Weekly Report 77

GENERAL SITUATION IN MEXICO

Weekly Review # 77 I October 20, 2021

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MANUFACTURING INDUSTRY AMCHAM: ELECTRICITY INITIATIVE RISKS REGIONAL PROSPERITY In the midst of a process of economic reactivation in which Mexico and the United States are making joint efforts to relocate and develop regional supply chains, the electricity counter-reform proposed by President Andrés Manuel López Obrador will lead to Mexico losing the opportunity to be a thriving and competitive economy, and will compromise the prosperity of the North American region, warned the American Chamber of Mexico (AmCham).

More than 1,000 U.S. companies operating in Mexico expressed their concern about the effects of the proposed constitutional reform on energy, as it contradicts the commitments established by Mexico in the Mexico-United States-Canada Treaty (USMCA) by reducing electricity supply options.

If the electricity reform is approved, “it would affect Mexican families and industry due to its environmental and economic repercussions and its compliance with international commitments, particularly the Treaty between Mexico, the United States and Canada (USMCA),” said the private organization to the legislators.

AmCham stated that Mexican consumers need reliable energy from diverse sources and at affordable prices; however, the constitutional energy reform would affect Mexico’s competitiveness and is contrary to the spirit of the USMCA.

AmCham added that Lopez Obrador’s initiative generates concern among private sector companies, raises the risk of shortages, and could increase the final cost of energy in Mexican homes. Also, increase the energy costs of production chains on Mexican soil and negatively affects investor confidence.

Private sector investments complement those of the public sector and contribute to energy security, the country’s competitiveness, and the integration of North America, so the American Chamber called on Congress to focus energy legislation on: “economy and consumer health; the rule of law; sustainability; and certainty in the business environment.”

“We are convinced that the best way to strengthen the country’s energy security and competitiveness is through the complementary participation of different companies from the public and private sectors that, in an environment of free competition and stable rules, compete to offer clean, reliable, resilient and affordable energy to Mexican homes and businesses,” he said.

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MANUFACTURING INDUSTRY LOPEZ OBRADOR SIGNS DECREE TO REGULARIZE “CHOCOLATE” CARS

President Andres Manuel Lopez Obrador signed this Saturday 16th the decree that regularizes the millions of “chocolate cars,” as vehicles entering Mexico illegally from the United States are called in Mexico.

In Ensenada, in the northwest of the country, the president signed the “Agreement for the regularization of used vehicles of foreign origin,” which will affect Baja California Sur and the northern border states: Baja California, Sonora, Chihuahua, Coahuila, Nuevo Leon, and Tamaulipas.

The “chocolate” car controversy began in 2019 when Morena deputies proposed legalizing them with the argument of collecting an additional 50,000 million pesos for 18 million existing irregular vehicles.

Chambers of the automotive sector, such as the Mexican Association of Automotive Distributors (AMDA), have questioned these figures and have warned of a drop of more than 30% in domestic sales.

The president of the Mexican Confederation of Employers (Coparmex), José Medina Mora, warned that this agreement is a “blow” to the automotive sector, the country’s finances and especially “an attack” against companies and 2 million jobs in Mexico, just at one of the most adverse moments of the Mexican economy.

Mexico has issued 19 decrees to regularize used vehicles of foreign origin in the last 50 years, and “all have failed,” due to the harmful effects on the domestic market, both in terms of employment and investment, warned Guillermo Prieto Treviño, executive president of the Mexican Association of Automotive Distributors (AMDA).

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GOOD NEWS US BORDER REOPENS TO NONESSENTIAL TRAVEL ON NOVEMBER 8; VACCINATION REQUIRED.

Travelers entering the US by air will also need to be vaccinated after that date.

On Friday, the United States land border will reopen to nonessential travelers fully vaccinated against COVID-19 on November 8, Foreign Minister Marcelo Ebrard said.

His announcement came two days after the United States announced it would reopen its land borders in early November for nonessential travel from Mexico and Canada.

Vehicular, rail, ferry, and pedestrian border crossings from Mexico and Canada have been limited to essential travel since March 2020 as part of measures to combat the spread of the coronavirus. In April, Mexico relaxed its border restrictions but didn’t strictly enforce the closure to nonessential travel before that.

Ebrard said on Twitter that the United States government had informed Mexico of the reopening date. “It will apply for vaccinated people,” he wrote.

People who have continued to cross the border for fundamental reasons during the pandemic, such as truck drivers and students, will have to show proof of vaccination starting in January.

Meanwhile, White House Assistant Press Secretary Kevin Munoz announced Friday morning that the requirement for incoming air travelers to be fully vaccinated would also take effect on November 8.

“The US’ new travel policy that requires vaccination for foreign national travelers to the United States will begin on November 8. This announcement and date apply to both international air travel and land travel.

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GOOD NEWS This policy is guided by public health, stringent, and consistent,” he wrote on Twitter.

Air travelers will also have to present a negative result from a COVID test performed no more than 72 hours before traveling, but people crossing the land border will be exempt from that requirement.

United States-bound travelers need to be vaccinated with World Health Organization-approved vaccines, a requirement that precludes the entry of millions of Mexicans vaccinated with the Russian Sputnik V and Chinese CanSino shots.

Nevertheless, the upcoming reopening is good news for residents of Mexican border communities, many of whom crossed the border frequently before the pandemic to go shopping, visit family and friends and carry out other activities deemed nonessential.

Manuel Lira Valenzuela, president of the Sonora branch of the national restaurant association Canirac, said that restaurants in the northern border state would be able to reduce their costs by once again purchasing supplies in the United States. In contrast, Julio Cesar Leon, head of the Nogales branch of the

SOURCE: today in-24 com / El Financiero

National Chamber of Commerce, said the border reopening would boost the economy on both sides of the border.

“It’s the good news we were waiting for; this has to reactivate the economy because we’ll have more freedom of movement, both from the United States to here and vice versa,” Leon said.

However, some business owners in Sonora had misgivings about the reopening, asserting that their trade would result, in fact, decline.

In July, the Confederation of Chambers of Commerce, Services and Tourism (Concanaco) said that Mexicans who would typically shop in the United States had spent an additional 45 billion pesos (the US $2.2 billion) in the Mexican border cities since the beginning of the pandemic.

The inability of many Mexicans to cross into the United States benefited businesses in Mexican border cities from Tijuana in the west to Matamoros in the east, said Julio Almanza, a Concanaco vice president in the northern border region.

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KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference October 13-19, 2021

COVID-19 SITUATION Undersecretary Lopez Gatell reported that there has been a 24% reduction in active cases of coronavirus and that there have already been several weeks of continuous decline in these. Regarding vaccination, during the weekend, 404,436 doses were applied.

The government also announced that the country already has all the vaccines to achieve the goal of vaccinating everyone over 18 years of age by the end of October. In total, 69,301,136 doses have been applied.

REOPENING OF THE NORTH BORDER The President announced that the opening of the northern border was achieved. Foreign Minister Marcelo Ebrard complemented by noting that land and air travel to the US will be allowed for vaccinated people from the first days of November (there is no definitive date yet).

DECENTRALIZATION OF MINISTRIES During this and next year, various state ministries will be changing locations. Among them, the Ministry of Welfare to the State of Oaxaca; Secretary of Public

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

Education in Puebla; Secretariat of Communications and Transportation to San Luis Potosí; Secretary of Culture to Tlaxcala; PEMEX to Ciudad del Carmen, Campeche; Secretariat of Agriculture and Rural Development to Ciudad Obregón, Sonora.

JOHN KERRY’S VISIT The President mentioned that, in the company of John Kerry, sent by the President of the United States, he visited a plantation of the Sembrando Vida program in Palenque, Chiapas, to evaluate the activation of this program in Central America. He pointed out that the Sembrando Vida program aims to plant 1,100 million trees and that more than 2,000 jobs are being created.

Also, during the visit, the President mentioned that Mexico is going to present a commitment proposal at the climate change summit that will be held in November.

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MEASURES TAKEN

BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California remains considered as medium-risk or yellow light. Official reports confirmed 2,063 active cases in the last week, with hospital occupancy at 53.76%. The vaccination plan continues this week by applying the first and second doses of Astra Zeneca, Pfizer, and Sinovac to the adult population in Tijuana. Baja California received 14,040 doses of Pfizer for children 12 to 17 years of age with comorbidities.

SONORA The State of Sonora is considered a low-risk or green light with only six municipalities in the medium-risk tier or yellow light and one municipality out of 72 in the high-risk tier or orange light. 34 new cases were reported in the past 24 hours. The registration for vaccination in adolescents between 12 and 17 continues directly on the government portal.

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MEASURES TAKEN

BY STATES IN MEXICO

COAHUILA Coahuila’s application of Covid-19 vaccines for children between 12 and 17 years of age began last Monday. According to the State Secretary of Health, 4,115 minors with comorbidities related to coronary diseases, severe lung diseases, pregnant women, among others, will be immunized.

TAMAULIPAS The Delegation of Programs for the Development of Tamaulipas reported that the application of the vaccine against Covid-19 will be carried out in children and adolescents between 12 and 17 years of age. From Tuesday, October 26 to Friday, October 29, the vaccination day for children and/or comorbidity will take place in eight of the 43 municipalities of Tamaulipas.

NUEVO LEON Governor Samuel Garcia Sepulveda announced that 600,000 vaccines against Covid-19 will arrive in Nuevo Leon to reactivate the state’s economy.

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MEASURES TAKEN

BY STATES IN MEXICO

QUERETARO According to the monitoring system and protocols implemented in each school, 269 people carrying the virus have been detected and channeled, so there has not been a single outbreak of contagion in any school. On the other hand, the voluntary return to school is still in force in the state. It is safe, so he called on parents to give their children the opportunity to continue with their activities if they have assimilated the COVID training that the same Ministry has disseminated. The state delegation of the Ministry of welfare has asked people who have not received any doses of the Covid-19 vaccine to wait for a new call since they are currently only administering the complementary dose to complete the immunization schedule. The agency asked those who received their first dose of the AstraZeneca vaccine in September, in the backlog call, to wait for the call for their second dose. They pointed out that it is impossible to receive the second dose on the current days since an interval of 8 to 12 weeks must be complied with to receive the second application. During the week of October 18 to 24, the second dose will be applied to people between 18 and 29 years of age residing in the municipality of Queretaro.

JALISCO Seven weeks after the return to classes, the strategy designed for returning to the classroom in Jalisco continues to work, as the reported incidence of COVID-19 infection in schools maintains a stable trend. The incidence of active cases of COVID-19 detected in elementary schools continues to be minimal, with only 0.0001 percent of students, that is, 38 active cases; 56 cases were reported among educational personnel, equivalent to 0.0049 percent of the total staff. Cases were identified in 83 schools, which corresponds to 0.62 percent of the 13,415 basic education schools in the state. According to the epidemiological follow-up carried out by the Jalisco Ministry of Health (SSJ), in coordination with the Jalisco Ministry of Education (SE), this week it is reported that in the age group of students from 3 to 14 years old (basic education), 189 cases started symptoms in the last 15 days. Only 38 were identified in schools. Most of the positive cases in this age range occurred in the AMG with 134, given that this area has a higher demographic concentration.

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MEASURES TAKEN

BY STATES IN MEXICO

AGUASCALIENTES The pandemic and the respiratory infections derived from the sudden temperature changes are combining to put the main hospitals in the city and the interior municipalities in trouble, to the extent that the General Hospitals of Pabellón de Arteaga and Calvillo are operating at 100%.

The same is happening in intensive care areas of Hospital 1 of the IMSS and Hospital Hidalgo, according to the Sunday report of the Information System of the IRAG Network. Coronavirus infections continue to rise, closing the week with an accumulated 607 and 48 more from Saturday to Sunday, which brings the total number of positive cases to 35,106, many of which are complicated and reach the hospitals, in addition to the fact that respiratory problems typical of the season have already begun to skyrocket. The incidence of Covid, flu, pneumonia and other respiratory problems increases the demand for beds in practically all public hospitals. Regarding the occupation of ventilator beds located in the critical areas of the hospitals, IMSS 1 remains at 100% and Hidalgo at 80%, which is already a saturation level, while ISSSTE reported that half of its ventilator beds in the Covid area were occupied. Regarding the incidence of the Covid-19 pandemic, Aguascalientes updated its number of infections to 35,106, adding the 48 confirmed the day before, while active cases decreased from 775 to 719 and recovered cases.

GUANAJUATO Guanajuato´s Ministry of Health reported that the state ranks third nationally in terms of active cases of COVID-19, with a total of 4,128, equivalent to 11.23% of the national total (36,750). The state is below Tabasco and Mexico City. At the regional level, after Guanajuato, Aguascalientes is in sixth place in terms of incidence of active cases, followed by Querétaro in eighth place, San Luis Potosí in ninth place, and Zacatecas in 21st place, making it the state in the Midwest with the fewest active cases of coronavirus. The COVID-19 infections in Guanajuato indicate 183,953 accumulated cases, along with 12,734 deaths due to this disease. In addition, besides the more than 4,000 active infections, there are 596 under investigation. As of Sunday, October 17, the state reported a 23.68% hospital occupancy rate, with 379 patients admitted for Respiratory Infection (IRAG), of which 219 have been confirmed as carriers of the virus. As for the condition of the admitted patients, 140 are in serious condition, and 57 are critically ill.

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MEASURES TAKEN

BY STATES IN MEXICO

STATE OF MEXICO Authorities of the Ministry of Health of the State of Mexico (Edomex) also confirmed the transition to Green Epidemiological Traffic Light, which will reactivate different socio-cultural activities with new Covid-19 prevention guidelines. According to the authorities, the change was due to the progress in vaccination, the decrease in the rate of hospitalization for Covid-19, as well as the number of confirmed cases and transmission of the virus in both sectors of the population.

CDMX For the first time since the beginning of the pandemic, Mexico City authorities activated the green color in the Covid-19 epidemiological traffic light, which translates into a greater capacity in closed places and zero restrictions on the capacity of people in outdoor events.

However, Mexico continues to face the Covid-19 pandemic, adding 96 new cases today, accumulating a total of 3 million 758,469 infections.

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ECONOMIC GROWTH IN MEXICO MINISTRY OF FINANCE AND PUBLIC CREDIT (SHCP) HIGHLIGHTS REBOUND IN INVESTMENT ENVIRONMENT The investment environment in North America has improved. It will allow for greater commercial exchange, assured Rogelio Ramirez de la O, head of the Ministry of Finance and Public Credit (SHCP), during the annual meetings he held with the International Monetary Fund (IMF) and the World Bank (WB) in Washington.

During his visit, Ramirez de la O participated in the plenary meeting of the IMF’s International Monetary and Financial Committee and presided over the annual meeting of the Board of Governors of the World Bank and the IMF. According to the official, these new investments will benefit some strategic sectors of the economy while at the same time allowing for the creation of employment.

According to Ramirez de la O, the reactivation of the HLED High-Level Economic Dialogue between Mexico and the United States will also strengthen supply chains and competitiveness. He stressed that one of the objectives in this new stage is to promote a sustainable economy and foster social development in southern Mexico and Central America.

This will generate jobs and opportunities that will contribute to closing social development gaps. He added that some states in the southern region are already seeing a recovery in employment levels.

In September, the Mexican Social Security Institute (IMSS) reported the creation of 174,96 formal jobs, the highest figure for a single month since records have been kept.

SOURCE: El Sol de México

Job creation represented an increase of 0.9 percent over the previous month, marking the ninth consecutive month of increases. On Monday, in his morning press conference, President Andrés Manuel López Obrador assured that the formal jobs lost due to the pandemic had already been recovered. Part of the recovery results from the administration’s flagship projects, such as the Mayan Train or the Dos Bocas refinery.

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TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON OCTOBER 18, 2021 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 1,413

SOURCE: https://www.gob.mx/salud/

CONFIRMED CASES: 3,758,469

NEW DEATHS REPORTED: 96

CONFIRMED DEATHS: 284,477

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INCREASE OF CONFIRMED CASES SINCE THE FIRST REPORT MAP WITH THE DISTRIBUTION OF THE INCIDENCE RATE OF ACCUMULATED CASES OF COVID-19 BY ENTITY OF RESIDENCE.

National rate 24.92

0 to 10.0 (4 states)

40.1 to 50 (3 states)

10.1 to 20 (10 states)

50.1 to 60 (2 states)

20.1 to 30 (7 states)

60.1 to 70 (1 states)

30.1 to 40 (4 states)

>70 (1 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of October 15, 2021, globally there have been reported 239,437,517 confirmed cases (422,625 new cases) of COVID-19 and 4,879,235 deaths (7,300 new deaths*). Lethal rate: 2%. In the last 24 hours, 422,625 cases and 7,300 deaths were reported globally.

SOURCE: https://www.gob.mx/salud/

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TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION

BY REGION AS OF OCTOBER 18

DEATH INCIDENTS IN POPULATION

BY REGION AS OF OCTOBER 18

SOURCE: https://www.gob.mx/salud/

GLOBALIZATION ON TRIAL

MONICA LUGO Institutional Relations Director

Since last year, there has been an unparalleled increase in global shipping costs. There are several reasons why this phenomenon is happening such as the effect of the pandemic, which has caused the production of certain products to stop or decrease, thus generating a drop in the supply of raw materials and final consumer products. In addition, many of the most important ports have reduced their activity or have closed to avoid pandemic outbreaks. On the other hand, an increase in the demand for consumer goods, which has deepened with the ease of sales generated by e-commerce.

The high degree of integration of global value chains generates a domino effect in which, when the cost of transportation is altered, this impacts the final production of products and affects prices for the end consumer. It is estimated that approximately 80% of the world’s traded goods are transported by sea, so an increase in transportation will inevitably lead to an increase in prices. This is a clear example of how disruptions in global value chains affect us on a day-to-day basis. Some analysts estimate that many supply chains facing these challenges, such as increased transportation costs and input availability, will not survive the pandemic. However, factors such as economic protectionism (exacerbated by this crisis), nearshoring, and alternative means of transportation have shown that global value chains are adapting to the new reality. Those who show creativity and flexibility will undoubtedly survive. Now more than ever, it is essential to strengthen value chains and develop, together with governments, short- and longterm public policies that will enable them to survive this reality and become more competitive.

Contact us for detailed information. We are ready to assist you with your supply chain strategy.

INSTITUTIONAL RELATIONS

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EHS

LABOR

17 COVID-19 VACCINE BOOSTER FAQS When can I get a COVID-19 vaccine booster if I am NOT in one of the recommended groups?

Additional populations may be recommended to receive a booster shot as more data become available. The COVID-19 vaccines approved and authorized continue to be effective at reducing the risk of severe disease, hospitalization, and death. Experts are looking at all available data to understand how well the vaccines are working for different populations. This includes looking at how new variants, like Delta, affect vaccine effectiveness.

What should people who received Moderna or Johnson & Johnson’s Janssen (J&J/Janssen) vaccine do?

The Advisory Committee on Immunization Practices (ACIP) and CDC’s recommendations are bound by what the U.S. Food and Drug Administration’s (FDA) allows. At this time, the Pfizer-BioNTech booster authorization only applies to people whose primary series was the Pfizer-BioNTech vaccine. People in the recommended groups who got the Moderna or J&J/Janssen vaccine will likely need a booster shot. More data on the effectiveness and safety of Moderna and J&J/ Janssen booster shots are expected soon. With those data in hand, CDC will keep the public informed with a timely plan for Moderna and J&J/Janssen booster shots.

DAVID ANTUNEZ Environmental, Health, and Safety Director.

FROM WORK FROM HOME TO WORK FROM ANYWHERE Digital transformation and the extensive use of remote work during the pandemic have accelerated the appearance of a new type of worker: The digital nomads.

Digital nomads use new technologies to conduct their work activities. Such workers work remotely and can choose to work from different locations, either at home, coffee shops, co-working spaces, vacation destinations, or simply from other countries while traveling.

Employers must understand that digital nomads are already here, and some of them already work for us. They are not a futuristic idea of workers; they are a new generation of workers we already collaborate with.

Companies should start differentiating between “Work from home arrangement” and “Work from Anywhere policies” to attract and retain the talent of the new era.

ALVARO GARCIA HR, Vice President

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