican Economic Newsletter prepared by Vázquez Tercero & Zepeda (VTZ) that specializes in international trade, customs, and tax law.
Yesterday, Ms. Katherine Tai appeared before the Senate Finance Committee for her confirmation as the US Trade Representative. On Wednesday, Ms. Tai’s opening statements were released (available here), and we highlight the following three remarks:
As for Mexico-US trade relations, it is clear that Ms. Tai, as a future USTR, will seek to use the available legal tools provided in the USMCA. This was repeated in her hearing (Youtube video). In VTZ, we consider that USTR will be more receptive to labor complaints that may trigger a facility-specific rapid response mechanism. From her opening statements, it also appears that the US will have closer cooperation with WTO and that the US will continue to have a strong policy against China, and with the support of allies.
For more information on Labor and Trade:
Yesterday, US President, Joe Biden, signed an executive order that seeks “to address the vulnerabilities in our supply chains across additional critical sectors.” In the speech, the expression “building resilience” was mentioned frequently, and what is meant is “increasing our production of certain types of elements here at [US].” In the words of the US President, the order does two things.
What recommendations may arise as a result of the review? Besides possible statutory or regulatory changes that may impact supply chains, and that “federal incentives and any amendments to Federal procurement regulations that may be necessary to attract and retain investments in critical goods and materials and other essential goods and materials[…]”
The Director of the Roosevelt Institute, Todd N. Tucker, made an interesting thread in Twitter:
In addition, diplomatic actions to seek the support of allies to strengthen supply chains jointly. With the tensions rising on US energy investments in Mexico, we wonder whether Mexico will be invited to support this policy?
As a final note, international news outlets have reported that Canada is considering a Carbon “Tariff” (and possibly the US), which would take the form of a “border tax adjustment” per the GATT. We understand that Canada has a domestic “carbon” tax, which can put in a competitive disadvantage some Canadian industries against imported products. Although it is still a project, the Canadian government is studying the possibility of a “Carbon Tariff” (in the form of a border tax adjustment) on the imports from countries that do not have strong “green policies.”
Meanwhile in the USA, it has been reported that a carbon tax bill is being drafted in Congress and that a carbon “tariff” (in the form of a border tax adjustment) may also be considered. The European Union is also discussing similar measures as part of its green deal since last year.
One thing is clear, at least for us, Canada and the US will push for “green” policies together, as perceived in the recent Biden-Trudeau meeting. In turn, imports from polluting countries in Canada, the USA, and the EU may be affected in the mid or long term with a carbon “tariff”, and Mexican industries shall pay close attention to how this matter develops.
More information: Macleans, Politico, BBC, SPGlobal, and Bloomberg.
More…Carbon tariff, green policies, Katherine Tai, US Executive Order on Supply Chains, USTR
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