October 12-18, 2024
HOT TOPICS:
Energy Reform is approved by Congress
The new energy reform in Mexico, approved by both Chambers is awaiting final voting in the Local Congresses The reform introduces significant changes for state-owned companies Pemex and CFE. The main modification removes their status as productive state enterprises, a figure created in 2013 to promote economic value generation Analysts indicate that the consequences for the market are yet to be known, as secondary laws will have to be published within 180 days
One of the key changes is the consolidation of the CFE as the main player in electricity generation, controlling 56% of the market and prohibiting private investment in electricity transmission and distribution Additionally, sectors like the internet and the lithium industry will be declared strategic for the State, banning private concessions for their exploitation.
The opposition criticizes that the reform may affect international agreements such as the USMCA. Meanwhile, supporters of the reform argue that it will strengthen Mexico's energy sovereignty and place strategic resources at the service of national development
Source: EL ECONOMISTA
MODIFICATIONS TO FOREIGN TRADE RULES
On October 14, 2024, modifications to Mexico's General Rules of Foreign Trade were published, affecting companies registered under the Business Certification Scheme, including IMMEX companies A key change is the requirement to implement an automated inventory control system This system must electronically receive and reflect operational data within 48 hours, and all additional information must be submitted by the time of customs declaration payment
Additionally, certified companies must provide customs authorities with online access to their inventory control system by supplying login credentials The deadline to comply with these new requirements is November 15, 2024 Failure to do so may result in certification suspension or cancellation, which could trigger VAT payment obligations for temporary imports
The new requirements for automated inventory control systems could increase operational costs for companies in Mexico, especially IMMEX-certified ones Noncompliance risks suspension of certifications, potentially leading to higher taxes and disrupting supply chains, affecting businesses reliant on temporary imports and export-related activities
Source: FOLEY & LARDNER
JUDICIAL REFORM
The Mexican Senate has approved a call for the election of 881 ministers, magistrates, and judges of the Judiciary, scheduled for June 1, 2025 This election aims to democratize the judiciary and will include the election of five Supreme Court justices, electoral tribunal magistrates, and hundreds of district judges The Senate has called upon the Executive, Legislative, and Judicial branches to establish evaluation committees by October 31, 2024, and has issued guidelines for candidate requirements. Current judges and magistrates can run for reelection unless they decline their candidacy.
President Claudia Sheinbaum rejected claims of a constitutional crisis surrounding the judicial election process These accusations came after the Federal Judiciary Council (CJF) submitted a list of judicial vacancies to Congress, a requirement of the judicial reform Sheinbaum dismissed the amparos (legal protections) filed by federal judges to block this process, emphasizing that the CJF is acting according to constitutional mandates
Despite judicial suspensions issued in amparo trials, key government bodies had continued with the election process These challenges cast doubt on the legality of the 2025 judicial elections and demand a new procedure that adheres to constitutional reforms
The 2025 election of judicial officials introduces uncertainty within Mexico's legal system, which could delay judicial processes Businesses may face slower dispute resolutions and potential shifts in legal rulings, impacting business operations and confidence
Source: EL UNIVERSAL
CEO Dialogue takes place HOT TOPICS:
The US-Mexico CEO Dialogue 2024, led by President Claudia Sheinbaum, aims to boost investor confidence by addressing key concerns for American and Mexican investors These include legal certainty, security, and clean energy and water access. The event, held in Mexico City, marks a new phase in the relationship between the Mexican government and the private sectors of both nations High-profile participants included over 200 business leaders, along with top Mexican officials. Discussions covered critical issues like supply chain development, border trade facilitation, and regional energy policies, promoting North America's competitiveness and the nearshoring trend
Sheinbaum emphasized Mexico’s commitment to the U S -Mexico-Canada Agreement (USMCA), with its review scheduled for 2026 She also announced that Mexico is poised to attract over $20 billion in investments for 2025, addressing concerns from 240 U S and Mexican business executives about judicial and energy reforms The dialogue serves as a prelude to the defense and potential renewal of the agreement, which aims to enhance regional collaboration rather than foster competition. Meanwhile, political developments, including U S presidential candidate Donald Trump’s intention to renegotiate T-MEC, could challenge its future Nevertheless, Sheinbaum highlighted the complementarity of the North American economies, positioning the region as a global economic powerhouse capable of confronting challenges from Asia, particularly China
Source: EXCÉLSIOR
GARCÍA LUNA IS SENTENCED TO 38 YEARS
The sentencing of Genaro García Luna, Mexico’s former Secretary of Public Security, to 38 years in a U.S. prison has significant implications for U.S.-Mexico relations His conviction, largely based on testimonies from criminal informants, marks a profound moment in the fight against corruption, sending a message that no one is above the law. This case could strain cooperation between Mexican and U S agencies, particularly in the fight against narcotrafficking, as Mexican officials might fear facing similar consequences for their involvement or knowledge of criminal activities. Moreover, the trial highlights longstanding concerns about the extent of U S knowledge of Mexican corruption and raises questions about political timing in such revelations, potentially influencing future collaborations on security matters
Source: EXCÉLSIOR
NEARSHORING REFORM
Senators Mario Vázquez Robles and Gustavo Sánchez have proposed reforms to Article 8 of the Law for the Sustained Increase of Productivity and Competitiveness in Mexico, focusing on maximizing the benefits of nearshoring. With $36 billion in foreign direct investment primarily concentrated in manufacturing, these initiatives aim to diversify investment sources and bolster national policies
Both senators highlight Mexico's strategic geographic position as advantageous for attracting foreign investments and creating quality jobs They stress the importance of improving infrastructure, ensuring reliable public services, and preparing the workforce for market demands.
Additionally, they emphasize the need for legal certainty and access to clean, affordable energy to enhance investor confidence Implementing these reforms could lead to a projected 4% economic growth and the creation of up to 4 million jobs by 2030, with annual investments potentially ranging from $30 to $50 billion, fostering sustainable economic growth and regional development in Mexico
Source: REFORMA
"VENTANILLA ÚNICA"
The creation of a digital transformation agency in Mexico, announced by President Claudia Sheinbaum, aims to streamline bureaucratic processes for businesses by implementing a "single window" system across municipal, state, and federal levels This initiative is designed to reduce the time required to complete the necessary paperwork for establishing businesses, which can currently take up to two years. The new system will simplify administrative procedures, encourage both private and public investment, and increase transparency These efforts are expected to remove barriers to investment and strengthen the rule of law, fostering a more business-friendly environment in Mexico
Source: OMNIA
HOT TOPICS: Legislative and Regulatory Issues:
ENERGY REFORM
The articles 25, 27, and 28 of the Political Constitution of the United Mexican States are reformed concerning the strategic industries of the state.
Presented by: Chamber of Deputies
Purpose: The reform states that no concessions will be granted for lithium, ensuring public enterprises prevail over private ones The state will maintain exclusive control over internet services, aiming to secure electricity transmission and distribution while preserving national energy self-sufficiency
Status: Turned to Local Congresses for its approval
FOREIGN TRADE
Second Resolution of Modifications to the General Rules of Foreign Trade for 2024 and Annexes 1, 2, 5, and 24
Presented by: Tax Administration Service (SAT)
Purpose: To inform about the modifications to the General Rules of Foreign Trade regarding customs accounts, RFC (Federal Taxpayer Registry), importation of vehicles under duty exemption, courier and parcel companies, company certification, among others
Annex 1-A of the second resolution of amendments to the miscellaneous tax resolution for 2024, published on October 11, 2024
Presented by: Tax Administration Service (SAT)
Purpose: To announce the modifications to the miscellaneous tax resolution for 2024
LABOR
The twelfth section of Part A of the second paragraph of Article 123 of the Constitution is amended and supplemented to create a housing system for all workers.
Presented by: Chamber of Deputies
Purpose: Agricultural, industrial, and other companies are required by law to provide workers with adequate housing through contributions to a national housing fund This fund offers affordable housing loans or rental opportunities after one year of contributions, ensuring that rent does not exceed 30% of workers' salaries. Priority is given to continuous contributors without home ownership
Status: The Reform is being discussed in the Commission in the Chamber of Deputies
Several articles and sections of the Constitution regarding Minimum Wage
Presented by: Chamber of Deputies
Purpose: The proposal stipulates that the annual setting or revision of general or professional minimum wages will never fall below the observed inflation rate during their validity period
Status: Constitutionally approved by 17 Local States' Congresses It will be sent to the Executive and published in the Official Gazette.
LABOR
Several articles and sections are added and modified in the Federal Law of Work regarding Work Harassment
Presented by: Chamber of Deputies
Purpose: The reform defines workplace harassment as acts or behaviors at work that harm selfesteem, health, freedom, or safety, regardless of hierarchy Harassment is grounds for dismissal without employer liability, and employers must implement protocols to prevent it Unions are also prohibited from engaging in harassment. Employers may face fines for tolerating harassment, and conciliation is not required in harassment-related conflicts
Status: Presented to the plenary of the Chamber of Deputies
Draft Decree Adding Section VIII to Article 537 of the Federal Law of Work
Presented by: Chamber of Deputies
Purpose: It establishes that the National Employment Service will aim to create programs that provide young people with their first job, promoting their inclusion in the labor market.
Status: Presented to the plenary of the Chamber of Deputies
