The Trading Room

Russia-Ukraine Conflict and Export Controls on Dual-Use Goods

Several countries are taking economic sanctions against Russia under the international conflict, including certain countries are beginning or will begin to deny Russia the “most-favored-nation treatment” under the World Trade Organization (WTO). 

As for the Mexican government, on Tuesday, March 1, 2022, the President indicated that no economic sanctions would be adopted against Russia (see El Financiero).

Notwithstanding the above, the Ministry of Economy of Mexico intended to establish a ban on the export of «dual-use goods» to Russia and Belarus due to Russia’s invasion of Ukraine and the condemnation contained in the resolution of the General Assembly of the United Nations. On Thursday, March 3, 2022, the National Commission for Regulatory Improvement (CONAMER) published a preliminary draft of the Ministry of Economy for the modification of the «Agreement that establishes the dual-use goods, software and technologies whose export is subject to regulation by the Ministry of Economy» published in the Official Gazette of the Federation (DOF) in December 2020. 

This measure establishes export controls by the Mexican Ministry of Economy on the export of dual-use goods, software and technologies, which are susceptible to deviation for the proliferation and manufacture of conventional weapons and weapons of mass destruction. As noted above, the amendment to such measure intends to establish that such prior export permits will not be authorized when the destination is Russia and/or Belarus, as well as to «cancel» prior permits that are in force when the export destination is Russia and/or Belarus. 

Incredibly, today, Friday, March 4, 2022, the Secretary of Foreign Affairs considered that it is unnecessary to make a prohibition because there is a committee that reviews each application for a prior permit for the export of goods for use.

In VTZ, we  wish to point out that while Mexico does not have economic sanctions, companies that are doing business in Mexico, directly or indirectly, with Russia and/or Belarus and other jurisdictions (such as the U.S.) should seek advice on the extraterritorial effects of the measures of other countries, such as the United States.

Tridonex Plant Collective Bargaining Agreement Ownership Consultation

On March 2, 2022, Tridonex employees in Matamoros, Tamaulipas, celebrated an election and voted to define which union has the “ownership” to negotiate a collective bargaining agreement. The voting result was in favor of appointing a new “independent” union, giving 1,123 votes to the National Independent Union of Automobile Industry Workers (SNITIS) versus 176 votes to the union is linked to the  Confederation of workers of Mexico (CTM). 

It should be recalled that the U.S. government activated the Rapid Response Labor Mechanism in June 2021 for alleged violations of the rights to freedom of association and collective bargaining committed by the company TRIDONEX. In response, the Mexican government conducted an internal investigation in which it was determined that «since the facts were prior to the entry into force of the Treaty, there was no denial to support the rights of its workers.»

Ultimately, the U.S. government reached an agreement with the parent company (Cardone Industries) that it would, among other things, support the right of its workers to determine their union representation without coercion, protect its workers from intimidation, harassment and receive election observers during any voting. In this regard, Katherine Thai, USTR, said she will closely follow the outcome to ensure compliance with the commitments made.

VTZ notes that six more union representation votes will be held soon at Parker Brownsville Servicios, AFX Industries, OHD Operators de México (Genie), Tricon y Componentes in Matamoros, and Panasonic in Reynosa, Tamaulipas.

Fuentes: El EconomistaEl EconomistaForbes.  

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