19Ago

Secretary of Public Economy announces uniform regulations of 4 chapters of the T-MEC

agosto 19, 2021 Luisa

On August 13, the Ministry of Economy announced the Promulgative Decree of the Protocol that Replaces the North American Free Trade Agreement with the Agreement between the United Mexican States, the United States of America and Canada, made in Buenos Aires on November 30, 2018; of the Protocol Modifying the Treaty between the United Mexican States, the United States of America and Canada, made in Mexico City on December 10, 2019; of six parallel agreements between the Government of the United Mexican States and the Government of the United States of America, which entered into force on July 1, 2020.

That Article 5.16.1 of the Agreement between the United Mexican States, the United States of America and Canada (T-MEC) establishes that the Parties must, for the entry into force of the same Agreement, adopt or maintain through their respective laws or regulations , Uniform Regulations regarding the interpretation, application and administration of Chapters 4 (Rules of Origin), 5 (Origin Procedures), 6 (Textile Goods and Clothing) and 7 (Customs Administration and Trade Facilitation) of the T- MEC, as well as other matters agreed by the Parties.

First of all, the T-MEC establishes that the Parties must, for the entry into force of the same Treaty, adopt or maintain, through their respective laws or regulations, Uniform Regulations regarding the interpretation, application and administration of the four corresponding chapters.

The T-MEC entered into force on July 1, 2020, modernizing and replacing the North American Free Trade Agreement (NAFTA).

Thus, the T-MEC maintains zero tariffs among the three countries that were in force under NAFTA.

This new agreement updates NAFTA in a number of key areas, including expanding the United States’ access to Canada for certain U.S. dairy, poultry and egg products and by establishing some of the most robust and advanced provisions on rights of intellectual property and trade in digital products.

Click here to access the official publication in the Official Gazette of the Federation (DOF) for your consultation.

18Ago

Continuation of the updated reform on outsourcing in Mexico

agosto 18, 2021 Luisa

Derived from the recent reforms to the Federal Labor Law, for the issue of personnel subcontracting or outsourcing; many companies are confused about the scope of these modifications in the outsourcing of various services. The first thing that those companies that intend to incorporate professional services for the provision of specialized services (outsourcing) should know or continue to maintain them in case they already have them in their organization, is the following:

1. The term as such of Outsourcing was eliminated, but now they will be called: specialized services companies or specialized works execution companies.

2. The subcontracting of professional services is allowed, as long as the requirements are met, that is, that the services that are contracted do not form part of the corporate purpose or the economic activities of the contracting company.

3. The personnel who carry out the main activities of the company may not be under the contracting of specialized services or the execution of specialized works.

4. Specialized service providers must be registered and registered in a public registry called: REPSE, which is regulated by the Ministry of Labor and Social Security.

5. Companies must have a written and signed contract to support the specialized services they hire.

How to adapt to the new reform?

Contractors or outsourcing agencies in Mexico must be registered with the Ministry of Labor and Social Welfare (STPS) and meet the necessary requirements; having until September 1 to register and regularize subcontracting services.

The terms of the Reform will also have to be considered: 1 month from the publication of the reform for the STPS to issue the guidelines for registration; 3 months for companies to regularize and recognize their workers, once the guidelines are published. Every 3 years companies will have to update their registration with the STPS.

In Mexcentrix you can access a safe and guaranteed specialized service complying with the requirements of the new reform of specialized services in Mexico, for more information contact us.

17Ago

Decision No. 107 of the Mexico-Colombia FTA

agosto 17, 2021 Luisa

On August 11, the Ministry of Economy announced through the Official Gazette of the Federation that the administrative commission of the free trade agreement between Mexico and Colombia agreed to grant a temporary dispensation for the use of certain materials produced or obtained outside the zone of free trade in the manufacture of certain textile and clothing goods, so that these goods can receive the preferential tariff treatment of the treaty.

This agreement is disclosed in decision No. 107 of the Administrative Commission of the Free Trade Agreement between the United Mexican States and the Republic of Colombia, adopted on July 9, 2021, said instrument will enter into force on August 12, 2021 and will conclude its validity on August 11, 2023.

The new products to which the Waiver will apply: certain textile goods classified in the subheadings of the Harmonized Commodity Description and Coding System: 6004.10, 6005.31, 6005.32, 6005.33, 6005.34, 6006.31, 6006.32, 6006.33, 6006.34, 6104.63, 6105.20, 6106.20, 6108.22, 6112.31, 6112.41, 6212.10, 6212.20, and 6212.90 totally elaborated in Colombia using the materials produced or obtained outside the free trade zone, classified, at the aancelarial fraction level in Colombia, in the fraction: 5402.31.00.00

The import tariff that Mexico will apply to the goods for which the exemption is granted, will be that corresponding to the original goods provided for in its tax relief schedule in Annex 1 to Article 3-04 of the treaty.

Tariff Fraction in Colombia (Input)	Description / Observations	Quantity (Net Kilograms)
(A)	(B)	(C)
54.02.31.00.00	Synthetic filament yarn (other than sewing thread) not put up for retail sale, including synthetic monofilaments of less than 67 decitex. Textured yarn: Of nylon or polyamides, with a count of less than or equal to 50 tex per single yarn.
	1. Polyamide, 78 Dx / 70Dr. Title, 68 filaments, 1 strand, 100% polyamide, Type 6.6, Ultramatte luster, ecru, S and Z twist process, Recycled	24,000
	Total	24,000

The certificate of origin will have to be filled out and signed by the exporter in this case, Colombia must indicate in the field of observations the following sentence: “the good complies with the provisions of decision No. 107 of the Administrative Commission of the Treaty and I use (amount (s)) kgs. of the exemption granted to (name of the material (s) used in the tariff section (s) _________. ”

Click here to access the official publication in the Official Gazette of the Federation (DOF) for your consultation.

11Ago

Adient announces US$24 million investment in the State of Mexico

agosto 11, 2021 Luisa

STATE OF MEXICO – The Governor of the State of Mexico, Alfredo Del Mazo, held a meeting where he presented the investment plans that the automotive supplier Adient has for the state, which amount exceeds US$24 million for the development of two projects.

The projects that this company will develop in the State of Mexico are the production lines for seats for Ford’s Mach-e and for the electric Ford Explorer, which will generate 1,550 jobs.

Adient executives, led by Sergio Carballo Castillo, Regional Operations Director, reported that their Lerma plant is leading the project to manufacture the seats for Ford’s Mach-e, while in 2022 they will initiate a similar project to supply the seats for the first electric Ford Explorer.

The minister of Economic Development of the State of Mexico, Pablo Peralta García, announced that Adient is part of a sector that represents 12.6% of the economy, more than 20% of manufacturing production and more than 2.6% of jobs.

It is worth mentioning that Adient is an organization that supplies one out of every three car seats worldwide, stands out for the quality of its products and its innovation capabilities.

SOURCE: MEXICONOW

05Ago

KCS de Mexico to invest US$113.5 million in San Luis Potosi

agosto 5, 2021 Luisa

SAN LUIS POTOSI – The president of Kansas City Southern de México, held a meeting with Juan Manuel Carreras López, Governor of the State of San Luis Potosí, where he presented an investment of more than US$113.5 million for the next few years.

The purpose of the meeting was to learn about and promote the development of more and better railroad infrastructure for national and international commerce in the state.

This project is expected to provide 33 kilometers of double track on the main line that crosses the entity.

It is worth mentioning that 12 projects have been developed, 6 of which have already been completed, to improve trade in this important hub of the Bajío region.

Kansas City Southern de México crosses 15 states in the country’s industrial zone with three intermodal terminals and connects the four most important ports with railroads. During its stay in Mexican territory, it has invested almost US$5 billion in 23 years.

The minister of Economic Development, Gustavo Puente Orozco, pointed out that the international company recognizes the strategic importance of San Luis Potosí for commercial routes; therefore, the decision was made to invest in the state.

SOURCE: MEXICONOW

29Jul

Extension of deadlines regarding subcontracting

julio 29, 2021 Paulina Aguirre

In ordinary session of July 23, 2021, the Technical Council of the Institute authorized to extend the 90 calendar days established in Articles 5, 6 and 7 Transitory of the “Decree by which various provisions are amended, added and repealed of the Federal Labor Law; of the Social Security Law; the Law of the Institute of the National Housing Fund for Workers; of the Fiscal Code of the Federation; of the Income Tax Law; of the Value Added Tax Law; of the Federal Law of Workers in the Service of the State, regulating section B) of article 123 of the Constitution; of the Regulatory Law of Section XIII Bis of Section B, and of Article 123 of the Political Constitution of the United Mexican States, regarding Labor Subcontracting ”, published in the DOF on April 23 of this year.

The authorization of the Council responds to the legislative process underway within Congress regarding the Initiative to reform the Decree on labor subcontracting, with the purpose of extending terms, published in the Senate Gazette LXIV / 3SPR-21/119360 of the Republic on July 21.

As far as IMSS is concerned, the 90 calendar days established in articles 5, 6 and 7 of the Decree on labor subcontracting are extended until it is approved and enters into force, by means of a new decree that the Federal Executive issue, for this purpose, the expansion proposed in said initiative or the one that the Congress of the Union finally decides to approve.
This decision makes it possible to safeguard the rights of workers and their families, as well as to support employers or obligated subjects in complying with their social security obligations.

Clic for consulting official publication.

26Jul

GIS invests US$30 million in San Luis Potosí

julio 26, 2021 Paulina Aguirre

GIS announces a US$30 million investment for the capacity expansion of its auto parts foundry at its Draxton business in San Luis Potosi to begin operations during the last quarter of 2022.

Draxton, dedicated to the casting and machining of critical auto parts for brake, engine and chassis systems for the global auto parts industry, has operations in six countries on three continents: Europe, Asia and in North America with plants strategically located in central and northern Mexico.

Through a statement, the company announced the construction and expansion of a new nodular iron smelting line at its San Luis Potosí production plant, which will allow it to increase its installed capacity by 30,000 tons per year to reach a global annual smelting capacity of close to 620,000 tons.

The new casting line will focus on the production of calipers and brackets, critical and safety-critical brake system parts that are 100% compatible with hybrid and electric vehicles, allowing Draxton to participate in the electrification of the global automotive industry.

“GIS’s financial strength allows us to finance this expansion of Draxton with our own resources and thus be ready to take advantage of the business opportunities presented by the USMCA agreement for the automotive industry,” said Jorge Rada, Chief Operating Officer of GIS.

GIS also reported that it refinanced the loan contracted for its Evercast foundry and machining business with a cost reduction and a term extension to 2026.

Source: MEXICONOW

15Jul

Creation of the National Customs Agency of Mexico

julio 15, 2021 Paulina Aguirre

On July 14, 2021, the “DECREE creating the National Customs Agency of Mexico (ANAM) as a decentralized administrative body of the Ministry of Finance and Public Credit was published in the Official Gazette of the Federation.”

ANAM will be the new tax and customs authority, in charge of organizing and directing customs and inspection services, to apply and ensure compliance with the legal provisions that regulate the entry and exit of goods from the national territory and the collection of taxes. and uses applicable to foreign trade operations.

In order to comply with the foregoing, ANAM will be endowed with technical, operational, administrative and management autonomy, and will have the following powers:

Collect the contributions and benefits applicable to foreign trade operations and their accessories in accordance with the applicable legislation and in accordance with the international treaties to which Mexico is a party.

Manage the registers of importers, importers of specific sectors and sectoral exporters;

Represent the interest of the Federation in fiscal and customs disputes, related to the entry, transit or exit of merchandise from or in the national territory;

Determine and settle the contributions and benefits applicable to foreign trade operations and their accessories;

Monitor and ensure due compliance with tax and customs provisions related to the entry, transit or exit of goods from or into the national territory and, where appropriate, exercise the powers of verification provided for in said provisions; Y

Direct customs and inspection services; carry out operations corresponding to the verification of the legal stay of goods in national territory and of goods in transport, including their verification of origin; seize or insure merchandise whose legal stay in the country is not proven and safeguard them as depositary.

It is important to mention that the aforementioned faculties are not the only ones that ANAM will have, however, they are the ones that we consider most relevant.

ANAM will be headed by a Holder, who will be freely appointed and removed by the President of the Republic, at the proposal of the Secretary of Finance and Public Credit.

Finally, it is important to mention that the Decree in question will enter into force as of the date on which the legal reforms that grant the jurisdiction that the Tax Administration Service currently has in tax and customs matters to ANAM begin.

Click here for the official publication in the Official Gazette of the Federation (DOF) for your consultation.

For more information about this release, please contact jfrocha@mexcentrix.com and / or paguirre@mexcentrix.com

This communication was created solely for disclosure purposes and, therefore, constitutes an opinion that may be used and / or quoted without our prior written authorization

06Jul

Prospects for Foreign Direct Investment in Mexico 2021

julio 6, 2021 Jesus Aguirre

According to different analysts and statistical data, an economic recovery and a higher level of foreign investment to Mexico is predicted for 2021. However, FDI (Foreign Direct Investment) is conditioned to the possibility of new “waves” of COVID-19, along with the recovery of business confidence and a greater sensitivity on the part of the government towards the needs of the foreign private sector in Mexico.

The analysis is as follows: Following the economic numbers presented by BANXICO and the Ministry of Economy at the end of last year, during the concentrated period 2010-2020, FDI in Mexico presented a growth of 2.3%, going from US$27.14 billion in 2010 to US$27.78 billion in 2020, while for the first quarter of 2021 FDI reached US$11.86 billion, which represents an increase of 14.8% compared to the first quarter of 2020.

However, this figure of US$27.78 billion represented a decrease of 18.8% compared to 2019. “This contraction is associated with the pandemic,” explained the analysis carried out by the consulting firm Salles Sainz Grant Thornton. In fact, the United Nations Conference on Trade and Development (UNCTAD) estimated that in 2020 global FDI flows decreased 42%, compared to 2019, according to the “World Investment Report” published in January 2021, which shows that Mexico had a better performance attracting FDI compared to the rest of the world.

According to the report on FDI presented by the SE, these US$11.86 billion in the first quarter of 2021 were reported by 1,872 companies with participation of foreign capital, 883 trust contracts and nine foreign legal entities.

The SE report further shows that the main element of FDI in the first quarter of 2021 has been thanks to the reinvestment of profits, US$7.02 billion (59.2%); for accounts between companies, US$2.62 billion (22.2%), and for new investments or equity only US$2.20 (18.6%).

When referring to the origin of the investments, the SE report indicates that the main country from which Mexico has received FDI is the United States, US$5.04 billion (42.5%), followed by Spain, with US$1.43 billion (12.1%); Luxembourg, with US$0.96 billion (8.2%); the United Kingdom, with US$0.65 billion (5.5%); Canada, with US$0.56 billion (4.8%), while other countries added the remaining 26.9%.

The main destination of FDI flows is the industrial sector, with manufacturing being the main destination subsector (46.6%). Following these two are the financial and insurance services sector (14.6%), mining (13.9%), commerce (11.5%), energy (3.4%) and temporary accommodation services (3.2%). The remaining sectors captured 6.8%.

Pandemic reality, reshoring and expectations

The COVID-19 conjuncture has caused a deep economic crisis, which has affected global FDI. According to the Economic Commission for Latin America and the Caribbean (ECLAC), in its report “Foreign Direct Investment in Latin America and the Caribbean, 2020,” because of the pandemic, most of the world’s productive sectors were hit in a generalized way, which successively extended to cross-border investments, which could register a reduction of between 30% and 40% at the end of 2021.

According to the cited ECLAC document, among the transformations that global value chains will undergo in the next decade, the withdrawal, to varying degrees, of international production can be considered, which has as a consequence a decrease in foreign investment, while paying special attention to national relocation (reshoring).

This relocation could become very relevant for high-tech industries. But specifically, in the automotive sector, this point is ambivalent: the high amount of investments already made in the main Latin American countries that produce vehicles (Brazil and Mexico) and the degree of technical preparation achieved by their workforce generate a high level of territorial roots that make the return of these industries to their countries of origin unlikely.

But, on the other hand, according to experts in this sector, the level of FDI will not increase in 2021 as investments are already in Mexico. According to Fausto Cuevas, general director of the Mexican Association of the Automotive Industry (AMIA), it will be difficult to see large investments in the assembly plants in 2021, except for the investments that are made annually for the change of production lines, of new models or changes in the current ones. For Cuevas, although the automotive industry, having been considered an essential activity, was not totally affected by the pandemic, significant investments in the country have already been made in the last 10 years, coming from automakers such as Kia (Nuevo León) , Toyota (Guanajuato) and BMW (San Luis Potosí), which, he said, “are still in the process of maturing.”

Under this conservative economic context, “expectations regarding FDI to Mexico for 2021 are expected to recover,” according to the consulting firm Salles Sainz Grant Thornton, positioning what was reported by BANXICO in February 2021 (US$26 billion) as the average expectation for 2021.

Is there confidence to invest?

According to AT Kearney, a company that annually prepares its world FDI confidence index, in 2020 the ranking of the most reliable countries to invest is led by the United States, Canada, Germany, Japan and France, Mexico (which was in position 25 in 2019) was left out, attributing it to the prioritization of investments with low economic and social impact, changes in the energy sector and project cancellations.

In this sense, AT Kearney affirms that the recovery of the global economy after COVID-19 is fundamental for attracting FDI to Mexico; however, “internal economic conditions will also be relevant to generate greater confidence for investment in the country.”

According to ECLAC, the benefits of FDI will be obtained when the policies to attract FDI are integrated and coordinated with the development policies of a country (in this case, Mexico). “Although FDI alone does not solve the problems related to economic growth, it can assume an important role to the extent that it is aligned with their strategic objectives,” according to their report “Foreign Direct Investment in Latin America and Caribbean.”

Are we going towards new collaboration strategies?

It should be noted that the Mexican government strategy to attract FDI has been based on the creation of a regulatory framework that offers transparency for the investor, rather than on building policies based on incentives to promote it.

“The new international scenarios make it necessary for FDI and the policies to promote it to be part of a broader project that allows social inclusion, equality and growing environmental sustainability,” said Salles Sainz Grant Thornton. But, for this, it is necessary not only to offer the conditions for foreign capital to arrive, but it is necessary to create conditions for capital to become generative sources of greater productivity, innovation and technology. In other words, a scheme of greater collaboration between government and private initiative is greatly needed. Will we see it in 2021? .

Sources: MexicoNow

Prospects for Foreign Direct Investment in Mexico 2021 – MEXICONOW (mexico-now.com)

06Jul

Unilever announces 5.5-billion-pesos investment in its 4 Mexican plants

julio 6, 2021 Jesus Aguirre

The owner of Knorr, Dove and other brands plans to increase production and exports.

Unilever has announced plans to invest 5.5 billion pesos (US $277 million) in its four Mexican plants over the next three years. The company, which owns brands such as Knorr, Hellman’s, Dove and Holanda ice cream, plans to increase production of its food, hygiene and personal care products.

The company also announced that it will begin exporting ice cream to all of North America.

“This investment will allow us to grow the production and increase the exportation of our products by roughly 20 billion pesos [US $1 billion] over the next three years to our main commercial partners, which are the United States, Canada, the Caribbean, Central and South America and some European countries,” said Reginaldo Ecclissato, president of Unilever in Mexico and Northern Latin America.

Economy Minister Tatiana Clouthier celebrated the announcement.

“It speaks to importance of the USMCA [trade agreement] as a strategic point for exports,” Clouthier said. “Unilever directly provides work for more than 6,500 people, imagine what it is generating indirectly … investors have confidence in Mexico, its economy and the labor force.”

The four Unilever plants are located in Mexico City, Morelos and México state. The British-based company said the new investment will lead to the creation of 3,000 new jobs, directly and indirectly.

Source: Mexico News Daily

Unilever announces 5.5-billion-peso investment in its 4 Mexican plants (mexiconewsdaily.com)