English, News

Mexican Official Standard 051 & WTO and UNCTAD COVID 19 impact on Global Value Chains

6 Mar , 2020  

Amendments to Mexican Official Standard NOM 051, European Union, WTO, TBT, Mexico, Codex, Frontal Labeling, Coronavirus, COVID 19, UNCTAD

Trading Room – Newsletter on Economic News and Mexico

(Download our newsletter in PDF: Trading Room -06032020)

Mexican Official Standard – 051  & WTO

During the meeting of the Technical Barriers to Trade Committee of the WTO, held last week on 26 and 27 February, the European Union (EU) submitted a series of comments on the draft amendment Mexican Official Standard (NOM 051), on food labeling. In this regard, we highlight the following:

  • CODEX guidelines: The EU suggests adapting Mexico’s definition of dietary fiber to follow Codex’s nutrition labeling definition as well as to align the nutrients to be declared as Codex guidelines do not foresee mandatory declaration of added sugar, trans fat and dietary fiber in food labeling.
  • Substitute Product: The EU submits an alternative to replace the legend of “Substitute Product”.
  • Added Sugars: The EU requests a clarification regarding the rationale of distinguishing this concept in the nutrition facts or declaration.
  • Trans Fats: Instead of the “Excess Trans Fats” frontal warning, the EU submits an alternative measure, which is more restrictive, consisting of the establishment of a Trans Fats maximum content limit to protect public health.
  • Front Warning Labels: The EU considers that front warning labels (graphical forms or symbols) do not comply with CODEX guidelines because they will not allow the consumer to understand the complete nutritional content of the product. Instead, the label captures the attention of the consumer with respect to only one or more nutrients in high content quantity.
  • Draft CODEX Guidelines on Frontal Labeling: The EU requests Mexico to hold the implementation of any measure in this regard until there is a final outcome of these issues in CODEX.

On 28 February, Mexico circulated a statement on its draft amendment to NOM – 051. In short, Mexico stated that there is a public health crisis in terms of overweight and obesity in its territory; that, this standard aims to address this issue; that a public consultation was undertaken and concluded on 24 January, and that the responses to the comments made during the public consultations are expected to be published in the “next days”.

 

More information? Visit our Trade Alert or view our presentation that summarizes the amendments to Mexico’s NOM-051 (available in Spanish).

 

The injunction to the publication of NOM-051

Notwithstanding the foregoing, the publication of the comments and/or the final version of the amendments to NOM-051 are on “hold” because a District Judge granted a provisional injunction to CONCAMIN and CCE (two business chambers), who filed a writ of Amparo against the amendment process of NOM-051 and its imminent publication.

 

The provisional injunction was appealed by the Government, and a Collegiate Court will decide either to confirm or to revoke that decision.

 

Eventually, the same Judge will determine whether to grant or not the definitive injunction. The injunction, either provisional or definitive, does not pass the word on the constitutionality or lack thereof of the process or the standard.

 

Update: Coronavirus (COVID-19)

On Wednesday, UNCTAD issued a report on the impact of Coronavirus on global value chains. As of today, 20% of trade in intermediate manufactured goods comes from China, so COVID-19 will affect those countries and/or industries that are dependent on such inputs due to reduced supply. Considering a 2% reduction in China’s intermediate manufactured exported goods, UNCTAD considers that the EU, the United States, Japan, Korea, Taiwan, Vietnam, Singapore, and Mexico will suffer the most the economic effects, yet unknown. The reduced supply of the said goods to Mexico may amount to 1,369 million USD, while the automotive, electrical-mechanical and machinery Mexican industries will resent the most this supply interruption.

 

By the way, do not forget to read our update on the effects of COVID-19 and its effects on the Chinese economy, as well as Chinese government measures.

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English, News

Update Coronavirus Effects on Chinese & World Economy

5 Mar , 2020  

Coronavirus, China, Manufacturing, MOFCOM, Measures, FDI, Foreign Investment, Subsidies, Chinese Desk, Mexico, Tourism, International Trade Fairs,

The Coronavirus Epidemic in the Chinese & World Economy

In the last few weeks of February, negative forecasts have been increased regarding the economic impact of the coronavirus outbreak in Asia, derived from the increase in cases of coronavirus in the region. In our reportVTZ’s Chinese Desk shares an update on the sectors that will be most affected by this health crisis, as well as the actions of the Chinese government.

Manufacturing Sector

According to the Caixin General Purchase Managers Index (PMI) the index for February 2020 fell to 40.3 as a result of the impact of the coronavirus, this is the first time that the number falls below the 50-point margin since the survey began in April 2004. This means that production was significantly reduced during the month of February, with many companies operating below 50% of their normal capacity.

 

Diverse media in China and abroad identify the exporting economies of Asia as the main affected by the current situation, Singapore and Hong Kong mainly. However, the dependence on China’s supply chains of Asian manufacturing economies will also create production disruptions, thus affecting the result of exports from countries such as Korea, Japan, among other Southeast Asian countries.

 

Although Chinese media report that the main manufacturing provinces have restarted operations, the reality is that the majority of migrant workers, who form the workforce in the country’s manufacturing centers, have not yet returned to factories, either by lack of transport or to avoid mandatory quarantine prior to joining a company.

 

Given this situation, businessmen and authorities have had to implement measures such as offering free transportation and lodging to migrant workers, as well as subsidies to companies that hire personnel.

 

The second problem faced by manufacturing centers is interruptions in the supply and shortage of materials. The above is caused by the transport controls implemented in the provinces, as well as the lack of personnel operating the transport.

 

In addition, shipping companies have been affected by their operations, due to lack of personnel, as well as mandatory quarantines implemented in countries in the region.

 

Tourism

China is the main exporter of tourism in the region, Southeast Asian economies, as well as the Special Administrative Regions of Hong Kong and Macao have been severely impacted by travel restrictions on Chinese citizens.

 

In recent days, the hotel sector in Hong Kong has registered one-digit occupancy rates, as well as a significant number of restaurants that have had to close due to lack of tourism.

 

For its part, Macao kept the casinos closed for 15 days as a measure to prevent the spread of the virus, seriously affecting the tourism and entertainment industry.

 

In recent weeks, multiple events, trade shows, and conventions have been canceled, and in fact, it is expected that the Tokyo 2020 Olympics will be rescheduled by the end of the year.

 

On the other hand, the reduction of flights in the region, as well as the imposition of quarantine for citizens or people who have been in countries with reported coronavirus cases have caused staff cuts in regional airlines, as well as unpaid licenses for air personnel and airports.

 

Retail Sales

In the same way, analysts report a great impact on retail sales, media report impact on retail sales, mainly in destinations with duty-free offer and high purchasing power such as Korea, Singapore, Japan, and Hong Kong.

 

In these economies, media report closures and reduction of opening hours in the main department stores, while economic authorities and developers begin to announce measures to mitigate the impact such as income and cash subsidies.

 

However, online sales and e-commerce platforms have increased substantially. Therefore, support and subsidy schemes have been created to promote SME products and temporary employment for people affected by the health crisis.

 

Minister of Commerce (MOFCOM)

On February 11, MOFOCOM issued a circular to local commercial agencies for the purpose of stabilizing and promoting foreign investment in China, minimizing the impact of the epidemic. MOFCOM notes, among several actions, to make use of agency platforms located abroad to promote investment and cooperation projects, adopt different policies to address various business sectors and measures aimed at overcoming obstacles, implement business, facilitation policies, guide companies in tax, finance, tax, social security, employment, and government procurement matters and treat foreign companies in a non-discriminatory fashion.

 

Conclusion

It is difficult to predict the total impact that the coronavirus outbreak will have on the Chinese economy and in the Asia region. MOFCOM aims to stabilize the impact to present and future foreign investment, but the listed actions do not specify whether subsidies, loans or incentives will be granted to such investment.

However, it is clear that unlike the SARS outbreak in 2003, today world economies have greater interaction with China, and in some sectors, they are widely dependent. This greater integration will definitely affect the prospects of global economic growth, where recovery will depend on how quickly the epidemic outbreak is controlled.

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