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.
(Download the PDF version: Trade Alert – 20052019)
Last Friday a joint statement by the US and Mexico was issued regarding the elimination of the so-called Section 232 tariffs on Mexican steel and aluminum. On Sunday 19th, the US President issued a Proclamation that eliminated the 232 measures applicable to said Mexican imports.
Today, 20th of May, the President of Mexico issued the following Decree:
DECREE that modifies the former Decree by which it modifies the Tariff of the Law of the Import and Export Tariffs, the Decree that establishes the Applicable Rate for 2003 of the Import Tariff for the goods originating in America of the North, and the Decree establishing various Sectoral Promotion Programs, published on June 5, 2018.
Sole Article.- Articles 1, 2 and 9 are repealed of the Decree[….] published on June 5th, 2018, in the Official Gazette.
In today’s Decree, the Mexican President eliminates the countermeasures that were taken against goods originating from the US (Decree of June 5th, 2018), such as steel and aluminum products, pork meat, cheese, agricultural products, motor boats, fans, “bourbon whiskey”, lamps and metal furniture, among others. The Decree enters into force today, so said US products can again benefit from the preferential tariffs that were established in NAFTA.
As mentioned in the joint statement and the Proclamation, we note that the elimination of the 232 tariffs is accompanied by a series of measures that will aim “to prevent the importation of steel articles that are unfairly subsidized or sold at dumped prices, to prevent the transshipment of steel articles, and to monitor for and avoid import surges.” According to the joint statement, the US and Mexico “agreed” that tariffs may be imposed to an individual steel or aluminum product in the event that imports surge, and that the “exporting” country can only retaliate in the affected sector; this clearly limits Mexico’s possible retaliatory measures which proved to be effective. Finally, Mexico and the US agreed to terminate all WTO litigation regarding this matter.
VTZ notes that in the Presidential Decree of June 5th, 2018, Mexico temporally raised tariffs against steel products from third countries with which it does not have a Free Trade Agreement. Such tariffs expired on January 31st, 2019. Mexico adopted said measure because it considered that it was likely a substantial increase in exports to Mexico, in part, because of the unilateral measures adopted by the US.
Notwithstanding that the aforementioned measures expired, again Mexico temporally raised tariffs on steel products from third countries on March 25th, 2019, claiming that there is an oversupply of steel. These “temporal” tariffs will be in force for 180 days, i.e. September 22, 2019.
Finally, VTZ highlights and considers that these events constitute a significant step towards the ratification process of USMCA in Mexico and the USA (as well as Canada). In this sense, companies established in the region shall start to prepare for its entry into force possibly in 2020.
For more information, please do not hesitate to contact Adrian B. Vázquez (adrian[@]vtz.mx), Eduardo Zepeda (eduardo[@]vtz.mx), Emilio Arteaga (emilio[@]vtz.mx).