Issue 144 – June / July 2019

July 25, 2019
Tariffs and the US-Mexico Relationship


By Mario Melgar-Adalid

Mexico and the United States recently experienced an episode that gained attention because of the impact it had on the bilateral relationship.  Upon the announcement, via threat, made by President Trump regarding progressive tariff increases of up to 25%, tension grew both in Mexico and the United States.  The threat of imposing tariffs was made in case Mexico failed to reinforce measures to avoid uncontrolled flows of Central American migrants seeking to enter the United States.  Experts in both countries feared that a crisis of unprecedented proportions could develop. U.S. Senate Majority Leader Mitch McConnell stated, “we do not support tariffs and still hope they can be avoided.”  Democrat Nancy Pelosi criticized the threat and stated it was “bad immigration … read more

July 25, 2019

Political Thermometer

Elections held in June 2019 provided the first test for President Andrés Manuel López Obrador and his party, MORENA, after last year’s resounding political victory.  Election results generally favored the president and his party, although voter turnout was low, possibly due to the electorate’s fatigue from the 2018 electoral process.  Despite the triumph, total votes for MORENA generally decreased, while votes for the PAN party increased. The PRI gained enough votes to keep its party’s registration, contrary to predictions that it would lose such registration in Baja California and Aguascalientes.  MORENA won Puebla’s gubernatorial election, marking the most significant gain for the party. The Puebla election was extraordinary, given that it was required after the aviation accident in which Governor … read more

Economic Indicators

On July 25, 2019, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $19.0623 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed at 40,930.24 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 8.4740%

Mexico Enacts Major Labor Law Reform

Mexico has enacted a major reform of the existing Federal Labor Law (the “Reform”), which was published in the Official Journal of the Federation on May 1. The Reform is designed to fit within the framework of the proposed new trade agreement among the United States, Mexico and Canada (USMCA). Although the signatories have not yet ratified the agreement, its proposed terms require Mexico to modify its current labor laws and regulations. The three core aspects of the Reform are: (a) freedom of association and collective bargaining; (b) democracy in union procedures and affairs; and (c) the introduction of an entirely new system for adjudicating labor matters and disputes. Notably, the difficult issue of how to regulate labor subcontracting (“outsourcing”) … read more

Hiring Service Providers-Legal Compliance in Mexico
By Pablo Sáenz and Fernanda Magallanes

Companies that enter into services contracts with service providers in Mexico that are individuals or companies should review their internal procedures and contracts to ensure compliance with applicable Mexican legal requirements. Such include verification that that the service provider is: Registered with the Mexican Federal Tax Administration. Has its own physical address. Provides services to numerous clients and has multiple sources of income. Is current in meeting all applicable tax reporting and payment obligations. Registered with the Mexican Social Security Institute (“IMSS”), and the employees it intends to assign to provide the services are also registered with the IMSS. Complies with all applicable reporting and payment obligations to the IMSS, National Housing Fund Institute and the Retirement Fund System (SAR), … read more

Draft Regulations Governing Collective Distributed Generation of Electricity
By Antonio Riojas

On May 27, 2019, the preliminary draft of the Resolution through which the Energy Regulatory Commission issues the contract model for suppliers of basic services and the methodology for compensation applicable to collective distributed generation (“Draft Regulations”) was submitted to the National Regulatory Improvement Commission for public comment. The Draft Regulations expand the possibilities for small electric power generators to supply multiple load centers, whose demand is met by a supplier of basic services. Consequently, it allows the option for load centers to benefit from distributed generation even though they may not have the physical space to install systems of this kind, such as solar panels. This modality is known as collective distributed generation. The Draft Regulations are based on … read more