WEEKLY REPORT 10.5.24

May 4 –10, 2024

AMLO Tours the Country HOT TOPICS:

President Andrés Manuel López Obrador announced he would carry out a tour around the country to supervise the healthcare system Beginning May 13th , and until May 29th , AMLO will travel to every state and meet with all governors to check the progress in the improvement of hospitals, clinics, medical centers and medical attention As he promised that the Mexican healthcare system would be one of the best in the world before the end of his term, it has become one his top priorities in the last months of his presidency Nevertheless, some critics have considered his tour as an act of campaign in favor of his party’s presidential candidate, Claudia Sheinbaum He also announced that, because of the electoral ban imposed by the electoral institute, he will suspend his morning conferences after the 29th of May until the end of the elections However, he mentioned that during those days he would still do a cultural tour, without giving any more specifics, and that he would celebrate the Navy Day on June 1st

Source: Expansión

OUTAGES OF ENERGY IN MEXICO

On May 7th , 11 states suffered outages of energy in México. These were Mexico City, the State of Mexico, Hidalgo, Tabasco, San Luis Potosí, Puebla, Guanajuato, Chiapas, Tamaulipas, Oaxaca y Querétaro. The National Energy Control Center (Cenace) declared a state of emergency and explained that the system was unable to meet the electricity demand The main reason for the increase in demand is the rise in temperatures around the country President López Obrador said that work is already underway to solve the issue, that it was an exceptional event, and that the system is in perfect condition to meet the electricity demand However, according to Óscar Ocampo, the energy coordinator at the Mexican Institute for Competitiveness (IMCO), power outages in Mexico are likely to persist through the rest of spring and into summer due to insufficient investment in the national electrical system The day after the blackouts, Cenace declared a state of alert for 9 hours, and power outages were reported in Mexico City, Guanajuato, and Aguascalientes, among other states. The business association Coparmex asked for more investment from the private sector to deal with the energy deficiency and prevent new incidents in the future. The CCE also stated that the causes of blackouts are structural and highlighted the need to improve the transmission infrastructure and allow private sector involvement INDEX also expressed their concerns over the energy needs of the manufacturing industry

Source: CNN, Forbes, El Universal, and Milenio

HIGH LEVEL MEETING WITH U.S. REPRESENTATIVES IN GUATEMALA

The third ministerial meeting of the "Los Angeles Declaration on Migration and Protection" was held in Guatemala with the presence of representatives from 20 countries, including the Mexican Chancellor, Alicia Bárcena, and the U S Secretary of State, Antony Blinken The declaration has three action pillars: 1) address root causes and support migrant integration to foster long-term stabilization; 2) expand legal pathways; and 3) strengthen humanitarian law enforcement During the meeting, Secretary Blinken announced USD 578 million in humanitarian, development and economic assistance to help partner countries Also, Mexico and the U S discussed collaboration to expand the use of eTrace and joint investigations against arms trafficking, in order to prevent arms from illegally reaching Mexican territory Additionally, on May 9, President López Obrador met privately with Elizabeth SherwoodRandall, White House Security Advisor, and U S Ambassador to Mexico, Ken Salazar, in Mexico City

Source: U S Department of State

PANEL FOR USMCA 2026 REVIEW

The Ministry of Economy has formed a "panel" consisting of government officials and private sector representatives to review the USMCA This treaty, which came into effect on July 1, 2020, requires comprehensive assessments every six years, along with specific semi-annual evaluations on labor and environmental issues, and continuous reviews through numerous committees on various topics

Source: El Economista

CUSTOMS AGENCIES EXTEND WORKING SCHEDULES

Thorough inspections of cargo trucks from Mexico by the Texas government prompted the National Customs Agency of Mexico (ANAM) to extend customs operation hours at alternative border crossings between Chihuahua and Texas in agreement with the United States Customs and Border Protection (CBP) This aims to alleviate delays caused by recent inspections at key bridges. ANAM highlighted the significant impact on trade and urged proper planning by transporters Further efforts are being made to extend hours at other crossings to ensure smoother commercial flow amidst heightened border control in Texas

Source: El Economista

TAIWANESE SEMICONDUCTOR PRODUCERS MEET WITH CCE AND MINISTER OF ECONOMY

High-level entrepreneurs, including leaders from the Taiwan Electrical and Electronic Manufacturers' Association (TEEMA), visited Mexico to explore investment opportunities, particularly in the electric vehicle sector, as part of nearshoring efforts, according to the Business Coordinating Council (CCE). The delegation met with the Minister of Economy and the president of the CCE They aim to capitalize on Mexico's geographical position and its role in the North American market Taiwanese investors are interested in Mexico's potential for high-tech specialization, given Taiwan's expertise in semiconductor manufacturing and other advanced industries

Source: El Economista

HOT TOPICS:

Presidential Campaign Polling

The poll of polls of Expansión compares how the three presidential candidates are doing according the several different polls The rectangle in the middle represents the probable range of vote intention for each candidate Sheinbaum (Morena-PT-PVEM) is leading the surveys with an expected vote intention of 57%, while Xóchitl (PRI-PANPRD) is running behind with a 32% and Máynez (Movimiento Ciudadano) comes out last with a 7% This same model shows that voting preferences have stayed pretty much the same since September of 2023 and that is “very probable” that Sheinbaum wins the election As June 2nd approaches, it becomes clearer that the race is between Xóchitl and Claudia, and that Xóchitl will have to make extraordinary efforts to attract a bigger part of the electorate

Source: Expansión and Milenio

SHEINBAUM WANTS TO KEEP SAME FINANCE MINISTER AS AMLO

In recent days, Claudia Sheinbaum stated in front of BBVA executives that she will ask Rogelio Ramírez de la O, current Finance Minister, to stay ahead the ministry during her presidency Ramírez de la O is Andrés Manuel López Obrador’s third finance minister, as the first one, Carlos Urzúa, quit only some months after taking the position, and the second one, Arturo Herrera, was apparently let go because of some disagreements with the president When Ramírez de la O was asked about Sheinbaum’s statements, he denied to answer and simply said that it was an honor to be with AMLO This further proves Sheinbaum’s objective to continue with AMLO’s economic policies.

Source: Bloomberg Línea, El Economista, El Economista

THE RACE FOR MAYORS IN NUEVO LEÓN

In a recent survey, Mariana Rodríguez, candidate for Movimiento Ciudadano (MC) in Monterrey, came out in first place with 30 1% of the vote intention, while the second place, Adrián de la Garza from the PRI-PAN-PRD, is only a few percentage points behind with 27 9% Mariana’s husband is currently the governor of Nuevo León and belongs to the same party However, several other municipalities have the PAN-PRI-PRD as the leading option The coalition is winning in Santiago, Santa Catarina, Juárez, Guadalupe, and Apodaca, in some even by more than 10 percentage points Morena is the leading option in García and General Escobedo, while the PAN by itself is winning by a considerable margin in San Pedro Garza García and San Nicolás de los Garza

Source: La Encuesta Mx

THIRD DEBATE: GOVERNORSHIP OF JALISCO

The third debate between the candidates for the governorship of Jalisco, Pablo Lemus (Movimiento Ciudadano), Claudia Delgadillo (Morena-PT-PVEM) and Laura Haro (PRIPAN-PRD), took place on May 4th , and focused on 1) economic development, employment, and wages, and 2) culture, health and sports One of the main issues during the debate was the accusations against Lemus of political violence based on gender by his rivals.

As for the proposals, Lemus mentioned he would establish a network of Industrial Parks, put the cargo airports of Lagos de Moreno and Costa Alegre in Chalacatepec into operation, and would not impose new taxes Delgadillo also proposed no new taxes and added that she wants to improve road infrastructure to encourage foreign investment, establish ongoing job training, and improve water infrastructure. Haro said she would create the Entrepreneurship, Innovation, and Technology Agency, and decrease the Payroll Tax for companies with a track record of more than six months

Lemus appears to be outperforming his second closest rival, Claudia Delgadillo, but only by a few percentage points According to Expansión, his expected vote intention is of 44%, while hers is 40%. The PRI-PAN-PRD candidate is far behind both with an expected vote intention of 12% With a few weeks left, this election could really make a turn

Source: Prodensa Intelligence and Expansión

Legislative and Regulatory issues: HOT TOPICS:

Note: the ordinary period in the Congress ended on April 30th Until the 31st of August there will be a Permanent Commission that cannot approve any initiatives

TRADE:

PROPOSED MODIFICATIONS TO FOREIGN TRADE REGULATIONS BY THE MINISTER OF ECONOMY

On May 6th, 2024, the Secretary of Economy has presented a preliminary draft of a decree by which the Ministry of Economy issues rules and general criteria in foreign trade seeks to modify aspects, including the addition of two paragraphs to rule 3 2 9, aiming to prevent practices contrary to the objective of the IMMEX program

Key Points of the Decree:

• Modification of Rules for Imports: The preliminary draft of a decree modifies rules concerning the importation of goods, particularly through courier and parcel companies, exempting certain shipments under a specified value from compliance with Official Mexican Standards (NOMs) at the point of entry However, this exemption is now being revoked to ensure consumer protection and compliance with quality standards

• Changes in IMMEX Program Procedures: Introduces amendments to the rules governing the IMMEX program, aimed at preventing practices contrary to its objectives and ensuring timely return or transfer of goods under the program

The proposed decree aims to empower SAT and ANAM to regulate IMMEX companies more extensively Breaches in goods return timeframes may trigger cancellation procedures, jeopardizing the IMMEX program and other related certifications, posing a significant risk to foreign trade operations It is important to consider that it is a preliminary draft of a decree that has not yet been officially approved

REMOVAL OF TARIFF ITEMS FROM DECREE

President López Obrador published a decree in the Federal Official Gazette on the 8th of May changing some tariff decrees The changes were:

1. Removal of tariff items 7601 10 02 (unalloyed aluminum) and 7601 20 02 (aluminum alloys) from the tariff increase decree published on April 22nd last month

2. Establishes a 35% tariff on item 3102 21 01(ammonium sulfate)

The decree entered into force on May 9th of 2024 and is available here

NUEVO LEÓN:

INITIATIVE TO AMEND ARTICLE 160 OF THE NEW LEON STATE TAX LAW

Presented by: Local Deputy Alhinna Berenice Vargas Garcia (NL - PRI)

Purpose: To incentivize employment by exempting payroll tax payments for:

• Remunerations of individuals aged 60 or older for up to 200 quotas

• Remunerations for young people aged 18 to 29 during their first year

Status: 2024-05-06 - Initiative referred to the Finance Commission of the Congress of Nuevo León for consideration

INITIATIVE TO ISSUE THE DIGITAL RIGHTS LAW OF THE STATE OF NUEVO LEÓN

Presented by: Deputy Eduardo Gaona Domínguez (NL - MC)

Purpose:

• Establish that digital service providers must ensure the security of personal data, prevent its unlawful processing, and include the consent of the user

• Include the right of workers to digital disconnection outside of their official hours Also, establish that employers must facilitate access to continuous updates in digital skills

Status: 2024-05-06 - Initiative referred to Legislative Commission of the Congress of Nuevo León for opinion

1. CITIZEN INITIATIVE AMENDING ARTICLE

2. Presented by: State Congress of

3. Purpose:

4. It will be the responsibility of the State Climate Change System to ensure that companies generating greenhouse gas emissions, whether medium or large, must guarantee a minimum annual reduction of 5% in their greenhouse gas emissions

5. This reduction should not affect their productivity or sales quantity, with the purpose of achieving zero greenhouse gas emissions within 20 years

6. Any company wishing to operate within the State must have a plan for sustainable production and plans and actions to become a green company and comply with the minimum annual reduction of 5%

7. Investments made to comply with this standard will be tax-deductible in the same year they are made

8. Status: 2024-05-02 - Initiative referred to Commission on Ecology and Environment of the Congress of San Luis Potosí for opinion

SAN LUIS POTOSÍ:

OF

STATE CLIMATE CHANGE LAW

San Luis Potosí