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Mexico Free Trade Agreements News – USMCA & EU-Mexico Free Trade Agreement – Newsletter

30 Apr , 2020  

USMCA, EUMEXFTA, Mexico, Free Trade Agreements, European Union, Rules of Origin, Auto, Labor

This week in our newsletter, The Trading Room, we address developments regarding the entry into force of USMCA as well as the modernization of the EU-Mexico Free Trade Agreement. Download our newsletter in PDF on the following link: Trading Room -30042020

USMCA

Last Friday the US Government notified the US Congress that Mexico and Canada “have taken measures necessary to comply with their commitments under [USMCA]”; Mexico is still in the process of modifying legislation. After notification to its congress, the USA notified Mexico and Canada and, therefore, USMCA will enter into force on July 1, according to the rules established in said treaty.

Automotive Sector

In an interview, Undersecretary of International Trade, Luz María de la Mora, indicated that the governments of the three countries are working to define the Uniform Regulations, including those relating to Vehicles and Autoparts. The goal is that these regulations should be published by July 1.

However, the Undersecretary also commented that producers of passenger vehicles and light trucks have the possibility of requesting an alternative staging regime to comply with the respective rules of origin. Accordingly, this possibility reduces the “urgency” of finalizing said Uniform Regulations. 

As a general rule, USMCA foresees a 3-year transition regime for said vehicles (e.g. VCR 66% to 75%); however, the appendix to Annex 4-B of USMCA foresees the possibility of an “alternative staging regime” to extend the transition for up to 5 years. Producers must justify their request and, if authorized, producers could benefit from a prolonged and gradual transition from Regional Content Value (including essential components), steel and aluminum content, and Labor Content Value.

Today, Thursday, April 30, the Mexican Ministry of Economy published in the Official Gazette the procedures to submit applications for an alternative staging regime. In general terms, the interested producers must present a (detailed) alternative staging regime plan, among other more specific requirements, that has to be submitted July 1, 2020, at the latest.

It should be noted that if the proposal is accepted by the Ministry of Economy, the alternative staging regime will be applicable to the producer’s eligibility to use the regime for imports into Mexico.

Labor

On Tuesday, April 28, the  Interagency Labor Committee for Monitoring and Enforcement was established by executive order. This Committee is not provided in the USMCA, rather it is an internal body of the USA whose creation was ordered in Section 711 of the USMCA Implementation Act. The committee will be chaired by the US Trade Representative (USTR) and the Department of Labor and other agencies will be members.

The Interagency Labor Committee will monitor compliance with the labor commitments assumed by Mexico and Canada, the implementation of the labor reform in Mexico, and to request enforcement actions concerning a USMCA country that is not in compliance. 

European Union-Mexico Free Trade Agreement

This Wednesday, April 29, and after four years of negotiations, the Ministry of Economy announced the end of the negotiations with the European Union on the modernization of the EUMEX-FTA.

The chapter that prevented the conclusion of the negotiations was the Public Procurement Chapter because the European Union had the interest of having access to tenders at the sub-federal (or state) level. Apparently, the result of the negotiations is to incorporate 17 Mexican states that are committed to international best practices. This is the first time that Mexico has negotiated public procurement at the sub-federal level in its history.

Now, the pending steps for the entry into force of this agreement are the legal review, translation, signature and the domestic approval process, i.e. the European bloc (European Parliament) as well as the legislative branch of each EU members because an investment chapter was included in the agreement, and, on the other hand, the Mexican Senate.

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English, News

COVID, USMCA, Mexican Corn – The Trading Room – Economic Newsletter

17 Apr , 2020  

Download our newsletter, The Trading Room, in the following link Trading Room -17042020

COVID: USMCA and Rules of Origin

This week it was reported in news outlets that industries in the region are seeking to postpone the entry into force of the USMCA automotive rules of origin; that is, to establish a transition period for said rules after USMCA’s entry into force.

 

USMCA’s entry into force remains a pending issue. So far, the US has not notified the completion of its internal procedures to trigger the 3 months term for its entry into force. However, it is said that it will take effect in mid-July or no later than September 1, which implies notification within the following weeks or months.

 

The region’s auto industry is concerned that rules of origin (RoO) will apply immediately with USMCA’s entry into force; regional content requirements will increase progressively. For this reason, 10 legislators in the US delivered a letter to the US Trade Representative (USTR) requesting “flexibility” and an adjustment period because COVID affected production in the region, complicating compliance with RoOs. In this regard, President Trump acknowledged last weekend that the agreement is different from the point of view that production will be lower.

 

In the case of Mexico, the president of the National Association of Buses, Trucks, and Tractor-trucks Producers (ANPACT), commented that “the complexity of complying with the origin regulations lies in the fact that for each component of a vehicle, calculations of regional content, the labor component, steel, and aluminum. In the case of an engine, they have approximately 700 suppliers, so meeting these requirements can take months.”

 

 

Furthermore, USMCA’s Uniform Rules are still being negotiated.

USMCA and the Law on Native Corn

On Monday the Federal Law for the Promotion and Protection of Native Corn was published in the Official Gazette of the Federation.

In essence, this law provides the following:

i) The production, marketing, consumption and constant diversification of native corn is recognized as a national cultural manifestation, and

ii) access to Native Corn is guaranteed without genetically modified organisms.

Since 2019, this law is somewhat controversial because it seeks to protect Mexican Native Corn from Mexico’s USMCA commitments to adhere to the International Convention for the Protection of New Varieties of Plants (UPOV 1991), Mexico is a party to said Convention but according to the 1978 Act. These conventions authorize the registration of patents on plant genes and varieties. However, UPOV 1991 extends rights to holders of such patents as compared to UPOV 1978.

 

Regardless of the above, we highlight that this law does not introduce restrictions on the importation of any type of corn into national territory.

VTZ contributed with Thomson Reuters Practical Law

 

For the third year, VTZ contributed Thomson Reuters Practical Law in the Guide to International Trade in Goods and Services in Mexico. Our Managing Partner, Adrian Vázquez, Junior Partner, Emilio Arteaga, and Associate, Mariana Malváez, answered a guide on key issues of international trade regulation in Mexico. Check the Guide here.

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News

VTZ TRADING ROOM – 31/08/2018

31 Aug , 2018  

This week on The Trading Room:

  • NAFTA: What about Canada?

An “Agreement in Principle” between US and Mexico was reached this Monday, and President Trump suggested to change the name “NAFTA” to “US-Mexico Trade Agreement” (USMTA). This statement triggered the following doubt: Can the US enter into a bilateral agreement with Mexico? Jennifer HillmanSee more

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Esta semana en Trading Room:

  • TLCAN: ¿Y Canadá?

Un “Acuerdo en Principio” entre EEUU y México se logró este lunes, y el Presidente Trump sugirió cambiar el nombre TLCAN por “Acuerdo de Comercio EEUU-México” (ACEUM). Esta declaración creó la siguiente duda: ¿puede los EEUU celebrar un acuerdo bilateral con México? Jennifer Hillman Ver más.

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The Trading Room – 31.08.2018

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News

VTZ Trading Room – 03/08/2018

3 Aug , 2018  

This week on the Trading Room:

  • Wages in NAFTA’s autos rules of origin.
  • A new China-Mexico relation?

Want to suscribe to our newsletter? Leave a comment or send us an email.

Esta semana en “Trading Room”:

  • Salarios en la Regla de Origen de automóviles del TLCAN
  • ¿Una nueva relación México-China?

¿Quieres suscribirte a nuestro boletín? Déjanos un comentario o envíanos un correo electrónico.

Trading Room -2018.08.03

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News

VTZ TRADING ROOM – MAR. 23, 2018

23 Mar , 2018  

This week on the Trading Room: NAFTA (Rules of Origin) and China & United States.

Esta semana en “Trading Room”: TLCAN (Reglas de Origen) y China & Estados Unidos.

Trading Room -2018.03.23

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General

VTZ Trading Room – Feb. 23, 2018

23 Feb , 2018  

This week on the Trading Room: TPP and the negotiations of the EU-Mexico Free Trade Agreement.

Esta semana en “Trading Room“: TPP y las negociaciones para modernizar el Tratado de Libre Comercio de la Unión Europea-México.

The Trading Room -20180223.docx

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