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Arbitration
Overview
Including: Sources of law; Institutions; Arbitral agreements; International or domestic arbitration?; Institutional or ad hoc arbitration?; Recognition, enforcement and annulment; Arbitration and amparo; Recent legislative changes.
The Supreme Court has reviewed the power of judges regarding arbitration procedures and arbitral awards issued under the terms of the Commerce Code, and the effects of resolutions ex aequo et bono or as amiable compositeur (ie, based on what is fair and just, rather than on the letter of the law). However, the court's arguments regarding resolutions ex aequo et bono have met with some criticism.
A Mexican court's annulment of a final arbitral award - which had granted around $400 million in damages to a company in dispute with the government agency Pemex - has become a highly controversial issue. This approach to arbitration puts future and current investments at risk, as a result of the lack of legal commitment and security that government agencies may be seen to offer.
The amendments to the International Chamber of Commerce Arbitration Rules finally measure up to international practice in jurisdictions such as Mexico, where the arbitration rules of the main local arbitral institutions had already included provisions for appointing emergency arbitrators and seeking interim relief.
The Law for the Protection and Promotion of Fair Business Practices was recently introduced to the legislative body. Unfortunately, the chapter on dispute settlement disregards the general principles of mediation. In particular, imposing a penalty on parties that fail to participate in an initial dispute resolution meeting contradicts the idea that mediation is a voluntary procedure.
Recent Commerce Code changes provide that an arbitral tribunal and a requesting party are liable for interim measures and any damages that such measures may cause to the other party. It has been argued that this will deter tribunals from granting interim measures. However, in practice an arbitral tribunal has a range of arguments at its disposal that may limit or exclude its liability.
Recent amendments to the Commerce Code include several provisions regarding judicial involvement in arbitration procedures. Although various changes will expedite the arbitration procedure by clarifying the judiciary's scope of action, the provisions relating to injunctions represent a risk for arbitral tribunals.
Aviation
The US Federal Aviation Administration has decided to restore Mexico's top safety category earlier that expected. All Mexican carriers can resume their plans for establishing new services to the United States or code sharing with their strategic partners. Moreover, a new group of investors and an agreement with trade unions have improved the chances of troubled airline Mexicana resuming operations.
The government faces one of the most challenging periods in the history of Mexican civil aviation. The Mexicana de Aviación debt reorganisation procedure and the downgrading of the Mexican General Directorate of Civil Aeronautics by the US Federal Aviation Administration have forced a reconsideration of the country's civil aviation policy. How can the authorities address the problems and strengthen the industry?
In 2007 Mexico and the United States signed a bilateral aviation safety agreement, allowing for the mutual acknowledgment of certification standards set by the US Federal Aviation Administration and the Mexican Civil Aeronautical General Directorate. As a result, certification procedures have improved for the wide range of aeronautical product components that are now produced in Mexico.
Banking
An executive order promulgating the Federal Act to Prevent and Identify Illegally Funded Transactions was recently published in the Federal Official Gazette. The purpose of the act is to detect and investigate activities and transactions involving resources that have been illegally obtained.
One of the main purposes of the Basel III agreement is to improve the regulatory framework of banks and strengthen the global financial system. Although Basel III will not become effective until 2013, Mexico intends to implement its guidelines during the second semester of 2012. This is largely due to the favourable conditions prevailing in the Mexican banking system.
An executive order has amended several provisions of the Auxiliary Financial Institutions Law to impose rules for non-regulated multi-purpose financial institutions, money exchange centres and other entities with respect to money laundering and terrorism financing. The amendments also create the legal concept of a 'money transmitter'.
A decision has published in the Official Gazette that establishes the procedure for making and annotating records in the Personal Property Security Registry. It is intended to allow all new filings, annotations, terminations and notices regarding the registry to be entered digitally using specific forms.
New dollar banking policies
The financial authorities have been systematically collecting information on cash transactions in US dollars within Mexico's financial system. Their analysis has revealed a considerable volume of excess US dollars - potentially originating from illegal activities - being held in cash by financial entities. Several additional control measures for dollar cash transactions have now been published.
Although only a minority of its citizens have access to banking services, Mexico has a fast-growing mobile phone industry. The National Banking and Securities Commission has introduced a new concept – the mobile banking agent management company – and has set out a comprehensive system for branchless banking services.
Capital Markets
A real estate investment trust ('FIBRA' in Spanish) is a real estate investment vehicle that can be managed through a stock exchange trust. Three FIBRAs are currently listed on the Mexican Stock Exchange; the outlook for further FIBRA development in Mexico is highly favourable, due to increased interest from both domestic and foreign investors seeking to diversify their portfolio risks.
The investment regime has been modified for Mexican investment companies specializing in pension funds, known as sociedades de inversión especializada en fondos para el retiro (SIEFOREs). The changes create a new form of trust securities certificate, allow SIEFOREs to invest directly in individual shares of companies on the Mexican Stock Exchange and change the calculation of a SIEFORE's value-at-risk.
Mexico's Securities Market Law seeks to facilitate access to the securities market for medium-sized companies or corporations by encouraging them to adopt sound corporate practices, including measures to protect the rights of minority shareholders.
Commercial Property
The often slow process of registering and searching property records has not helped the development of Mexico's primary and secondary housing credit market. It is hoped that a national programme to modernize the Public Registry of Property will facilitate real estate transactions and boost the sector in difficult economic times.
Mexico's system of ejidos - parcels of communal land - has long hindered real estate projects, as developers have usually regarded the process of privatizing such land as prohibitively complex and costly. However, planned reforms could create significant development opportunities, particularly in Mexico's countryside, suburbs and tourist centres.
Company & Commercial
One of the decisions that an investor must make is to choose the form of company through which it will do business in Mexico. A decisive factor in choosing a form of company is often the liability that its members may incur. Another significant issue is whether the members of the company can compete with the company's business.
Following a common international trend, the Senate has approved a bill that authorises the formation of stock corporations and limited liability companies with a single shareholder or member. The bill indicates some of the advantages for small businesses, which can limit the liability of their members and deal with public entities that are required to contract with companies rather than individuals.
Competition
A proposal was recently submitted to Congress that provides for major changes to the institutional structure of the Federal Competition Commission. Among other things, the proposal calls for the creation of a new commission as a constitutional and autonomous entity, with new enforcement powers and operational guidelines. However, there is concern that the proposed amendments could bring considerable complications.
In 2010 the Federal Competition Commission (FCC) commenced an investigation concerning allegations of relative monopolistic practices – specifically, denial of service and discrimination – in the provision of both airport and complementary services and slot allocation by Mexico City International Airport. However, the FCC recently issued a resolution closing the case due to lack of sufficient evidence.
In three separate cases the Federal Competition Commission (FCC) has exercised its investigative and punitive powers over government officials involved in anti-competitive practices. These decisions have confirmed the reach of the FCC's authority and reinforced the precedent that government officials are not exempt from complying with competition laws due to their status as public servants.
A change of paradigm in amparo proceedings
The Mexican courts recently admitted an unprecedented amparo motion by a civil rights association, aiming to preserve the rights of freedom of speech and information, against a merger involving Grupo Televisa and GSF Telecom Holdings. This amparo motion is the first of its kind and sets a precedent in determining legal standing under Mexican law.
FCC accepts commitments by Telcel
A year after imposing the biggest fine in Mexican competition history on Telcel, the Federal Competition Commission stated that it would not impose liability on the mobile phone company, finding its proposal of commitments to be "suitable and economically viable". The decision raises a number of questions; a potential court challenge might yet provide the answers.
Dawn raids and dangerous uncertainties
Amendments to the Federal Law on Economic Competition in 2011 enhanced the Federal Competition Commission's powers to conduct inspection visits. Companies should ensure that they understand the scope of these powers and should prepare for the possibility of dawn raids. However, they should also be aware of significant and worrying questions that these enhanced powers may raise in practice.
Corporate Finance/M&A
Launching mandatory tender offers
Mandatory tender offers in Mexico are primarily regulated by the Securities Market Law and its corresponding general provisions, applicable to listed companies and other participants in the securities market and issued by the National Banking and Securities Commission. Acquisitions in violation of these provisions will be deemed null and void by law, while violators will face serious consequences.
Tax considerations in M&A transactions
Mexican tax laws have specific provisions regarding the merger of entities and the acquisition of shares or assets; both of these situations have tax consequences and obligations for both the seller and the buyer. A thorough analysis and due diligence should be carried out in order to ascertain the relevant tax implications of M&A transactions, depending on the characteristics of the entities involved.
When acquiring shares of a company which in turn holds shares of a Mexican company with a Manufacturing, Maquiladora and Exportation Services Industry programme, certain factors should be taken into consideration. Failure to perform a thorough due diligence on respective subsidiaries, especially in light of foreign trade matters, may result in customs implications.
When considering a transaction, a buyer usually would – and should – ask the seller to provide or carry out an environmental site assessment before acquisition of the company in order to identify any possible environmental conditions or risk. However, the seller can also consider ways in which to limit its environmental liability.
Corporate Immigration
Overview
Including: Non-immigrant; Immigrant; Permanent Resident; Visas.
In the past two years the government has implemented several changes to the main aspects of its immigration policy and criteria. Among other things, the new immigration legislation obliges companies to obtain a certificate of employer registration with the National Immigration Institute, which is a prerequisite to apply for a work permit and is mandatory for all companies hiring foreign staff.
In accordance with the new immigration regulations that recently came into force, Mexican companies must now obtain evidence of registration with the National Immigration Institute in order to initiate immigration procedures or renew existing immigration documents for foreign employees. In order to avoid inconvenience, companies should obtain evidence of registration as soon as possible.
New regulations for Immigration Law
Recently published provisions and new regulations for the Immigration Law are set to become effective shortly. The new regulations match the migratory characteristics of the General Population Law with the new types of stay. Documents issued before the entry into force of the new Immigration Law will be valid until their expiration date.
It is arguably easier to do business in Mexico than in any other Latin American country and corporate immigration is an increasingly significant factor in the economic life of the country. However, many entrepreneurs are unaware of the immigration law implications of starting a business in Mexico. A typical case study illustrates the procedure.
The new rules of the Manual of Immigration Criteria and Proceedings have come into effect. The manual introduces new national immigration criteria and policies which apply to applications and proceedings before the National Immigration Institute. In addition, new immigration documents are now in use and impose new requirements on corporations hiring aliens.
The National Immigration Institute has sought to consolidate the normative instruments on immigration in Mexico into a single reference document, to be known as the Manual of Immigration Criteria and Proceedings. The manual is intended as a reference handbook for all forms of immigration proceeding overseen by the institute.
E-commerce
Modifications will not be Enough
Several laws in Mexico, including the Civil Code and the Commerce Code, have recently been modified in order to recognize and protect electronic transactions. However, these modifications do not constitute a specific e-commerce law and several omissions will have to be addressed.
Employment & Labour
The Federal Labour Law was recently amended for the first time in more than 40 years. One of many relevant aspects of the new law is the inclusion of new regulations for outsourcing services. Every company in Mexico using the services or work of a third party must now observe several new rules, each of which presents its own challenges and potential risks.
Energy & Natural Resources
Overview
Including: The Oil and Gas Sector; The Power Industry
The articles of association of the four subsidiary entities of Mexican Petroleum (Pemex) recently became effective. The new articles are in line with the recently published amendments to Pemex's articles of association and contain provisions to establish the entities' basic organisational structure and the scope of authority of their general directors, administrative units, departments, managerial and general personnel.
The Ministry of Energy has published its guidelines for the authorisation of drilling works for oil and gas exploration and production. The guidelines set forth the documents to be submitted to the ministry and the requirements that must be met by Pemex before it can be authorised to undertake drilling activities. The list of required documents and conditions to be met is significant and, in places, vague.
The Federal Commission for Regulatory Improvement has published a draft of the new Dispatch and Operation Rules of the National Electric System. The dispatch rules will supersede those that were previously in effect and include both specific rules for renewable energy and efficient cogeneration facilities and further details about the necessary procedures for the dispatch of generation facilities.
The Energy Regulatory Commission has passed a resolution establishing the legal, administrative and technical requirements that power generators must satisfy to be eligible to interconnect their renewable energy and efficient cogeneration projects to the National Electric System. The new rules are another step forward in the government's efforts to improve the regulatory framework for renewable energy projects.
An amendment to the Contracting Administrative Provisions for Acquisitions, Leases, Works and Services of the Substantive Productive Activities of Mexican Petroleum (Pemex) and Subsidiary Entities has been published in the Federal Register. This amendment allows Pemex to negotiate and execute contracts dealing with regulated sectors with greater flexibility.
The Ministry of Foreign Affairs has published in the Federal Register the Agreement Between the United Mexican States and the United States of America Concerning Transboundary Hydrocarbon Reservoirs in the Gulf of Mexico. The treaty establishes the terms and conditions for exploring and developing the oil and gas reservoirs along the maritime border between the two countries in the Gulf of Mexico.
Environment
The draft bill for the Federal Act for Environmental Responsibility, currently under consideration by the House of Representatives, seeks to regulate liability for harm to the environment and mandate restoration and compensation for such harm. The draft act also includes alternative dispute settlement options and sets forth the general rules and requirements to file civil actions.
The Mexican Stock Exchange Market has launched a sustainability index. The index allows investors to identify companies in terms of their commitment to sustainable causes and compliance with environmental laws. It also provides an incentive for companies to engage in sustainable practices or else risk losing value and investment capital.
Two draft official standards - on waste for special treatment and hazardous waste - are expected to be approved in the coming months and will create new obligations in respect of waste management programmes. Generators of waste and other parties involved in waste handling would be well advised to start work on their management programmes.
Mexico is moving forward on climate change. The Senate has debated and approved the General Climate Change Bill which would create - among other things - a national climate change policy and an independent climate change authority. It sets out significant provisions on adaptation and mitigation, and on accessing federal and international funds for carbon capture and greenhouse gas reduction.
A constitutional amendment allowing class or representative actions on environmental matters represents a big step forward for Mexico's environmental law. The change will inevitably lead to increased exposure for individuals and entities in performing activities and securing approvals under federal environmental legislation.
Franchising
Franchising Legislation is Revamped
Article 142 of the Industrial Property Law - the primary law governing franchising - has been substantially revised. It now not only provides the broad parameters for disclosure and possible registration of franchise agreements, but also includes relationship law elements that were previously not part of the law. It also attempts to limit the franchisor's right to terminate the agreement without good cause.
Healthcare & Life Sciences
The Federal Commission for Protection against Sanitary Risks has published guidelines stating that the confidential information received along with a health approval application is subject to protection against unfair commercial use and public disclosure, and expressly provides a term of data protection of five years from the date on which health approval is granted.
Insolvency & Restructuring
Overview
Includes: Ranking of Creditors and Shareholders; Mechanisms for Trade Creditors to Secure Unpaid Debts; Rescue and Insolvency Procedures; Liability and Transactions; Foreign Proceedings.
Where joint obligations exist between a holding company and its subsidiaries in respect of a third party, it is arguable that the subsidiaries may not vote on a bankruptcy or business reorganisation agreement if the holding company might benefit from reductions in its financial obligations or extensions of time. However, if no such obligation exists, it is necessary to analyse the origin of the claim.
The provisions in Title XIV of the Bankruptcy Code allow for submission of a business reorganization plan agreed between the debtor and creditors representing at least 40% of the total debt. Such pre-packs offer businesses in difficulty a more flexible form of proceeding that gives them an opportunity to resolve or at least mitigate their financial problems. However, further improvements are needed.
Until recently, directors of a company which was subject to a business reorganization process at the request of a merchant or creditor could be sentenced to house arrest by a federal judge. However, amendments to the Business Reorganization Law now restrict this right.
Article 24 of the Business Reorganization Law states that a person or entity filing a petition for business reorganization must demonstrate that it has access to an amount equivalent to 1,500 times the daily minimum wage in Mexico City (around $50,000). The article was ruled unconstitutional on the grounds that it limits the right to free access to justice guaranteed in the Constitution.
The Supreme Court has ruled that Article 49 of the Business Reorganization and Bankruptcy Law does not violate the constitutional right to trial established by Article 14 of the Constitution.
The Supreme Court recently ruled that the domiciliary arrest of members of a bankrupt or reorganizing company's board of directors is constitutional and does not affect their right to freedom of transit, as long as they leave a legal representative responsible for complying with all legal obligations which the company might have.
Insurance & Reinsurance
Congress has passed a new insurance and bonding law. The new law is intended to strengthen the insurance and bonding system according to international best standards and practices, with special regard for corporate control and governance, capitalisation rules, reserve investment and risk management policies, among other things.
As a consequence of new regulatory guidelines, Mexican insurers will face tougher new requirements to assist in anti-money laundering activities. Insurers will need to update their internal 'know your client' policies and systems to ensure that they comply with the new requirements.
The National Insurance and Bonding Commission has issued an amendment to the Uniform Insurance Ruling that will require insurers to ensure that service providers hired to sell insurance products comply with the law. Insurers are now required to request evidence from third-party vendors that they have provided proper training for their employees, and that such employees have received certification from the commission.
The National Insurance and Bonding Commission has amended Section 5.1.24 of the Unified Insurance Ruling related to medical expense insurance. The amendment provides clearer guidelines for insurance companies to follow in regard to their medical expense insurance products. It expressly requires insurance companies to draft policies with clarity and legal certainty for the insured.
A package of amendment to various federal laws has given rise to the possibility of filing class actions against insurance companies. These amendments will have a material impact on the conduct of insurance companies in relation to their clients, not only in their promotion, sale and adjustment of insurance, but also in the assessment of coverage policies, as exposure will be increased significantly.
The Unified Insurance Circular has been amended to require insurance companies to submit statistical information about their activities electronically. The aim of the change is to facilitate delivery and improve the Insurance Commission's access to the information submitted by insurance companies for compliance and surveillance purposes.
Intellectual Property
Overview
Including: Patents; Utility Models; Industrial Designs; Trade Secrets; Breeders' Rights; Integrated Circuit Designs; Trademarks; Slogans; Trade Names; Litigation; Federal Law of the Administrative Procedure
The Federal Commission for the Protection against Sanitary Risk has published guidelines stating that the confidential information received with a health approval application is subject to protection against unfair commercial use and public disclosure according to the North American Free Trade Agreement and the Agreement on Trade-Related Aspects of IP Rights. However, the guidelines generate new uncertainties.
A guide to anti-counterfeiting enforcement
Several crucial laws govern counterfeiting in Mexico. Depending on the matter involved, these laws – alone or in combination – provide rights holders with the necessary tools to take legal action against counterfeiting and seize illegal merchandise, obtain preliminary injunctions and prosecute criminal, administrative and civil actions to seek appropriate remedies against infringement.
In order to reduce service times and costs, increase efficiency and transparency and improve the quality of services offered by the Mexican Institute of Industrial Property, an online system for trademark and industrial design applications has been implemented. However, the filing of applications through the new system is optional.
The power of mnemonics in distinctive signs
The term 'mnemonics' is normally associated with lists of information and their corresponding rhymes or phrases. However, the mnemonic function can also be applied for other types of information, potentially helping to reinforce the connection that consumers make between trademarks, slogans and other signs on the one hand, and the product or service - and their experience of it - on the other.
The Industrial Property Law provides for a 12-month grace period for the benefit of an inventor (or an inventor's successor in title) in respect of the disclosure of an invention, model or design. If a party attempts to secure a grace period after its application has been filed, the Mexican Institute of Industrial Property will normally refuse. However, the Federal Law of Administrative Proceedings may give applicants another option.
The scarcity of patent litigation in Mexico as compared to other jurisdictions has resulted in a lack of case law in several key areas of patent litigation. One such area is the situation where a product does not have all of the features of the claims of a granted patent, but is so close that it appears that a feature has been changed to circumvent patent coverage through the incorporation of an equivalent feature.
Litigation
The new Amparo Law, which is now in force, aims to modernise amparo proceedings and includes several matters that were already recognised in case law, but not included in the previous law. Among the most relevant features of this new law, constitutional protection has been extended in some ways and limited in others.
Following a constitutional amendment in 2011, the new Amparo Law has been approved by both chambers of Congress. Although to a great extent the new law includes positive changes to amparo proceedings and aims to modernise this constitutional challenge procedure, some of the new provisions may be unfavourable to companies and financial institutions.
Possible changes to the class actions regime
Amendments to the Mexican class action regime have recently been proposed. Several provisions of the Federal Code of Civil Procedure are intended to be modified to provide wider protection to consumers. However, it is important to consider the impact that the amendments might have on the defence of respondents and the level of exposure that companies will have if they are approved.
A recent Supreme Court decision has established that compensation for damages suffered by a person or company must be determined by the judge on a case-by-case basis. Consequently, indemnity capped by law is unconstitutional. The decision provides persuasive guidance on the court's views with respect to the importance of fully compensating for damages suffered.
Numerous pitfalls await foreign parties assuming that proceedings in Mexican courts unfold in the same way as in the courts of their own jurisdictions. Many foreign companies in Mexico may be unaware of how drastically Mexican litigation procedure can affect a dispute. Whether a company is bringing an action or has been sued in Mexico, it risks losing its case if it does not avoid certain traps for the unwary.
The First Chamber of the Supreme Court recently ruled on the constitutionality of one of the timeframes set by the Bankruptcy Law for filing a proof of claim in bankruptcy proceedings. In extending the timeframe, it may have provided a significant opportunity to complete the formal requirements for filing a proof of claim, given that Mexico's procedural rules are generally strict and often set the bar for compliance too high.
Projects & Procurement
After more than a year of legislative deliberations, Congress recently approved the new Federal Law Against Corruption in Public Procurement. According to the law, it is illegal to give or offer to give (either directly or through a third party) to a public official any type of bribe or gift for obtaining or retaining a privilege or business advantage in the area of public procurement.
The provision of goods and services to public authorities is a lucrative but competitive activity, in which understanding the intricacies of legislation may provide a crucial competitive advantage. Although certain labour-related aspects are often overlooked, they are a crucial strategic element of a well-prepared bid.
The approval of a new law on public-private partnerships (PPP) is a great step forward for infrastructure development in Mexico, taking PPPs beyond the bounds of traditional public procurement legislation. It is expected to promote an increase in infrastructure construction and, as a consequence, an increase in the placement of development capital certificates.
Budget limitations are affecting Mexico's ability to maintain its existing infrastructure and to undertake new projects. The country's aim is to become one of the world's most developed countries by 2030, but infrastructure is a bump in the road to success. Public-private partnerships - and effective legislation on the processes involved - may be the way to get back on track.
Recent initiatives for legislation to address corruption in government contracting reflect a demand for a clear framework for the large infrastructure projects being developed in the telecommunications and energy industries, including oil and gas. They create effective financial deterrents and places significant responsibility on the public as a key instrument in identifying corrupt procurement practices at federal level.
For companies that wish to participate in tender processes, the Regulation on the Public Works and Related Services Law is crucial. Among other things, it sets out conditions for the participation of microenterprises and small and medium-sized companies, and provides that a participant may be disqualified from future processes for a bad-faith appeal against the award of a contract to another bidder.
Securitisation & Structured Finance
Concerns Over Mortgage-Backed Securities
Recent developments in the Mexican real estate market include initial public offerings filed by Mexican real estate developers abroad and new loan schemes created by government institutions. Mortgage-backed securities are viewed as both a financing mechanism and a political tool with regard to family home businesses. However, key legal issues remain unresolved.
Telecommunications
The recent change in government has brought many interesting developments through the so-called 'Pact for Mexico' - an agreement between the three dominant political parties in the country to work together. The pact includes proposed amendments to several telecommunications laws that would give Mexicans greater access to world-class telecommunications services and diverse networks.
Earlier this year the Ministry of Communications and Transport began legal proceedings to change the use of the 2.5 gigahertz band to provide 4G mobile services. To date, there has been little previous public policy on the use of frequencies in order to tackle the low number of wireless internet service providers, so a key question for existing licensees is why the new policy must impose such a burden on them.
The Ministry of Communications and Transport has initiated proceedings to change the use of the 2.5 gigahertz frequency band. Users of the frequencies were notified of the new policy. The ministry plans to revoke these users' licences – which entitle them only to deliver television services and value added services – and thereafter auction off the frequencies for the provision of 4G mobile services.
Trade & Customs
The government has implemented a new scheme for certified companies, reflecting consolidated programmes such as the Customs-Trade Partnership against Terrorism in the United States and Canada's Partners in Protection. The scheme aims to facilitate many aspects of customs dispatch and improve competitiveness - many companies with a high volume of foreign trade have already expressed their interest.
Senate approves new free trade links
During the Senate's last session of 2011 the free trade agreement between Mexico and Peru was approved by a slim majority. The agreement with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua was unanimously approved. Other significant amendments include further changes to the Foreign Trade Rules, export control forms and activities subject to export control permits.
In 2008 Mexico and China reached an agreement to eliminate anti-dumping duties on Chinese goods under 953 tariff headings and establish transitional duties for over 200 tariff categories. As the end of the phase-out approaches, many industrial sectors have demanded strong action against low-price imports from China. The government's next steps will prove crucial.
Until recently, Mexico lacked an export control regime for conventional weapons, dual-use goods and software and technologies that pose a risk of interception. However, a resolution has recently come into force which seeks to prevent the manufacture and proliferation of conventional weapons and weapons of mass destruction.
The president has signed the Maquiladora Tax Decree, which provides for an extension of the fixed-rate corporate tax stimulus that was originally scheduled to expire in 2011. The decision is welcome, as the ability to apply the relevant fixed-rate corporate tax benefit in fiscal years 2012 and 2013 provides greater certainty for foreign investors.
Mexico and Colombia announced that they have renegotiated their free trade agreement in light of the withdrawal of Venezuela. The FTA-G3 agreement, which has been in force for the past 15 years, is now known as FTA-G2. Amendments have been published whereby goods imported to and from Mexico and Colombia are deemed exempt from duties, with certain exceptions.
White Collar Crime
A new anti-corruption law is intended to penalise individuals and companies, from Mexico or abroad, that engage in unethical behaviour in the context of government contracts in Mexico. As well as private contractors that do business with the government itself, the law will affect dealings with the government-owned oil and power companies and the agencies that award infrastructure concessions.
