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December and January Developments on International Trade – The Trading Room

15 Jan , 2021  

International Trade News in Mexico

Developments Mid-December 2020

A series of decisions and regulations trade-related were published in December 2021. The most relevant in our opinion are the following:

  • Mexico and CPTPP: Ministry of Economy made some changes to the procedure regarding the public tenders to access the import quotas per Mexico’s Tariff Rate Quotas established in Appendix A-1, which deals with dairy products. 
  • UK-Mexico Trade Continuity Agreement: Mexico and the UK reached an agreement whereby the preferential tariffs are maintained. In essence, the European-Mexico Free Trade Agreement will continue to apply between Mexico and the UK as modified per the agreement. Now, we highlight that materials originating from the European Union will be considered as materials originating from the UK. The text of the agreement is available here.   
  • The New General Tariffs on Imports and Exports Act in Mexico: The new tariff system entered into force on december 28th, 2020, whereby Mexico now has a 10 digit tariff item code, called NICO for its acronym in Spanish. With the entry into force, the federal government published the implementing regulations, and updated its non-tariff barrier regulations: 
  1. Import and Export Quotas;
  2. Trade regulations on Pesticides, Fertilizers, and Toxic Substances;  
  3. Goods subject to trade regulations to the Ministry of Culture;
  4. Goods subject to trade regulations on behalf of the Ministry of Agriculture
  5. Goods subject to trade regulations on behalf of the Ministry of Health;
  6. Goods subject to trade regulations on behalf of the Ministry of Environment;
  7. Goods subject to trade regulations on behalf of the Ministry of Energy;
  8. Sugar export permit and maximum quota;
  9. Dual-Use, Software, and Technologies subject to trade regulations on behalf of the Ministry of Economy;
  10. Trade Sanctions per the United Nations Security Council resolutions;
  11. Goods subject to trade regulations on behalf of the Ministry of Defense.
  • Tax Benefits in the Northern and Southern Border: As reported in our last edition, the federal government renewed the Northern Borders Tax Program and replicated said Program in the Southern Border of Mexico. For more information, Jorge Montes, VTZ Tax partner,  prepared a Tax newsletter about this matter (available in Spanish).
  • The Free Trade Zone of Chetumal: Mexico created this Free Trade Zone located in the capital of the State of Quintana Roo (about 3-4 driving from Cancun). The Decree lists the goods that will not be subject to import duties and the customs processing fee. “Companies of the Region” can only access these benefits provided that they register before the Ministry of Economy. The Decree aims to “promote” trade of goods at lower costs in this region. It is uncertain (and unlikely) that this free trade zone is designed to be a foreign investment attraction policy.

Should you need more information, do not hesitate to ask us.

USMCA Labor Complaint

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.

Mexico to Eliminate Independent Bodies?

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.

USMCA Implementation E-Book

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.

On December, we organized a webinar in a round table format (in Spanish) that discussed trade and tax related matters. You can access the video in the following link: Webinar.

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English, News

Northern and Southern Border Region & New Minister of Economy – THE TRADING ROOM

11 Dec , 2020  

International Trade News in Mexico

The Northern and Southern Border Region 


The “Free Zone of the Northern Border” program will be valid until 2024 in accordance with the decrees signed by the President of Mexico, AMLO, on November 27th, 2020. Established in 2018, the program grants tax incentives on VAT, Income Tax (“ISR”), and the Special Tax on Production and Services (“IEPS”) applicable to fuels to companies located in the northern border strip. A more detailed description of the benefits of this program is discussed in our Tax Chapter of the Doing Business Guide

It is noteworthy that the minimum wage is higher in the northern border region, i.e. 185.56 pesos (+/- 8.25 USD) instead of 123.22 pesos (+/- 5.50 USD).
 

The President also announced that the Program will be replicated in the southern border strip of Mexico as a complementary policy to the Mayan Train project and the Trans-isthmic Corridor.
 

The Southern Border will include 22 cities or communities of Chiapas, Tabasco, Campeche and Quintana Roo that have a border with Guatemala, which will enjoy the same benefits as the Mexican northern border.

Creation of a “Free Trade Zone”

In addition, Chetumal, Quintana Roo, will become a Free Trade Zone where import duties and the customs processing fees will not be applicable, allegedly. The Presidential Decrees have not been issued in the Official Gazette yet and, thus, we are still unaware of the details and/or rules. However, the President announced that these programs will enter into force in January 2021.

New Minister of Economy

The Mexican president, AMLO, announced changes to his cabinet this Monday. We highlight the nomination of Tatiana Clouthier as the new Minister of Economy, while Graciela Márquez will leave said position in a couple of days to join the board of the National Institute of Statistics and Geography (“INEGI”).

Tatiana Clouthier is currently the vice-coordinator of the MORENA party in the Chamber of Representatives, and she was the coordinator of AMLO’s presidential campaign in 2018. In that sense, Ms. Clouthier is close to the President, but she has also been critical to a couple of the President’s decisions.

Ms. Clouthier’s academic background is not related to the economy or international trade, however, she has held different positions in the public sector for more than 10 years, such as being a representative and working in local governments. 

During a press conference, Ms. Clouthier stated that “[…] the objective of this job is very clear: more and better companies, to promote better jobs for all […]”, while in Twitter she expressed that “With pleasure and of course commitment I will accept the challenge of this job to which the President is inviting me. We will work to become a space that seeks to solve through dialogue, ideas and innovation in favor of our motherland” 


 
Despite some frictions between the government and the private sector, the next head of the Ministry of Economy appears to show that she is open to dialogue, which is much needed to meet the needs of the current economic context that Mexico is experiencing due to the COVID-19 pandemic. As a Minister of Economy, Ms. Clouthier will be responsible of foreign investment, international trade programs and restrictions, free trade agreements, among other matters.

VTZ Webinar

VTZ will be organizing a webinar with a round table format (in Spanish), where our members will share their 2020 professional experiences (trade, customs, tax, real estate, and labor) as well as our expectations for the next year. If you are interested, please register in the following link: Zoom Webinar

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English, News

COFECE Proposals & Global Economy – Economic Newsletter

23 Oct , 2020  

International Trade News in Mexico

Reactivating the Mexican Economy

The Mexican Antitrust Commission (COFECE, acronym in Spanish) presented 12 measures in order to reactivate the national economy for the following relevant sectors: pharmaceutical, financial, energy, transportation, public procurement, and regulation. 

VTZ highlights that one of these measures focuses on International Trade regulations, specifically on trade remedies matters. In general, the COFECE proposed measure consists of “avoiding the imposition of restrictive measures on international trade without a prior analysis of the negative effects on the consumer.”

Though many of the proposals are encouraged, VTZ notes that some of these “trade” measures would require reforming Mexico’s International Trade Law.

What does COFECE propose?

  • Making transparent and justifying the allocation of import quotas mechanisms, favoring public bidding.
  • Establishing transparent methodologies and technical criteria on the dumping margin calculations, the injury analysis, and the causal relationship.
  • Implementing a lesser duty rule.
  • Carrying out a public interest test considering industrial users and consumers.
  • That the Ministry of the Economy actively initiates reviews on antidumping duties.
  • Avoiding simultaneous trade measures in the same sector.

Modifying the operation of the International Trade Commission (ITC) so that (i) its composition is more balanced, for example, including the Federal Attorney for the Consumer (PROFECO, acronym in Spanish), (ii) having the opportunity to hear the opinion of those who may be affected; (iii)publishing the stenographic versions of the sessions; and (iv) the information allows the ITC to assess the potential costs and benefits of the proposed measure, with special care on the consumer.

Eco-Trolleybuses and Tariffs 

Yesterday, October 22, the Government of Mexico published a Decree modifying its tariffs items and duties. In line with Mexico’s commitments on climate change and promoting the use of cleaner energies, the President ordered unfolding tariff items regarding used and new trolleybuses as well as their respective tariffs.

Accordingly, new trolleybuses are subject to a 0% import duty, a rate that will be temporarily available until September 30th, 2024, while used trolleybuses will be subject to a 50% tariff.

Hopefully, the Mexican Government does not forget to renew the 0% import duty before its expiry.

UNCTAD, COVID, and the Global Economy

Last month, UNCTAD released its 2020 Trade and Development Report. On its website, a short article addressing the report and the global economic situation due to the COVID-19 pandemic was published.
Accordingly, UNCTAD warns of “a lost decade” if national governments decide to adopt austerity policies. It should come as no surprise that austerity policies would trigger low job creation, stagnant wages, slower economic growth, and increased pressure on government budgets. It would also mean not fulfilling the 2030 Agenda for Sustainable Development.

In contrast, the article indicates that boosting public investment with international support and coordination could double the global growth rate for the next decade. Also, UNCTAD emphasizes actions that the multilateral system can take for economic recovery, such as expanding the use of Special Drawing Rights to boost global liquidity and the closure of the Doha Development Agenda, which has been suspended or frozen for almost two decades.

According to UNCTAD, the world economy will contract this year by more than 4%, leaving a deficit in world production at the end of the year of more than $ 6 trillion (US dollars), while “trade will shrink by around one-fifth this year, foreign direct investment by up to 40%.”

In the case of Latin America, the article points out that the region is likely to have a decline in production of 7.6% this year, while some of its largest economies, Argentina and Mexico, will have a sharp double-digit decline. 

For this reason, the Director of the Division of Globalization and Development Strategies of UNCTAD Richard Kozul-Wright mentions that “[…] a V-shaped recovery… would require double-digit global growth next year, which is out of the question.”

English, News

Mexico tackles Cheese and Yogurt Products & more – The Trading Room

16 Oct , 2020  

International Trade News in Mexico

USMCA Rail Corridor

According to a Mexican news outlet, an interesting infrastructure project is being planned that will further integrate North America. The project entails a rail and logistic corridor that will connect the Mazatlan, Sinaloa, to Winnipeg, Canada crossing the United States.

USMCA Rail Corridor, conection of North America, private investment

Per the report, 167 km of rail need refurbishment and 87 km of rail construction is needed in Mexico. The budget of this project will be private and not government funded. Check out the report here (in Spanish).

Mexico tackles Cheese and Yogurt Products

Accordingly, the Mexican Ministry of Economy and the Attorney General for Consumer Protection issued a “ban” on specific cheese and yogurt products. The Ministry of Economy issued a public statement identifying the following cheese and other yogurt trademarks, while news outlets identified specific products.

What happened?


According to the public information, the identified cheese products are not complying with labeling requirements, origin markings, failing to provide the exact weight, or using prohibited ingredients (e.g. adding vegetal fat). As for yogurt products, the Ministry identified, for instance, some “natural” drinkable yogurts that have a low protein intake per the mandatory labeling standard. The standard does not distinguish between drinkable and “container” natural yogurt, while “fruit” yogurts do have such distinction and, thus, drinkable “fruit” yogurts have a lower minimum protein content requirement.  
 

This government measure, of course, has sparked reactions in the business community. Mondelez issued a public statement calling the measure as “totally baseless”, while Lala, Danone, and Fud claim that their products comply with the Mexican mandatory standards. However, the Industry has claimed that they will correct any inconsistency with their products. For more information, see the following report of the Associated Press (English).
 

VTZ and Mexican Standards

In February 2018, Mexico started public consultations on draft-projects regarding mandatory standards on dairy products (i.e. powder milk, yogurt, and cheese) as noted in our Trading Room. These standards were eventually adopted, and they were published in 2019.

Imports and Labeling in Mexico


VTZ is, of course, aware that new labeling rules applicable to imports started to apply as of the beginning of October. The new rules have impacted, for instance, “intermediate” products that are used in industrial processes and not destined for final consumers. This has caused bottlenecks in Mexican customs as reported by a news outlet this Monday.

English, News

The Legal 500 | VTZ International Trade & Customs

9 Oct , 2020  

, Vazquez Tercero, Mexican Trade Lawyers, Best Lawyers, Leading Lawyers, International Trade and Customs

On September 7, 2020 The Legal 500 published its 2021 ranking where classifies the best law firms in the different Areas of Practice.

Vazquéz, Tercero & Zepeda appears again in the number 1 band of leading firms in International Trade and Customs. The legal ranking also recognizes leading individuals of our team, in this edition appears as leader Adrián Vázquez, and as next generation partners, Emilio Arteaga, who is currently a Junior Partner, also mentions our partners Eduardo Zepeda and Eduardo González, as well as our partners mentioned above, as Practice Heads.

Leading Law Firm International Trade and Customs

The ranking shows the following review of our firm:

A top-notch player in the international trade and customs arena, Vázquez Tercero & Zepeda has a very strong focus on anti-dumping matters and the maquiladora industry. The 14-strong practice, which covers a wide array of matters, including including trade policy, customs compliance, regulatory matters, customs litigation, and tax planning and litigation; is a popular choice for clients from the Asian market. Managing partner and trade disputes expert Adrián Vázquez co-heads the practice with Mexico City colleague Emilio Arteaga (promoted to partner in May 2019, he has been active in anti-dumping investigations); and Guadalajara-based partners Eduardo Zepeda, who has a robust knowledge of the IMMEX/maquiladora industry, and skilled litigator Eduardo González. Support comes from key associate Mariana Malvaez. Notably, in addition to the aforementioned offices, the firm also operates from León, Monterrey, Puebla, Reynosa, Matamoros, Tijuana and Los Cabos, and has a promotion trade and investment office in Hong Kong. Former partner Horacio López Portillo left to establish his own boutique, López Portillo Consultores, S.C., in June 2019.

The publication also mentions some clients with whom our firm has collaborated. Consult here: The Legal 500 2021

English, General

Final Antidumping Determination | Wind Towers

5 Oct , 2020  

Antidumping duties on wind towers from China, Mexico antidumping investigation wind towers

Antidumping investigation on imports of wind towers from China

Today, October 5, 2020, the Final Resolution of the antidumping investigation on imports of wind towers originating in the People’s Republic of China was published in the Official Gazette of the Federation, regardless of the country of origin. The companies requesting the investigation were Arcosa Industries de México, S. de R.L. de C.V., and Speco Wind Power, S.A. de C.V., and four Chinese producer-exporters and Mexican importers of wind towers appeared at the investigation.

In this investigation, both the producer-exporter companies and the importers argued, among other reasons, that the eventual imposition of antidumping duties implies a barrier to entry into the domestic market, price setting by domestic producers, monopolistic or oligopolistic practices, distortion prices, increases in electricity prices, impact on consumers and obstacles to goals. Likewise, the counterparts asked the Ministry to evaluate the “public interest” of the environmental factor in light of Mexico’s international commitments regarding the production of clean energy, climate change, and sustainable development. In this regard, the Ministry concluded in paragraph 420 of the Final Determination, the following:

420. The Ministry considers that the arguments of the appearing parties regarding the negative effects that the application of countervailing duties could cause in the domestic market are inadmissible since the eventual imposition of countervailing duties is only intended to restore fair conditions of competition and correct the distortion in prices generated by the concurrence of imports to the domestic market under conditions of price discrimination and not for other purposes.

Preliminary Antidumping Determination

The Ministry of Economy preliminarily applied countervailing duties that ranged from a range of 41.22% to 66.49 for three participating Chinese producer-exporters and 143.06% for a Chinese producer-exporter and the other Chinese exporters. However, in its Final Resolution, it noted the following:

418. In the preliminary stage of the investigation, the Ministry determined it appropriate to apply provisional countervailing duties to imports of wind towers originating in China, equivalent to the margins of price discrimination. This was due to the fact that it reached a preliminary affirmative determination on the existence of price discrimination and pecuniary injury caused to the domestic wind tower industry, and considered them necessary to prevent them from continuing to cause injury to the industry during the investigation, in accordance with the provisions of Article 7.1 of the Anti-Dumping Agreement.

Final Antidumping Determination

As stated in paragraph 425 of the aforementioned Final Resolution, in this investigation the Ministry of Economy imposed a “lesser duty” in order to restore fair conditions of competition and eliminate damage to the domestic industry.

Antidumping Duties

In paragraph 429 of the Final Resolution, the Ministry of Economy determined to impose a final compensatory quota of 21% on imports of wind towers originating in China, regardless of the country of origin, which enter through the tariff section 8502.31.01 of the TIGIE, or by any other.

VTZ represented Chinese exporter-producers

Vázquez Tercero & Zepeda (VTZ), through his team of lawyers, represented the production-exporters in this investigation (Chengxi Shipyard Co. Ltd., Penglai Dajin Offshore Heavy Industry Co. Ltd., Shanghai Taisheng Wind Power Equipment Co. Ltd . and Suzhou Titan New Energy Technology Co. Ltd.) The team was led by Adrian Vázquez, supported by Emilio Arteaga, Verónica Vázquez, Mariana Rivera, and Mariana Malvaez.

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English, News

Antidumping Investigation Steel Slabs from Brazil and Russia

21 Sep , 2020  

Steel Slab

Mexican Antidumping Investigation on Steel Slabs from Brazil and Russia

Today, the Mexican Ministry of Economy published in the Official Gazette the notice of initiation of the antidumping investigation on the imports of carbon and alloy steel slabs from Brazil and Russia. The notice of initiation can be accessed on the following link: Official Gazette 21/09/2020

Below, please find relevant information on the antidumping investigation:

Petitioner:

Arcelormittal México, S.A. de C.V.

General Product Description:

Carbon and alloy steel slabs from Brazil and Russia

Tariff Items (MHTS):

7207.12.99, 7207.20.99, 7224.90.02 and 7224.90.99

Period of Dumping Investigation:

January 1st, 2019, to December 31st, 2019.

Period of Injury Analysis:

January 1st, 2017 to December 31st, 2019.

Normal Value:

Reconstructed Normal Value

Date to Submit the Questionnaire:

October 29th, 2020, but a deadline extension may be requested.

Named Exporters:

Ternium Procurement, C.A. Luis Bonavila No. 1266, Torre 4, Apto 201, Zip Code 11300, Montevideo, Uruguay

Arcelormittal Tubarão / Arcelormittal Brasil S.A., Av. Brigadero Eduardo Gomes No. 526, Bairro Polo Industrial Tubarão, Zip Code 29160-904, Serra, ES, Brasil

Steelinvest (Jersey) Ltd., One the Esplanade, St. Helier, Zip Code JE2 3QA, Jersey, Estados Unidos de América

SteelInvest Group, Westkaai 51, Kattendijkdok, Zip Code 2000, Amberes, Bélgica

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Please contact us if you need additional information at: Adrian Vázquez (adrian[@]vtz.mx), Emilio Arteaga (emilio[@]vtz.mx), Verónica Vázquez (vero[@]vtz.mx), Mariana Malvaez (mariana[@]vtz.mx), Mariana Rivera (mariana.rivera[@]vtz.mx).

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English, News

The Implications of a Hard BREXIT on Mexico – UK Business | Webinar

14 Sep , 2020  

Brexit, Mexico, UK, Reino Unido, Comercio Internacional, International Trade, Business,

Emilio Arteaga, Junior Partner of VTZ, participated on Wednesday, September 23 in the Panel “The implications of a Hard Brexit in trade and business Mexico-United Kingdom”, which was co-organized by the British Chamber of Commerce in Mexico.

The Panel focused on where we are now in terms of trade and bilateral treaties, how a hard Brexit will affect trade relations, as well as what the options are for both countries going forward, including WTO rules.

The Panel was made up by Jaime López, Partner of Deforest Abogados, Paddy Kelly, Partner of Laytons LLP, and Emilio Arteaga, Junior Partner of VTZ. The panelists shared the political and economic context surrounding the Mexico-UK trade relationship.

Mexico – UK Trade in the Context of Brexit

Today, Mexico and the United Kingdom have 97% of their tariff lines liberalized as a result of the European Union – Mexico Free Trade Agreement, which is still in force. However, these preferential tariffs will be lost as a result of a possible and likely Hard Brexit.

Moreover, Mexico and the European Union concluded this year the negotiations regarding the modernization of their FTA. As for the trade in goods, the new EU-Mexico FTA will liberalize all goods, including meat, cheese, chocolate, cereal, pastries, pasta, among other products. For more information, visit our economic newsletter.

In the webinar, Emilio Arteaga provided a brief summary of international trade statistics between Mexico and the UK. For instance, exports from Mexico to the UK amounted to more than 2.5 billion dollars in 2019, while export from the UK to Mexico were equivalent to more than 2 billion dollars.

Immediate Consequences to UK goods

In the event of a hard Brexit, goods originating from the UK may be subject to Mexican Import Tariffs (import duties), Mexico’s default customs processing fee (i.e. .008% of the customs value), as well as any other applicable internal charge or tax (e.g. VAT and IEPS).

For more information on Mexico’s international trade policy, customs duties, tariffs, or taxes, register for VTZ’s Doing Business in Mexico Guide in the following link: International Trade.

For more information on the most traded goods between Mexico and the UK, check out our partners’ presentation:

Contact

Should you have any questions or wish more information, do not hesitate to contact Emilio Arteaga (emilio[@]vtz.mx) or connect with him through Linked-In.

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English, News

VTZ a Top Mexican Law Firm in International Trade | Chambers & Partners

3 Sep , 2020  

Chambers and Partners Latin America 2021, Mexico, Leading Trade Lawyers, Adrián Vázquez Chambers and Partners, Eduardo Zepeda Chambers and Partners

Vázquez Tercero & Zepeda (VTZ), a Mexican Law firm, retained their “top-ranked” position in the International Trade / WTO Practice of the Chambers and Partners Latin America 2021 ranking, which was released today, September 3, 2020.

Top Mexican Law Firm, International Trade, WTO, Customs Law, Best Lawyers in Mexico, Top Ranked, Chambers,

Mexican Law Firm With An Established International Trade and Customs practice in Mexico

Throughout more than eight years, our firm and lawyers have appeared in this important legal ranking and specialized practice. Consolidating itself more and more each day as one of the top and leading law firms in Mexico, VTZ is recognized for its international trade practice, especially anti-dumping investigations, as well as customs and maquiladora matters.

Recently, VTZ issued its Doing Business in Mexico Guide that includes a Chapter on International Trade and Policy for the Manufacturing Industry.

In addition, the Chambers and Partners Latin America 2021 includes the following review of our firm:

Outstanding international trade outfit deeply respected for its prowess in anti-dumping investigations and countervailing duties. Boasts further expertise in customs compliance and verifications of origin. Continues to serve an impressive roster of domestic and international clients encompassing such sectors as metals, manufacturing and consumer goods. Remains a first port of call for clients from Asian markets exporting goods to the Mexican market.”

Chambers and Partners Latin America 2021

Our Top Lawyers: Adrián Vázquez and Eduardo Zepeda

Also, Chambers recognizes outstanding individuals or lawyers of the Mexican Law firms per their areas of practice, such as International Trade and WTO Law. Our partners Adrián Vázquez and Eduardo Zepeda appear in Bands 1 and 4, respectively.

Adrián Vázquez

Furthermore, one source describes Adrián Vázquez as “[…] an experienced and highly sophisticated lawyer” and, “a key name in this area”, and Chambers highlights that his expertise also encompasses advising clients on the impact of free trade agreements on their operations.

Eduardo Zepeda

Regarding Eduardo Zepeda, Chambers mentions that a source points out that he is a lawyer “highly experienced in maquiladora matters”, and his advice is frequently sought out by clients in relation to customs matters.

The VTZ team is honored

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Doing Business in Mexico, English

Doing Business in Mexico: A Guide

24 Aug , 2020  

Invest in Mexico, Doing Business in Mexico 2020, Mexican Law Firm, Guide, Foreign Investment Guide, Doing Business Ranking

In line with our objectives, VTZ Law Firm has developed a Doing Business in Mexico Guide with a strong focus on foreign investment in manufacturing activities. It is our goal as trusted advisors and business facilitators to guide foreign investors, providing insights in a concise manner.

Why Doing Business in Mexico?

Before the coronavirus outbreak, economists predicted that Mexico was heading to be the seventh economy of the world in 2050.[1] Mexico would be growing at a 3.5% annual average rate over the next three decades, a growth rate superior to that of developed economies. Mexico’s size of the economy, demographic, sound macroeconomics, stable public finances, as well as recent amendments to strategic economic sectors have contributed to a better economic performance according to the OECD.[2]

Today, Mexico is one of the most attractive foreign investment destinations. Besides being the 15th largest economy in the world, Mexico is a “free market” economy that is opened to international trade and foreign investment. As a result, Mexico has a highly diversified economy, modern industries, and a developed financial market. This is the result of a shift from protectionist towards liberal economic policies since the beginning of the 1990s, particularly, with the North American Free Trade Agreement.

Needless to say, there is still much work to be done to improve the general conditions of life for Mexicans, as well as for the business environment. For instance, the World Economic Forum identifies Mexico’s five most problematic factors for business: corruption, crime and theft, inefficient government bureaucracy, tax rates, and tax regulations.     However, there is hope. In recent years, business facilitation measures have been in the political agenda as well as tackling corruption, which is now more relevant than ever as a result of Mexico’s modern free trade agreements (FTAs). In fact, it is clear that Mexico’s competitiveness relies on its extensive FTAs network as a pivotal force for its economic development.

Therefore, the United States-Mexico-Canada Agreement (USMCA), which entered into force in July 2020, will continue to consolidate the country as an attractive business destination as long as Mexico successfully implements said agreement.

Mexico is living a historic moment. The political map changed significantly following the general elections held in July 2018. Mexico’s president, Andrés Manuel López Obrador (AMLO), and his party, the National Regeneration Movement (Morena), have continued the trend to promote, for instance, free trade agreements, but they have also adopted new and controversial policies. For instance, Mexico’s investment and trade promotion agency, PROMEXICO, was extinguished as result of “austerity” measures.

Vázquez Tercero & Zepeda (VTZ) seeks to fill that void and promote Mexico as a business destination for international companies and foreign investors in an honest and concise manner. This is why VTZ has developed Doing Business in Mexico 2020, which is divided into seven chapters:

1. Why Invest in Mexico?

2. Foreign Investment

3. International Trade Policy

4. Trade Policy for the Manufacturing Industry

5. Creating a Company in Mexico

6. Taxation in Mexico

7. Labor & Migration

In these executive guides, VTZ aims to help and to provide insights regarding relevant legal topics on business, trade, tax, and labor for potential investors, that seek to reap the best out of Mexico and the manufacturing industry.

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[1] PWC, The World in 2050, 2017 p 6.

[2] OECD, Towards a Stronger and More Inclusive Mexico, p 1

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