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No United States presidential election has stirred up as much excitement around the world, including Mexico, as the upcoming election between President Trump and former Vice-President Joe Biden. The election results will have a significant impact on the United States. If Trump is victorious, little change in the style of government can be expected, as well as a continuation of the policies of his first four years. If Biden wins, substantial changes in public policy and a different approach to international relations can be expected. The anticipation is so high, that during early voting more than 75 million Americans have thus far exercised their right to vote early, prior to the November 3rd election date. President Trump himself has already voted early. As the Senate and House of Representatives are also at stake, the significance of this election is even is greater. If Biden wins, the political makeup of the Senate may change, and a Democratic majority may emerge. On the contrary, if Trump wins, his re-election could lead to the Republican party’s recovery of the House of Representatives. In Mexico, there is a general idea that the personal relationship between President Trump and President López Obrador would make Trump’s reelection desirable. Additionally, some argue that the good relationship between the current presidents of each country will lead U.S. democrats to have animosity toward Mexico if Biden wins. This reasoning is not very sustainable. The bilateral relationship between the two countries is so complex that the supposed sympathy or antipathy between the leaders may or may not be favorable to diplomatic matters; however, it will not determine the success or failure of such a relevant, broad, and deep relationship between two neighboring countries. Such deeply intertwined relationship truly depends on the millions of people from both countries who on a daily basis, and in all walks of life, form the economic, political, social, and cultural binomial Mexico-United States.
The Covid-19 pandemic seems to have cooled the political thermometer in Mexico. However, the proximity of the 2021 midterm elections has started to raise temperatures. On one hand, we have the unexpected and overwhelming triumphs of the Institutional Revolutionary Party (PRI) in the states of Hidalgo and Coahuila in elections for local congresses and city councils, in which the once invincible PRI regained momentum and prevailed over the National Regeneration Movement (“MORENA” by its acronym in Spanish) and National Action (PAN) parties. These triumphs were attributed to the good political work of the states’ governors, who are both affiliated with the PRI, and to the general disorder which exists within the ruling MORENA party. The MORENA party is currently in power of the federal government and has encountered a lot of conflict in selecting its leader, so its party members are conflicted and divided. In this regard, a selection process to select the leader of the national party is moving forward, with the intervention of the National Electoral Institute (INE), the highest electoral authority in the country to act as an arbitrator in the internal leadership contest. Three surveys were conducted to determine the winner among the final two contenders to lead the party: Congressman Porfirio Muñoz Ledo, probably the longest-serving and oldest active politician in the country, and congressman Mario Delgado, politically linked to Foreign Minister, Marcelo Ebrard, an important adviser to President López Obrador. In the last and apparently definitive survey, Delgado won with 58.6% in his favor and 41.4% in favor of Muñoz Ledo. Congressman Muñoz Ledo did not accept his defeat, so the political thermometer is expected to remain at a high temperature for the time being.
On September 4, 2020, Mexico published a new Decree requiring new forms to be used for requests and notices filed with its National Registry of Foreign Investments (“RNIE” by its initials in Spanish) in the Official Journal of the Federation. The new forms mandate the inclusion of more detailed information be provided in quarterly and in the annual RNIE economic reports. The following are the most significant changes:Important changes to the Quarterly Economic Report Form:• Copies of financial statements, as well as debtors and creditors' schedules, must now be provided.• A new form called "Geographical destination of the investment or origin of the divestment" is now mandatory.• A “State presence” form requires information regarding the presence of the Mexican company in other states throughout Mexico.• New specific forms require lists of information requested in the debtors and creditors' schedules, among others, which are mandatory when the accounts reported in the income and expenses module are for more than 20 million pesos.• All subsidiaries of Mexican holding companies domiciled in Mexico are not required to report changes in their capital accounts.Important changes to the Annual Economic Report Form:• The new form adds a specific space for companies to describe why they do not have employees, as well as to report jobs located outside the country.• The new form also requires companies to provide debtors and/or creditors schedules, regardless of the amount of their economic activity.• The annual form also calls for the filing of the “State presence” form requiring information pertaining to the companies offices or locations in other Mexican states.• A company that files a consolidated report will be deemed to have complied with the requirement in Article 35 of the Foreign Investment Law with respect to the annual renewal of the registration certificate issued by the RNIE, as well as the companies whose information was included in such consolidated report. Therefore, those companies whose information was consolidated in such report need not individually file the annual report.The Decree also sets forth the manner in which financial statements information must be provided for both the quarterly reports and annual economic reports. It further provides for the possibility of submitting reports and notices by email and states that the acknowledgment sent by the RNIE via email will be valid evidence of having submitted the required forms and that face-to-face meetings with RNIE officials will not be required. Notwithstanding the foregoing, information may also be filed in physical form, or through the RNIE’s electronic platform.
On October 28, 2020, updated financial indicators reflected:Peso/Dollar Exchange Rate: $20.8798 pesos per Dollar.Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed 37,393.71 points.Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 4.5215%.
On October 2, 2020, Decree 358 was published in the Official Journal of the State of Nuevo León, adding a second paragraph to article 2326 of the Civil Code for the State of Nuevo León (“CCNL”), which reads as follows:"Art. 2326.- If the use of the property is impeded only in part, the tenant may request a partial reduction in rent, based on the opinion of experts, unless the parties elect to terminate the contract, if the impediment lasts as long as the time set forth in the prior article.Tenants of real property conducting commercial activities whose use and enjoyment of such real property was disturbed as a result of the declaration of a civil protection or sanitary emergency by authorities which ordered the cessation of its commercial activities may be entitled to a reduction in rent for the duration of the emergency declaration and prohibition against opening their business, for the territorial district in which the property is located, according to the terms of the agreement between the lessor and the tenant, or in the absence of an agreement, however the competent authority defines."Article 2325 sets forth that “If due to acts of God or events of force majeure, the tenant is completely prevented from using the property rented, no rent will be incurred for the duration of the impediment, and if it lasts for more than two months, termination of the contract may be requested." Additionally, article 2327 establishes that "The provisions of the two prior articles may not be waived."Article 2292 of the CCNL distinguishes among three types of leases: residential, commercial and industrial. Considering such, it is clear that the legislation meant only to include commercial leases in the reform, and it is also noteworthy that legislators did not include a specific definition of the scope of the commercial activities that fall under this reform, instead referring to those parties that receive an order to cease their activities.The reform implies that due to the declaration of emergency by the civil protection or sanitary authorities, a commercial tenant who is prevented from operating has the right to request a reduction in rent for the time that it is prevented from opening its establishment, with such reduction to be as agreed between landlord and tenant, or in the absence of an agreement, as defined by the competent authority. Based on such reform, it can be understood that with respect to the determination of the percentage of rent reduction, the agreement between landlord and tenant prevails over the determination of the authority and in that sense, it is not an inalienable right for purposes of article 2327.The amended article does not provide for a time frame during which the landlord and the tenant must agree on the reduction, nor rules to determine its percentage. For this reason, the agreement between landlord and tenant entered into prior to the emergency may be considered valid, as it would be when entering into the lease agreement or an amendment thereto. In the absence of an agreement, the competent authority may determine the amount of the applicable rent reduction during the emergency.
As a result of the 2019 Mexican Labor Law reform and the signing of the USMCA, the Protocol for Validating Existing Collective Bargaining Agreements, which was published in the Official Journal of the Federation on July 31, 2019 (“Protocol”), entered into force on August 1, 2019. Based on such change, all unions in Mexico must validate their collective bargaining agreements within a maximum term of four years, which ends on May 1, 2023.The validation process involves unions consulting with their members and having them vote on whether to approve the contents of their collective bargaining agreement. It is important to note that wages under such collective bargaining agreements are reviewed on an annual basis, while the overall terms of the agreements are reviewed every two years. In order to comply with the validation requirement, and for unions to register and schedule their consultations, the Mexican Department of Labor and Social Welfare (“STPS” for its acronym in Spanish) created the online site Event Registration System for Validation of Collective Bargaining Agreements, which will be launched when the Federal Center for Labor Conciliation and Registration begins operations.Notwithstanding the above, due to the COVID-19 pandemic, Mexican unions’ ability to conclude the process of validating their collective bargaining agreements has been hampered by not being able to gather their union members to conduct the voting process. Therefore, to conduct this type of meeting, unions must not only comply with the legal requirements and those contained in the Protocol, but they must also comply with: (i) the Technical Guidelines for Health Safety in the Workplace Environment, published by the Department of Labor and Social Welfare on May 18, 2020; (ii) the Specific Technical Guidelines for the Reopening of Economic Activities, published in the Official Journal of the Federation on May 29, 2020; (iii) the Criteria for Vulnerable Persons Susceptible to Developing Complications or Dying from COVID-19 in the Reopening of Workplace Economic Activities, published by the Departments of Health and Labor and Social Welfare on July 17, 2020; and (iv) the protocols and other criteria published by local authorities of each Mexican state.It is also important to consider that these meetings may be held only when the Covid-19 signal light monitoring system of the city where the meeting is to take place is orange, yellow or green on the date designated for the meeting. Accordingly, unions will have to carefully schedule the voting, report in advance to the STPS when the vote is planned to take place, and must take into consideration that the meeting place guarantees accessibility, social distancing and protection of the safety and health of the unionized employees.
