The Trading Room
Mexican Investment Promotion Policy Must Change
Susana Muñoz, director of the VTZ Chinese Desk and former government official of the Mexican Ministry of Economy, prepared a text on the decoupling of the global economy and its implications for Mexico. Taking into account that the 2020 US presidential election approaches, she addresses the growing tension between the US and China and describes recent events affecting the relationship between the two largest economies in the world.
Our partner highlights the complexity involved in untangling the two largest economies in the world because the global economic restructuring is yet to come. While China is expanding and looking to develop new markets, China is opposed to US policies, which will mean both the destruction of business models and the reconstruction of entire industries, as well as geopolitical consequences.
In this regard, Susana Muñoz reflects on the China-US trade tension and its impact on Mexico by answering the following questions:
What do these changes in the geopolitical paradigm mean for Mexican companies? What are the risks to consider?
On the one hand, Susana recognizes that the trade tension will impact in the short and medium-term the Mexican investment promotion strategy as an attractive destination for the manufacturing sector that seeks to export to the North American markets.
On the other hand, our partner highlights that:
«…it is very necessary to update our approach strategy towards Chinese companies and investors, not only positioning the benefits of the USMCA, but also doing an in-depth job of identifying complementation opportunities in commercial, industrial, technological, and investment projects.
Check the full text of the article here.
We consider relevant to note that the National Institute of Statistic and Geography (INEGI, Spanish acronym) on Mexico’s Trade Balance during June 2020 reports that annual growth rate of exports continues to decline when compared with the 2019 figures. In the same sense, imports of capital goods, which entail goods that will serve to produce, have registered a strong decline of (-) 12.3 % compared to last year’s data.
Here is the link to the report.
Changes for IMMEX companies
Last Friday, July 24, 2020, modifications to the General Rules of International Trade were published in the Official Gazette. Some modifications consist of the elimination of benefits and the addition of obligations for manufacturing/maquiladorasI IMMEX companies with VAT Certification. Some of these benefits were transferred to Authorized Economic Operators.
One of the benefits that were eliminated to VAT certified companies is, for example, the 36 months period of legal stay for goods imported temporarily, instead of the 18 months provided in the Customs Law. Regarding the addition of obligations, VAT certified companies, for example, will have to ensure that all their domestic suppliers are up to date with their tax obligations. We prepared an alert in Spanish, which is available here, but if you have any questions do not hesitate to contact us.
Given their relevance and impact to the manufacturing industry, VTZ is organizing a webinar that will take place today at 8:30 am (Mexico City Time), you can register in the following link.
If you cannot or could not attend, contact us so we can send you the link to the video in due course.
Adrián Vazquez & Alliott Group
On Wednesday, June 29, Adrián Vázquez was appointed member of the Alliott Group Latin American Regional Advisory Committee. Our partner’s role will be to help develop and monitor the implementation of Alliott’s strategic plans in the region. This appointment comes at a key moment of Alliott’s growth in the Latin American Region.
More information here.