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
Doing Business in Mexico, English
Our third chapter of Doing Business in Mexico, International Trade, will provide a general overview of ton Mexican International Trade Policy considering international context, as well as customs aspects.
This chapter includes the following sections:
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As a member of international organizations and Free Trade Agreements, Mexico has, to a certain extent, a predictable trade and customs policy. Mexican laws on customs and trade are normally compatible with international rules. The President and his ministers are not only in charge to apply these laws, but they also have powers to regulate international trade and customs, including emergency actions.
Since the inception of the World Trade Organization and the North American Free Trade Agreement, Mexico’s trade and customs legal framework has not been subject to a substantial overhaul; seldom reforms particularly to the customs law have occurred from time to time.
However, Mexico is currently embracing modern free trade agreements, such as the Comprehensive and Progressive Transpacific Partnership (CPTPP) or USMCA, that have and will bring certain legal changes in intellectual property, de minimis, e-commerce, etc.
Needless to say, trade and customs programs or regulations are subject to frequent changes that seek to adapt to new trends, risks, or policy objectives. Mexico has in place, for instance, duty deferral and tariff reduction programs that allow manufacturing or export-oriented industries to be more competitive. However, such programs are subject to strict government controls.
Mexico is a party to the World Customs Organization and to the International Convention on the Harmonized Commodity Description and Coding System (HS Convention).
As a result of the sixth amendment to the HS, Mexican congress discussed a new law that replaced its General Import and Export Tariff Act (LIGIE, acronym in Spanish), i.e. Mexico’s Harmonized Tariff Schedule. The Ministry of Economy conducted an exhaustive review and proposed to compact or unfold tariff items for statistical purposes into 10 digits that will be called Commercial Identification Number, instead of an 8 digit tariff item (known as fracción arancelaria). The new General Import and Export Tariff Act was published on July 1, 2020.
Mexico’s average WTO bound tariff is 35%, and duties rates vary from 0% to 100%. According to Mexico’s most recent Trade Policy Review (2017), the average MFN tariff on agricultural and non-agricultural products was 14.3% and 4.6%, respectively. The General Import and Export Tariff Act establishes the import tariff or “General Import Tax” (Impuesto General de Importación, or IGI) as well as the export tariff “General Export Tax” (Impuesto General de Exportación, or IGE).
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Mexico has an extensive network of Free Trade Agreements (FTAs) with 50 countries and is also a party to regional agreements within the framework of the Latin American Integration Association (ALADI).
The main FTAs and trade agreements to which Mexico is currently a party are as follows:
….. Read more
Long before NAFTA came into existence, Mexico had into effect duty deferral policies that allowed manufacturing companies, known as maquiladoras, to import goods, such as raw materials, parts, containers, etc., without paying import duties. The maquiladoras had to use said imported goods in the production of exported manufactured goods and, in turn, they could temporally import said goods and defer customs duties.
Eventually, NAFTA introduced drawback provisions to promote the use of regional goods and “to reduce the incentive for third countries to use a NAFTA country as an ‘export platform.” Article 303 NAFTA, replicated in article 2.5 USMCA, introduced a general prohibition on refunding or exempting customs duties owed on non-originating goods imported into the territory of a party.
In essence, these provisions have as a purpose to avoid double ‘taxation’ on non-originating materials that are used as an input in the production of a finished good subsequently exported to another NAFTA or USMCA party.
Thank you for your interest, if you wish to continue reading please fill out the form below or contact us.
For more information about VTZ Law Firm services, visit our website or contact us info[@]vtz.mx
CPTPP, customs, Doing Business in Mexico, Duty Deferral, Free Trade Agreement, import duties, International Trade, International Trade and Customs, Trade Policy, USMCA, WTO
In our Trading Room economic newsletter, we address Robert Lighthizer’s appearance before the U.S. Senate to share the 2020 Trade Policy Agenda, where he commented on possible USMCA Labor Disputes and the use of the rapid response labor mechanism as well as WTO actions; we also address the selection process for the WTO Director-General.
On Thursday, June 17, the US Trade Representative, Robert Lighthizer, appeared before the Senate to share the Trade Policy Agenda 2020. We highlight the following two points of his participation:
Lighthizer noted that as of July 1, the U.S. will meet with the corresponding committees to discuss the possible use of TMEC’s enforcement mechanisms in environmental and labor matters.
In labor matters, the dispute settlement mechanisms are essentially the State-State dispute settlement panels (chapter 31 of the TMEC) and the rapid response labor mechanism
Mexican news outlets have reported that the possible first labor disputes could relate to child labor and forced labor issues, particularly in the agricultural sector; however, the freedom of association (i.e. unions) and collective bargaining should not be excluded.
The US-Mexico Bar Association (USMBA) earlier this month organized the webinar “Labor & Trade: Is Mexico Ready for USMCA’s Labor Chapter?”, where our Jr. Partner Emilio Arteaga participated. The panelists discussed the rapid response labor mechanism as well as the current labor environment in Mexico, the video of the webinar is available in the USMBA’s website:
In addition, VTZ will organize a series of Labor & Trade webinar (in Spanish) on the specific challenges for the Mexican manufacturing industry. If you are interested in attending, please click the following link:
Regarding environmental disputes, it is reported that it could be about agricultural biotech products because Mexico has not granted the necessary permits to import said goods since 2018.
Robert Lighthizer also noted that the U.S. bound tariffs in the WTO are outdated; U.S. bound tariffs are notoriously low with an overall 4.6%.
In this sense, Mr. Lighthizer pointed out that the U.S.’ bound tariffs no longer reflect the economic and political conditions of WTO members, some who continue to maintain very high tariffs compared to the U.S.
In short, the U.S. may seek to increase its bound tariffs in the WTO. If such event occurs, such change would impact products originating from WTO members that do not have a Free Trade Agreement with the U.S., such as China However, all WTO members must agree with any change regarding in the Schedule of Concessions (i.e. the bound tariffs) of another WTO Member. In other words, the process is not unilateral and requires negotiations.
It should be noted that since last year, President Trump has questioned the developing status of certain WTO members (e.g. China) and the benefits that it entails.
On June 8, 2020, the Mexican government formally submitted Jesús Seade, USMCA chief negotiator and current Under Minister for North America, as a candidate for the Director-General of the World Trade Organization.
Seade’s candidacy sparked diverse opinions among renowned Mexican professionals in the international trade arena that were reported on a news outlet. For example, an opinion is that the Director-General must have a certain status, that is being an ex-minister or former head of state, and he must have sufficient leadership to overcome the paralysis situation in the WTO.
It is expected that the selection process will last 3 months, so the WTO may have a new Director-General by the 1st of September. So far, three other candidates appear along with the Seade: the Nigerian Ngozi Okonjo-Iweala, the Egyptian Abdel-Hamid Mamdouh, and the Moldovan Mr. Tudor Ulianovschi.
In the end, how much will the Mexican reactions affect Seade’s aspirations to Director-General?
labor, Labor Chapter, Manufacturing Industry, Mexico, Seade, USMCA, Webinar, WTO
This week on the Trading Room, we address the Mexican the weekly news that impacts international trade in Mexico: Mexican COVID-19 strategy to resume activities, changes to the essential activities, Director General of the WTO steps down and its implications to Mexico, as well as the G20 decision. Download our newsletter in the following link: Trading Room – May 15.
After requests from the US government and industry, the Mexican Ministry of Health finally published yesterday the decision that adds as an “essential activities” the transportation equipment manufacturing industry, as well as the construction and mining; the decision also establishes a three-stage strategy to resume educational, social, and economic activities.
However, the three aforementioned industries will be able to resume activities until June 1, so supply chains will likely be affected, particularly OEM plants in the US that will begin operations the following week, as we reported last week citing the MENA.
For more information on the stages, we prepared an Alert – COVID.
We consider it important to share that the General Health Council published a similar decision on Wednesday, May 13, however, it was suddenly and incredibly withdrawn during the day by the Official Gazette of the Federation. The department issued a statement with an explanation.
Importante: Aclaración sobre la publicación de la edición electrónica del DOF del día de hoy. pic.twitter.com/DFmTVAckCJ
— Diario Oficial DOF (@DOF_SEGOB) May 13, 2020
A retired supreme court judge, Mr. Cossío, stated in a tweet that the alteration of the Official Gazette was done because public officials realized that the General Health Council lacked powers to issue such a decision.
La publicación del acuerdo del Sec. de Salud en el Diario Oficial del día de hoy, demuestra que la grave alteración al Diario Oficial de ayer fue porque se dieron cuenta que el Consejo de Salubridad era incompetente para dictar tales medidas.
— José Ramón Cossío D. (@JRCossio) May 14, 2020
The Mexican Bar issued a statement regarding this event calling the government to protect the trustworthiness of the Official Gazette.
EXHORTO. Que realiza #BMAAbogados a la Segob y a la Dirección del DOF para cuidar la confiabilidad de las publicaciones en el Diario Oficial de la Federación. pic.twitter.com/3i9NLusvHY
— BMA COLEGIO ABOGADOS (@BMA_Abogados) May 14, 2020
In VTZ we fully endorse the content of the letter.
Yesterday, May 14, Roberto Azevedo, Director General (DG) of the WTO, announced that he will step down from his position on August 31 of this year. Roberto Azevedo began his position in 2013, a mandate that was renewed in 2017, and that ended in August 2021.
Within his mandate, the Commercial Facilitation Agreement, the expansion of the Information Technology Agreement, among other decisions, were agreed; Also, Azevedo has been criticized for being passive in defending the multilateral trading system due to the constant attacks of the US against the Appellate Body (including on a budgetary basis).
According to his farewell speech, Azevedo explains that he is resigning because, in part, members will be able to choose a new director who will have the time to prepare for the next Ministerial Conference as well as to set a new path for the future of the WTO, taking into account the new post-COVID-19 realities.
The WTO is going through a critical time, as no consensus has been reached, notably, with regard to the selection of Appellate Body members. Without a leader at the head of the WTO, the multilateral system will be paralyzed because members will hardly be able to reach new agreements to renew the foundations of the WTO, such as new agreements on subsidies, dispute settlement, fishery subsidies, etc.
Lighthizer, the US Trade Representative, stated that he looks forward to participating in the selection of the new DG; however, if the members do not manage to choose promptly, the trade uncertainty will continue because it will be difficult to reduce the tensions of the US-China trade war, to return the “Rule of Law” to international trade relations punishing unilateral-protectionist actions, as well as to face the post-COVID effects.
The regional blocs will continue to take on greater relevance in international trade, fragmenting and rendering the multilateral system obsolete. Although Mexico is a strong supporter of the multilateral system, Mexico has established itself in various regional blocs, notably USMCA (with a renewed dispute settlement chapter), CPTPP, Pacific Alliance, and now modernizing its trade relations with the European Union, which may allow Mexico to become an attraction pole for new regional and global value chains.
On May 14, the Ministry of Economy reported that the Trade and Investment Ministers of the G20 agreed on a series of specific actions in the short and long term to counter the economic effects of the COVID-19 pandemic.
#Comunicado | Los Ministros de Comercio e Inversión del #G20 aprueban acciones para mitigar los impactos de la pandemia COVID-19
La secretaria @GMarquezColin, participó en la 2ª Reunión Extraordinaria de Ministros de Comercio e Inversión del G20.#UnidosSaldremosAdelante pic.twitter.com/2X1jxRhlLe
— Economía México (@SE_mx) May 14, 2020
The actions foreseen in the short term focus mainly on issues of trade regulation and facilitation, global value chains, strengthening of foreign investment, transparency, and operation of logistics channels. In the long term, members agreed to strengthen the multilateral trading system.
Finally, the Ministry of Economy’s statement indicates that the G20 Trade and Investment Working Group must report the status of implementation of the agreed actions.
Auto, Azevedo, Coronavirus, COVID, COVID-19, Essential Activities, G20, International Trade, Mexico, OEMs, WTO
(Download our newsletter in PDF: Trading Room -06032020)
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:
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).
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.
#Comunicado Poder Judicial detiene proceso de la NOM-051 de etiquetado de alimentos y bebidas no alcohólicas. 👇🏻 pic.twitter.com/poCZCWcJF4
— CCE (@cceoficialmx) March 1, 2020
The provisional injunction was appealed by the Government, and a Collegiate Court will decide either to confirm or to revoke that decision.
📄 Postura de la @SE_mx , @SSalud_mx y @COFEPRIS sobre Comunicado de Prensa emitido el día de hoy por el Consejo Coordinador Empresarial @cceoficialmx y la Confederación Nacional de Cámaras Industriales @CONCAMIN #NOM051#GobiernoDeMéxico pic.twitter.com/TZStgB4P4L
— Economía México (@SE_mx) March 2, 2020
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.
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.
CODEX, Coronavirus, COVID-19, Food Labeling, Manufacturing, Mexican Official Standard, Mexico, Newsletter, TBT, Trading Room, UNCTAD, WTO
Today, the 13th of February, Chambers & Partners Global Guide 2020 was released and Vázquez Tercero & Zepeda appeared in Band 1 in the International Trade / WTO Law practice in Mexico. Over the past eight years, our firm has appeared in this important legal guide, consolidating itself as one of the leading law firms in international trade matters in Mexico.
The Chambers & Partners Global Guide 2020 defines our firm and team as:
“the team is known for Pace-setting player in international trade matters, routinely singled out for its anti-dumping and countervailing duties expertise. Regularly receives mandates from acclaimed clients in the metal, chemical and consumer products sectors, with particular strength in representing clients from Asian markets. NAFTA verifications of origin, customs compliance advice and representation before the Mexican tax authorities are additional areas of expertise.”
The Chambers & Partners Global Guide 2020 also recognizes prominent lawyers in each law practice. Our partners Adrián Vázquez and Eduardo Zepeda appear in Bands 1 and 4, respectively.
An interviewed source described Adrián Vázquez as “an expert in international law and is bright and experienced in this field.” Another source adds that “He’s always sharp and has been in the field for a long time with a steady practice.“.
As for Eduardo Zepeda, Chambers & Partners described him as a lawyer with a “solid knowledge of Mexico’s maquiladora industry, he often advises clients on the interactions between tax and customs laws in Mexico.”
Adrian Vázquez, Chamber and Partners, Customs Law, Eduardo Zepeda, Global Guide, Lawyers Ranking, Maquiladora, Mexican Lawyers, Mexico, trade, WTO
Download our newsletter in PDF: Trading Room -24012020
According to media outlets such as Inside U.S. Trade and Grupo Reforma, the US issued comments regarding Mexico’s project of overhauling the labeling scheme for food and nonalcoholic beverages in the WTO. VTZ has prepared Trade Alerts regarding this topic.
In essence, we highlight that the US, as well as other WTO members (including the European Union), questions Mexico’s draft labeling project in a handful of matters, which suggests whether this labeling draft-project may not comply with article 2.2 of the Technical Barriers to Trade (TBT) Agreement as well as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, an issue that was raised by our members, other Mexican trade law experts as well as foreign companies in Mexico. Moreover, this topic was discussed in a panel during the V Biennial Conference of the Latin American Network of International Economic Law, which was held in ITAM last year.
It must be noted that the period to submit comments to the project concluded in early December. According to government officials, 4, 775 comments were submitted which will have to be studied by the Ministry of Economy. If the labeling project is subject to modifications, such modifications must be done within a 45 natural day term pursuant Mexican Law, though this may be unlikely given the international attention and the number of comments. The responses to the comments and the modifications to the draft-labeling project, if any, will have to be published in Mexico’s official gazette.
Ayer concluyó el periodo de Consulta Pública de la Modificación a la NOM 051 de #etiquetado para alimentos y bebidas no alcohólicas. En un hecho sin precedentes se recibieron 4,775 comentarios. Gran participación de los sectores aportando elementos para la recta final del proceso
— Alfonso Guati Rojo (@A_GuatiRojo) December 12, 2019
In its face, Mexico’s draft labeling project does not violate the national treatment principle since it will apply to both domestic and foreign products. However, we wonder whether this project, if adopted as such or with minor amendments, will trigger a WTO dispute because it creates unnecessary obstacles to international trade? Do you need more information? Do not hesitate to contact us.
Yesterday, the Bilateral Investment Treaty (BIT) between Mexico and the Hong Kong Special Administrative Region was signed in Davos, Switzerland. This Agreement will grant legal protection to investments from investors from both economies in the host economy, and, as a consequence, this will increase investor confidence.
#WEF2020 La subsecretaria Luz Maria de la Mora @luzmadelamora firmó hoy con su contraparte de Hong Kong, Edward Yau, el Acuerdo de Promoción y Protección de Inversiones (APPRI), que fortalece la certidumbre y alienta las inversiones en ambas economias.#Diversificación pic.twitter.com/dzaKVaFiHC
— Graciela Márquez Colín (@GMarquezColin) January 23, 2020
Among the commitments agreed in the document, the two governments undertake to provide investors with fair and equitable treatment in accordance with the international customary law minimum standard of treatment of aliens, non-discriminatory treatment, compensation in case of expropriation of investments, and the right of free transfers abroad of capital. The Agreement also provides a dispute settlement mechanism under internationally accepted rules.
Being China Mainland the main investor in Hong Kong, this BIT will allow Mexico not only to increase trust among investors in this Special Administrative Region but also to expand investment flows and strengthen trade with the Asian country.
Mexico offers important opportunities for Hong Kong and Chinese companies in the logistics, manufacturing, tourism and services sectors. As of June 2019, the Ministry of Economy reported in Mexico 1,203.8 million dollars of investment from mainland China and 991.2 million dollars of Hong Kong investment since 1999.
Internal processes are still pending to approve the APRI in both countries, but this Investment Agreement will be 22nd for Hong Kong, while for Mexico it adds to the 29 previously signed.
ChinaBIT, Food, Investment, Labeling, Mexico, NOM 051, Non-alcholic Beverages, WTO
(Download our PDF version of our newsletter: Trading Room)
This Tuesday US President Trump “threaten” to pull out of the WTO and called again on the WTO reform regarding the “developing-country” status during a rally in Pennsylvania. The context of the “threat” was done when President Trump mentioned that before his tenure the US was losing all their disputes at the WTO, a statement that it is not true. In his speech, he mentioned that
“China, India, many countries…they viewed them as “they’re growing”.[…] Well, they’ve grown. And they had tremendous advantages. But we’re not letting that happen anymore.[…]”
This is in line with the US Presidential memorandum dated 26 of July that requested the USTR to address this issue at the WTO, among other matters, and to inform progress in 60 days, i.e. September. If there is no substantial progress in 90 days, the USTR may stop considering a Member as a developing country as well as not support any such country’s membership in the OECD. This move targets countries like China, India, and Turkey (Mexico was also mentioned in the Presidential Memorandum); so, will there be consensus in reforming the “developing-country” status in the WTO? We consider it unlikely.
A WTO member may self-declare if it is a “developing country” since there is no definition in the WTO agreement. Being a developing country provides some additional rights than those members that are “developed”.
For instance, the “Enabling Clause”, adopted since the GATT framework, allows a WTO member to circumvent unilaterally and legally the Most Favored Nation obligation through a “Generalized System of Preferences” (GSP). A developed Member may grant preferential tariffs to certain goods from developing WTO members that they determine; in fact, the US recently removed India and Turkey from their GSP.
Another right that developing members enjoy is that they may take longer time periods for implementing agreements and commitments, a situation that occurred with the implementation of the Facilitation Trade Agreement. Mexico has self-declared itself as a developing country.
Sources:
https://www.wto.org/english/docs_e/legal_e/enabling1979_e.htm#fnt-3
This Monday was published the interview conducted by the CEO of Best Lawyers, Phillip Greer, to our managing partner, Adrián Vázquez Benítez, in the guide Best Lawyers. Adrian shared his vision on the future of international trade, especially its impact on Mexico, and we highlight the following points:
Adrián Vázquez considered that there are two problems that impact Mexico and may affect international trade these days: trade facilitation and the WTO crisis. On the one hand, our partner pointed out that Mexico was in the process of reforming and even creating a new Customs Law in order to make it compatible with the Facilitation Trade Agreement of the WTO; on the other hand, due to the paralysis on the appointment of appellate body members, the effectiveness of the dispute settlement mechanism system is at risk as well as compliance with WTO law by its members.
Referring to regional integration, our partner commented that the rules of origin in USMCA, which now provide for a higher percentage of regional content, for example, in the automotive industry, leading automotive firms will have to make an effort to comply with the new rules.
About TMEC, our partner emphasized the close commercial relationship and dependence that our country has with the US, but that it is necessary for Mexico to diversify its market through the use of FTAs such as TIPAT, despite the geographical location of its members. In this regard, he warned that Vietnam, a party to CTPP, could become China’s replacement regarding trade remedies in Mexico, as Vietnam has powerful steel, footwear, and textiles industries.
We invite you to read the full interview in the following link:
https://www.bestlawyers.com/article/vazquez-tercero-zepeda-law-firm-of-the-year/2521
As previously announced, the guide Best Lawyers considered Vázquez Tercero & Zepeda as the 2019 Trade Law Firm. As a result of such great honor, Best Lawyers interviewed our managing partner, Adrian Vázquez, to have a legal insight regarding trade developments in Mexico.
Best Lawyers CEO Phillip Greer had a conversation with Adrian Vázquez, where our partner discussed a broad range of topics, from the future of international trade in Mexico, WTO disputes, why the renegotiation of NAFTA is forcing Mexico to explore new avenues for trade such as Europe and the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), and the ways VTZ has innovated internally to adapt to the modern world.
We highlight Adrian’s comment when commenting on CPTPP:
Once I was talking with a U.S. trade lawyer, and he told me that TPP is all about three countries, Vietnam, Vietnam, and Vietnam. So that’s something that we should be very focused on, because Vietnam is very competitive in footwear, it’s competitive in textiles, and it’s competitive in steel. And those three are very sensitive sectors in Mexico.
I would guess that we will not be exporting textiles, footwear, or steel to Vietnam. On the contrary, we will be importing textiles, footwear, and steel from Vietnam and this will open new trade remedy cases against Vietnam. First, it was China, but Vietnam will follow.
The article is available on the following link:
https://www.bestlawyers.com/article/vazquez-tercero-zepeda-law-firm-of-the-year/2521
Best Lawyers, CPTPP, featured, Law Firm, Mexico, NAFTA, trade, Trade Facilitation, USMCA, WTO
(Download the PDF version of our newsletter: Trading Room)
On June 28th and 29th, the G20 summit was held in Osaka, Japan, and the Mexican President did not attend. We highlight, of course, the following three trade topics that were addressed in the “Global Economy” section of the declaration. First, the leaders of the G20 recognized the importance to maintain a stable, non-discriminatory trade and investment environment. Second, the G20 reaffirmed, as in Buenos Aires 2018, their support to reform the WTO, and its dispute settlement system. Third, G20 calls for a consensus by fall 2019 regarding the Steel Excess Capacity which is being discussed in the OECD.
In addition, this summit served as a forum so that the US and China could discuss a solution towards the ongoing trade war. In fact, the US suspended an additional tariff raise on 300 billion USD Chinese imports; currently, the US measures (i.e. 25% tariff) affect 250 billion USD of Chinese imports.
Sources:
https://www.eluniversal.com.mx/mundo/g20-advierte-sobre-los-riesgos-para-economia
https://lta.reuters.com/articulo/eeuu-china-tregua-idLTAKCN1TS1HC-OUSLT
This Monday and Tuesday, Mexican Foreign Affair Minister, Marcelo Ebrard, and the State Councilor and Foreign Minister, Wang Yi, gathered to agree on a joint work plan for the next 5 years with the aim to strengthen the “Strategic Partnership”. The partnership was established in 2013 during the term of Peña Nieto.
This joint work plan aims to promote trade, mainly agricultural exports from Mexico, attract Chinese investment in sectors such as advanced manufacturing, electric mobility, e-commerce, among others. The plan also includes cooperation in education, science and technology, and cultural matters.
Sources:
This Tuesday the Senate approved the Federal Austerity Law, which the Chamber of Deputies will shortly discuss and vote.
This in itself generates uncertainty because article 15 of said law prohibits foreign “delegations” (except those related to security) and that the Mexican State will be represented abroad only by the Ministry of Foreign Affairs. This Law may have as a consequence the closure of the Ministry of Economy’s foreign offices, which are in charge of international trade topics and represent Mexico at international organizations, such as the WTO.
If the law is passed as such, experts are worried because the members of the Ministry of Foreign Affairs will absorb the tasks, and they lack experience in said topics. Will the members of the Ministry of Economy will be transferred to the Ministry of Foreign Affairs?
Sources:
Austerity law, China, Economía, G20, Mexico, Ministry of Economy, trade, Trading Room, USA, WTO
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