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The effects of the COVID-19 pandemic have impacted Mexico and many other countries throughout the world. With that said, it appears the impact in Mexico has been delayed as compared to what has already happened in China, Italy and other countries. This led the Mexican government to design a precautionary strategy, which has not been entirely understood by Mexican society. Users of social media, the press and mass media outlets have been particularly critical of the measures, or lack thereof, to contain the pandemic. Mexican President Andrés Manuel López Obrador has faced harsh criticism for initially trying to maintain an optimistic attitude, initially rejecting specific policy proposals, such as the avoidance of physical contact through social distancing. Mexican health authorities have articulated the three stages that the pandemic will cycle through in Mexico: the first (importation) led authorities to try to prevent the spread by promoting hand washing and the avoidance of physical contact with others. The second, (community transmission) was then cited, with an emphasis on the official proposal to stay home. Because it was foreseeable that the cases of infection would increase, measures were taken such as suspending classes, promoting working from home and cancelling large events. The third and final stage (epidemiological) will affect thousands of people in various parts of the country and, as a result, drastic health protocols will be implemented, including a general and mandatory quarantine.The involvement of Mexico’s General Health Council, the constitutional body authorized to deal with health emergencies such as the current ongoing one in Mexico and throughout the world, will be of enormous help and is expected to promote a more calm attitude among the Mexican population. Notably, the Health Council is comprised of federal and state government officials, and includes the participation of universities, academics in the medical field, and scientists. The Health Council’s determinations will give much needed guidance and orientation to Mexico’s populace in light of the complications from this viral phenomenon, which is affecting the entire world.
The United States, Mexico and Canada Agreement (USMCA) is scheduled to enter into force on June 1, 2020. In a letter, dated March 30, 2020, the United States Senate urged Robert Lighthizer, United States Trade Representative, to seriously consider delaying the date the USMCA will enter into force, noting that the COVID-19 pandemic has impacted governments and businesses in such a way that will not allow enough time and resources to ensure a smooth transition from the North American Free Trade Agreement (NAFTA) to the USMCA.
The pandemic generated by COVID-19 has repercussions in all imaginable areas. Mexican politics are not exempt. The position of the Mexican government in the face of crisis has shown the political strength of the group led by President López Obrador. Regardless of the press, media and social media criticism, the Congress has seen slight opposition and few complaints. The PAN and PRI congressmen in the Mexican lower House of Representatives stated that social distancing measures should be coordinated with the governments of the 32 federal entities. PAN representatives specifically insisted that the measures adopted must be coordinated by the General Health Council, headed by the President of the Republic, in which federal and state officials participate, but also universities and scientific academies and members of the private sector in the health industry.To date, Mexico’s president has decided not to interrupt the routine followed and has not canceled or postponed any visits to different towns in the country to meet the people who receive him with enthusiasm. However, the entry of the General Health Council onto the political scene suggests that this constitutional body could initiate decision-making, avoiding the direct involvement of the president in actions that seem of little relevance to the people. In fact, the Mexican Constitution created this autonomous constitutional body so that the government could have an executive institution capable of preventing and reacting quickly and effectively to health problems that may arise.The General Health Council is authorized to issue, according to the Constitution, general provisions of a mandatory nature throughout Mexico’s territory that can be converted into public policies and implemented by the country’s health authorities. The government’s decision to convene the General Health Council to deal with, review and execute measures to face the problems caused by the presence of COVID-19 is good news, since it will depoliticize the problem and to turn it into an exclusively technical one. Politics in times of crisis should serve to solve the problems of a society, not to make them more complicated. All want the measures adopted by the government to have the effectiveness that a problem of this size can cause to the safety of the country, and for the health and well-being of its inhabitants.
On April 6, 2020, updated financial indicators reflected:
Peso/Dollar Exchange Rate: $24.6850 pesos per Dollar.
Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed at 34,381.56 points.
Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 6.6850%
The reforms to the Mexican Commerce Code, published on January 25, 2017 and amended by means of a decree dated March 28, 2018, set forth the time periods for transitioning from the traditional written trial system to commercial oral trials. Beginning January 26, 2020, lawsuits with an amount in controversy of up to four million pesos (approximately $210,500 U.S. Dollars) will be tried as Expedited Commercial Oral Trials, and those with amounts in controversy above such amount will be tried as Expedited Commercial Written Trials. On the other hand, all commercial trials for which a special trial procedure is not provided by applicable law must be tried as Commercial Oral Trials, irrespective of the amount in controversy. The principal objective of both expedited and ordinary commercial oral trials is to reduce the amount of time in which a commercial dispute is resolved. Therefore, certain novel measures will be implemented, such as the inability to appeal a judgment rendered pursuant to these new trial procedures. An unfavorable judgment rendered by means of the new trial procedures may be challenged solely by means of certain procedures, such as a direct extraordinary constitutional appeal (“amparo directo”), among others. The foregoing rules are intended to consolidate Mexico’s legislative and judicial efforts throughout the last decade so that oral commercial trials become a reality in most cases, and, as a result, the time it takes to resolve a commercial dispute is substantially reduced for the benefit of commercial litigants.
Economic regulators exist to correct the failures of certain markets, and thus promote their efficient development. These regulatory agencies have multiplied in recent decades throughout the world in order to protect consumers and users of certain products and services against, for example, conditions involving natural or legal monopolies. The goal has been to create a level playing field for regulated companies to compete in a fair environment and to guarantee open access to network infrastructure.In Mexico, the purpose of the Mexican Energy Regulatory Commission (“CRE” by its acronym in Spanish) is to promote the efficient development of midstream and downstream activities in the hydrocarbons and petroleum sector, as well as in the value chain of the electricity industry. Despite the fact that private investment was allowed as part of the energy reform of 2013-14, the Mexican government decided not to privatize the existing public entities operating in the sector, i.e., not to sell their assets. Instead, the purpose of said reform was to convert them into productive State-owned enterprises that would compete under equal circumstances against private companies.In recent months, Mexico has seen a reaction against equal competitive conditions by its State-owned enterprises Mexican Petroleum (“Pemex”) and the Federal Electricity Commission (“CFE”). These companies have not promoted constitutional or legal reforms; rather, they have acted under the authority and tone set by the current administration and have submitted their own respective lists of requests to the CRE.After Pemex Industrial Transformation (“Pemex TRI”) officially requested a package of strengthening measures, on December 16, 2019, the CRE issued Resolution A/043/2019, which overruled the methodology to determine prices for first-hand sales of refined products and sales made at storage terminals. With this Resolution, the CRE has eliminated a measure that mitigated the dominant power of Pemex TRI in those markets. This is true despite a transitory provision of the Hydrocarbons Law mandating that asymmetric regulation should continue until “a greater participation of economic agents is achieved”. It is surprising that the CRE considered that such goal had been achieved, when, for example, in November 2019 Pemex and its subsidiaries imported 82% of gasoline and 64% of diesel through points of entry to Mexican territory.Further, at the end of December 2019, a document sent by the CFE to the CRE entitled “Petition Document” was made public. Based on the document’s contents, the Financial Times published an article with a striking headline predicting the dismantling of the Wholesale Electricity Market (“MEM” by its acronym in Spanish) in Mexico. In truth, while the Petition Document addresses certain aspects of the MEM, several of the listed actions would harm, above all, projects with contracts executed under the Electricity Public Service Law of 1992, particularly self-supply corporations.One of the most sensitive issues addressed in the Petition Document is the request to update the fees charged for electricity transmission service (“post stamp wheeling”), which the CFE applies to self-supply corporations that use renewable energy sources. Such fees were established in 2010 by the CRE to comply with the law of 2008, whereby the Mexican government determined the public benefit of deploying renewable energy and clean technologies in order to promote energy sustainability and reduce dependence on hydrocarbons. This measure, among others that were strictly regulatory in nature, was a determinant factor for the investment decisions that led to the initial flourishing of wind energy generation in Mexico (approximately 2,000 MW in operation in 2014).So far the political defense of the progress made in energy matters during the last three decades, by those who conceived them at the time, has been notably weak. In any case, if the CRE addresses certain requests from Pemex and the CFE, and thereby violates the rights of other companies, such companies would have valid legal arguments to promote or defend their interests before Mexican courts.
On January 6, 2019, Mexico’s federal congress enacted a law detailing how it will create and regulate a new Federal Mediation and Labor Registry Center (the “Federal Center”).The Federal Center is expected to begin operations during the fourth quarter of 2020. The main purpose of the Federal Center is to oversee mediation in federal labor cases involving individual workers who file claims against their employers, as well as to oversee collective bargaining issues. Additionally, the Federal Center is tasked with the following matters:
The Federal Center will be headquartered in Mexico City, with satellite offices established throughout Mexico’s 32 states. By instituting the Federal Center, the government seeks to resolve more labor disputes through mediation, thereby reducing the number of labor lawsuits.In addition to these purposes, the government intends to achieve greater efficiency and better control of unions and collective bargaining agreements by comprehensively regulating collective bargaining agreements, all while protecting workers’ rights to free union association.As the date approaches for the Federal Center to begin operations, it is important for employers to understand and comply with the new obligations and procedures to register and renew collective bargaining agreements, as well as with the registration and updating of internal work rules.
On December 13, 2019, the Plenary Third Circuit in Civil Matters issued an opinion contradictory to opinion PC.III.C.J/50 C (10a.), entitled: “Ordinary and default interest in commercial matters. Such must be analyzed independently in order to determine whether they are usurious, even when they are incurred simultaneously and, therefore, coexist.” In said opinion, the court ruled that, in commercial matters, when ordinary and default interest obligations exist at the same time, the analysis to determine the issue of whether interest is usurious must be assessed separately, that is, without adding both types of interest to each other. The court made such determination because it considered the characteristics of these types of interest to be different and because default interest, being a sanction, is usually higher than ordinary interest, which typically corresponds to the profit earned by a creditor for issuing credit.
