The Ford Mustang became a cultural icon, forever associated with the decade of the 1960s. It gained unprecedented acceptance in Mexico after it was first produced in 1964. With its distinct styling, the Mustang forms an important part of the Ford brand and the history of Mexican motoring. In the 1920s, the famous Ford Model T played a crucial role in Mexico City’s modernization. Given that Mexico was a natural market for the expansion of American industry, in 1925, the Ford Motor Company, S.A. inaugurated its plant and facilities in Mexico City, becoming the first automaker to assemble finished autos in this first plant. The Ford Model Ts had remarkable success and were popularly known as “Fortingos.” While many were used as taxis, many more were acquired by Mexican drivers for personal transport. As the final text of the Mexico-United States-Canada Trade Agreement (USMCA) was being completed and signed, Ford Motor Company decided to manufacture its new electric-powered Mustang in Mexico. The decision points to high expectations that the USMCA will be approved by the U.S. Congress, which will enable trade relations between the two countries to strengthen. The electric Mustang also confirms Detroit’s commitment to produce cars powered by electricity. The Mustang Mach E, designed as an SUV, faces the challenge of convincing consumers to pay the additional cost of a vehicle powered by batteries, compared to the somewhat lower cost of a gasoline-powered vehicle. The announcement of Ford’s investment in Mexico provides evidence of the advantages of trade arrangements between the two countries and highlights the importance of economic cooperation and free trade.
The approaching year-end marks the first anniversary of Mexican President Andrés Manuel López Obrador’s (AMLO) administration. What stands out most about his tenure so far is the decided shift in policy direction away from that positions to which Mexican society had become accustomed. From the beginning of his administration, AMLO stated that he would bring change to Mexican politics. This change affected all areas of Mexican society, from social and economic to cultural matters.2019 will be known for the stark polarization between defenders and detractors of the new policies. Such polarization indicates a climate of growing social tension among Mexicans. Fortunately, Mexico’s government and institutions are mature enough to maintain civility and the freedoms that guarantee democratic debate and participation, which can be seen in the absolute freedom enjoyed by the Mexican press and media. The opposition has been able to express themselves without reprisals, and it appears not a single act of repression has occurred against those who oppose the administration’s views.2019 has seen large contrasts, although it is not yet time to make definitive evaluations of the administration’s first full year. On one hand, several of the president’s decisions were badly received by society and have been harshly criticized. Notable examples include cancellation of the construction of Mexico City’s new airport planned to be built on Lake Texcoco, which will now be replaced by another airport (Santa Lucia), on which construction recently started. Another example is the difficulty many companies have had in navigating transactions with the federal government or the obstacles presented by various investment projects, including those in the energy sector. While criticisms of AMLO may be common , there are also signs that his decisions have received society’s approval. Among the decisions that have been almost unanimously applauded are the fight against corruption, austerity measures in government spending and increased accountability of federal authorities. Another interesting change in political life is the president's decision to hold daily morning press briefings to explain to assembled reporters and the general public the rationale for certain decisions or to clarify doubts that can arise on a daily basis.While there is concern about the slowdown of the country's economic growth, Mexican economic indicators have remained reasonably stable. Final approval of the USMCA is expected to boost direct foreign investment in Mexico, which is necessary for technological innovation and the creation of jobs and wealth. Similarly, the government’s decision to pursue equality among all societal groups is also positive, promoting greater economic participation by women and youth, and supportive of vulnerable groups such as the elderly, indigenous peoples and people in extreme poverty. However, widespread concern remains about violence in several regions of the country, and there has been little substantive progress in strengthening the rule of law. Without doubt, these factors, both good and bad, affect Mexico´s political life. This year was marked by the constant presence of the president and an unfortunate paralysis of political parties, which continue to remain at odds on minor disputes and be tied up in internal conflicts. In 2020, important new administration proposals will be further clarified and all of Mexico hopes they will result in a vigorous and thriving benefit for the country.
Good news regarding Mexico’s electricity sector has been in short supply since late last year. Instead, the electricity industry has witnessed a series of controversial governmental decisions, which in certain cases clearly contradict the principles of Mexico’s 2013-2014 electricity reform. Such decisions included: exertion of unjustified political pressure against the former President of the Energy Regulatory Commission (“CRE” by its acronym in Spanish); the appointment of five new CRE Commissioners whose profiles and Senate confirmation hearings were criticized by both the general public and industry specialists; modifications to the strict legal unbundling of the Federal Electricity Commission (“CFE” by its acronym in Spanish); the cancellation of two proceedings to build transmission lines in Oaxaca and Baja California; and the suspension of auctions of financial transmission rights.However, the highest profile news was the announcement by the National Center for Energy Control (“CENACE” by its acronym in Spanish), back in February 2019, of the cancellation of the fourth long-term auction. Such caused a paralysis for a large number of clean energy generation projects in the country, as well as the suspension of the most important mechanism that Mexico has for meeting clean energy goals and its resulting contribution to climate change mitigation. At the end of September 2019, the Mexican government sent a different message when the head of the Department of Energy (“SENER” by its acronym in Spanish) made several statements that caught the sector by surprise, this time in a positive way. The Secretary of Energy noted that a fourth long-term auction was likely to be held, and that it would occur "as soon as possible", but would be subject to two conditions. To paraphrase, the conditions are that the future auction would: (i) be held as permitted by congestion in the National Transmission Grid; and (ii) be regional, unlike the previous auction, “in order to achieve territorial balance”. Despite the conditions and the lack of a specific date for implementation, these statements were well received by the sector.Unfortunately, the positive mood was short-lived. A few days after those statements were made, two new headlines came out and resonated quite negatively. First, on October 7, 2019, SENER sent to the National Commission for Regulatory Improvement (“CONAMER” by its acronym in Spanish) a draft of the Resolution amending the Guidelines that establish the criteria for the issuance of clean energy certificates (“CELs” by its acronym in Spanish) and the requirements for their acquisition (the “Resolution”). The Resolution was published on October 28, 2019 in the Official Journal of the Federation and became effective the next day. The second headline centered on the appearance of the CFE General Director before the Mexican federal House of Representatives on October 10. The stated objective of the Resolution is to convert grandfathered power plants into creditors of CELs. This means that the CFE’s old clean power plants, most of which are hydroelectric, but also some geothermal and nuclear, will receive CELs from the CRE. This is in contradiction with the objective of CELs, which is to incentivize the growth of new clean generation plants, in addition to the capacity that existed prior to the electricity reform.The Resolution, which was subject of at least 60 comments on the CONAMER website, presents several problems, among which are the following: (i) it favors the CFE, which is already the largest participant in the wholesale electricity market; (ii) it is a seemingly deceptive way to accomplish the clean energy goals that Mexico has set forth; (iii) it breaches the promise of the current administration not to modify the energy legal framework within its first three years; and (iv) it implies potential manipulation of the market owing to the oversupply of CELs and its possible depreciation, which as a practical matter could nullify the incentive for new clean energy projects.On the other hand, the CFE General Director appeared before the House of Representatives and pointedly stated, among other things, that: (i) clean energy is too expensive because it requires backup from conventional power plants; (ii) CFE, as a State company should generate more electricity and such can be accomplished mainly with the modernization of its hydroelectric plants; and (iii) neither medium nor long-term auctions are necessary for CFE to acquire electricity and associated products. If one can conclude anything from the above, it is that the landscape for clean energy in Mexico has become more complicated. Many hope the current administration will take into account legitimate concerns from stakeholders and, upon greater reflection, will reconsider the role of clean energy projects’ development in promoting domestic investment and employment, as well as in addressing climate change responsibly.
Mexican Official Standard NOM-035-STPS-2018 (“Standard 035” or the “Standard”) entered into force on October 23, 2019 in order to establish rules to identify and prevent psychosocial risk factors in the workplace, as well as to achieve a positive work environment in all workplaces.
Standard 035 defines psychosocial risk factors as those that may cause anxiety, sleep problems, severe stress or adjustment disorders resulting from an employee’s job duties, work hours or exposure to traumatic events or workplace violence.
The Standard sets forth numerous obligations for employers, some of which are mandatory from the time the Standard entered into force, and others that will be mandatory beginning in October 2020. The following is summary of the most relevant obligations.
Mandatory obligations beginning in October 2019.
• Establish a policy to prevent psychosocial risk factors; post such in a visible place and distribute.
• Implement measures to prevent and manage psychosocial risk factors.
• Identify employees who have been exposed to severe traumatic events at the workplace, using a questionnaire that is included in the Standard.
• Establish safe and confidential mechanisms to receive complaints from employees.
• Inform employees as to the prevention policy, measures and actions to prevent and manage risk factors, as well as regarding potential health effects due to exposure to risk factors and the procedures to submit complaints.
Mandatory obligations beginning in October 2020.
• Identify and analyze psychosocial risk factors and assess the company’s organizational environment. For such purpose, employers must take into consideration work conditions that require a significant effort to adjust, work-loads, work hours and rotating shifts, as well as duties that interfere with employees’ family life, among other factors.
• Conduct medical exams and psychological evaluations for employees who have been exposed to workplace violence and/or psychosocial risk factors.
• Keep records of results of assessments and evaluations, corrective measures implemented and of employees who are clinically evaluated.
It is important to undertake the necessary steps to comply with the obligations set forth in Standard 035, as it is expected that labor authorities will soon begin to verify compliance with the new requirements.
Mexico’s Sixth Collegiate Court on Labor Matters of the First Circuit recently published opinion I.6o.T. J/48 (10a.) entitled, “Paystubs issued electronically without the employee's signature. Such electronic paystubs are valid for proving the items and amounts reflected therein.” In its opinion, the Court held that paystubs issued electronically, which are not signed by the employee receiving pay or salary, are valid to prove the amounts and items stated in the electronic paystubs and concluded this was consistent with Mexican customary law and practice. To reach such decision, the Court considered that the need to avoid making cash payments has caused employers to rely on direct bank deposits to pay their employees. Based on the foregoing, unsigned electronic paystubs will be considered valid for evidentiary purposes if no other proof exists to the contrary.
On September 20, 2019, a new Decree was published in the Official Journal of the Federation which serves to amend numerous federal laws, including the Decree Amending the General Law of Import and Export Tariffs, the Decree establishing a General Import Tax for the Border Region and Northern Border Region, the Decree Establishing various Sector Promotion Programs (PROSEC for its Spanish acronym), and the Decree for the Promotion of the Manufacturing, Maquila and Export Services Industry (IMMEX for its Spanish acronym), effective as of September 22, 2019.The new amendments are mainly aimed at the steel sector, and feature the following highlights:The 15% tariff on the importation of various steel products remains in place. It should be noted that this new provision aims to renew the previous measure established in the Decree published on March 25, 2019 in the Official Journal of the Federation to continue to protect Mexico’s domestic steel industry.The amendments contain a tariff relief schedule for 228 tariff codes ranging from 10% by September 22, 2021, 5% - 7% by September 22, 2023 and either a full exemption or 3% tariff by August 22, 2024.Similarly, the amendments create 82 new tariff codes (70 codes with full exemptions, 10 codes with a 5% tariff and 2 codes with a 15% tariff). Meanwhile, 25 codes are amended and 21 codes are eliminated.In addition, the IMMEX, PROSEC, Border Region and Northern Border Region Decrees were amended to include or eliminate tariff codes in accordance with the changes made to the General Law of Import and Export Tariffs.Finally, an explanatory note was added to Chapter 72 of the General Law of Import and Export Tariffs to clarify that alloy steel should be considered and classified as tool grade steel.