printable version| August 2022
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Inflation, as we know, is not controlled by decree or by laws of Congress; it is an economic situation that is managed in a multifactorial manner.
A little more than three months after President Andrés Manuel López Obrador presented the Package against Inflation and High Cost of Living (PACIC), the measures seem insufficient for Mexico, now engaged in consultations with the United States and Canada regarding non-compliance with the T-MEC, in its increasingly pointed agreements on the energy sector that they do not want to comply with.
Both problems, although they seem to be separate, are actually linked. On the one hand, the PACIC measures have been implemented little by little, with decrees according to the sectors involved and by different agreements of the federal agencies. Although in general terms they were positive actions, the plan seems insufficient to counteract a global inflationary phenomenon. On the other hand, certain decisions adopted by the Mexican federal government such as the non-compliance with international treaties and the consequent uncertainty regarding the economic situation. This is because if nervousness is generated among investors, the degree of investment is affected and does not contribute to controlling inflation, due to the fact that the different markets always react to the stability provided by a government and compliance with the legal framework and respect for the rule of law.
Inflation, as we know, is not controlled by decree or by laws of Congress. It is an economic situation that is managed in a multifactorial way and therefore, all the actions taken by the federal administration end up impacting the implementation of measures such as the PACIC. On the other hand, the international economic situation is not in the hands of the federal government. Today we are entering a recessionary cycle worldwide due to the Russian war in Ukraine that has affected many markets, especially in Europe in terms of energy, food and agricultural products that have suffered several price increases. Everything has had an impact on the situation we are experiencing, including the punishments of the international community to Russia, such as limiting the export of its natural gas, which greatly influences Europe and has contributed to the inflationary escalation.
Mexico, through the Bank of Mexico, is also not immune to other global increases in interest rates, which have been necessary and end up impacting inflation.
True, other conservative measures by the Treasury Department to avoid increasing public debt help to sustain the country's ratings, although Pemex has not fared so well in the evaluations, which is negative, since it is a company with a high economic impact on the federal government's spending budget. It helps, however, that debt issues are controlled and rates are within ranges appropriate to the current economic situation.
But even with all this, the situation is so complex that only with a crystal ball can we guess when inflation can be controlled. It will be difficult until the Russia-Ukraine conflict is resolved and the most recent international tension between the United States and China regarding Taiwan could be even more serious for economic stability and peace in the world if it is not resolved. In fact, no war is desirable, much less between the two main world powers. The problem is that the level of threat is increasing and this shakes international trade in goods, which is another reason for price increases.
On the other hand, if Mexico manages to get ahead in the T-MEC consultations and the federal government changes its perception regarding its respect for the rule of law, the outlook will be somewhat more positive. Unfortunately, the time is uncertain, but trying to make a forecast, inflation does not seem to improve in the remainder of the year, even though paradoxically the conflicts help strengthen the peso in the face of the pressure that other currencies such as the euro and the US dollar are under.
By Sergio Chagoya, eExpert in investments and advice to companies on corporate and regulatory matters.
Source: The financial
The pandemic caused by covid-19 has been a tough, but very instructive test that allows companies and workers to realize that teleworking or home office It is not harmful, but productive when taken seriously enough, which has been the case in most cases, which is why the new Mexican Official Standard NOM-037, whose draft was recently published, should strengthen teleworking.
On July 15, 2022, it was published in the Official Journal of the Federation (DOF) the Draft Mexican Official Standard PROY-NOM-037-STPS-2022, which establishes the health and safety conditions in the aforementioned modality and derives from the reform to the Federal Labor Law on teleworking in January 2021. The project has 60 calendar days to be published in its final version and from then on, it will have another 180 calendar days for the obligations and conditions it contains to come into legal force, that is, towards the end of the first half of 2023.
The primary objective is to protect workers and provide them with greater guarantees, and this means that employers must be very aware of their new obligations. This is a change in work culture with budgetary implications for organizations, as it also entails inspections by the Ministry of Labor and Social Welfare (STPS) and, eventually, economic sanctions for non-compliance.
Although it is a draft, I believe that it should be taken as practically the final version. It is very difficult for a draft to be significantly modified once it is published, especially since a year and a half has been spent discussing it by the authorities, private initiatives and civil society organisations.
The NOM-037 project is the result of a new reality in the country. There were already very specific studies that solutions had to be analyzed for road traffic and insecurity problems, especially in large cities. Before the pandemic, some companies managed, if not the home officeYes, flexible working hours; for example, Fridays were granted so that staff could continue working from home, especially in intellectual activities that do not require 100% physical presence in the workplace.
The NOM-037 project establishes minimum elements so that the teleworker can carry out his tasks in optimal conditions. For example, having an ergonomic chair that guarantees an adequate body posture; it seems like a minor issue, but someone who is seated for 8 hours a day during the work day can suffer serious illnesses and stress in the long run if the chair is not adequate for his work; the project also considers the risks of working at home, the rules of contact that guarantee that there is no social isolation and the loss of the sense of belonging. Employees will also have the right to disconnect, that is, not to expect the company to answer calls outside of their work hours, during meal times or days off, etc.
The truth is that the pandemic, although very regrettable due to its dire consequences due to the loss of the lives of millions of human beings, in the workplace allowed us to verify that the majority of workers do take advantage of their time and are productive in this modality of working remotely from home.
We will have to be attentive, therefore, to the publication of NOM-037 and its entry into force and, of course, to the way in which both the provisions relating to teleworking and the rules contained in this NOM-037 end up landing in order to, where appropriate, finish evaluating the impact that this type of work has on the society and culture of our country.
By Andres Rodriguez, eexpert in labor law and social security.
Source: Excelsior
US low-cost airlines are the winners of the downgrade to Category 2 of air safety in Mexico. Between May 2021 and the same month this year, Frontier, Spirit, JetBlue and Alaska Airlines were the companies that most increased passenger traffic from Mexican soil to the United States, according to figures from the consulting firm Cirium.
During those 12 months, Frontier increased passenger traffic by 67%; Spirit by 50%; JetBlue by 28%, and Alaska Airlines by 14%. In contrast, Mexican low-cost airlines decreased the number of passengers they transport to the United States. Viva Aerobus reduced the number of people it transported from the country to the United States by 24% during that period, while Volaris decreased it by 9%.
In May 2021, the Federal Aviation Administration (FAA) downgraded Mexico to Category 2 for air safety, because the Federal Civil Aviation Agency (AFAC) did not meet international standards to oversee commercial airlines in the country. As a result, Mexican airlines cannot increase frequencies to the United States, open new routes or introduce larger aircraft than they were authorized to.
The case of Aeroméxico stands out, as it managed to increase the number of passengers between both countries by 57% in that period, according to Cirium.
Aeromexico explained that it already had authorized routes to the United States before the downgrade, which it was able to reactivate and, thanks to its alliance with Delta, it managed to continue growing, in addition to the recovery of international travel.
"Although we were not allowed to open more routes, we were able to increase frequencies in the destinations where we already operated before the downgrade," the airline told EL UNIVERSAL.
“In addition, we allocate our fleet according to the capacity demanded to achieve better coverage, as we have aircraft with from 99 to 276 seats,” he added.
According to analysts, US airlines were not expected to grow so much because they were expected to recover from Category 1 within six months, but that did not happen.
The Center for Tourism Research and Competitiveness of the Universidad Anáhuac estimates that in the last 11 months, Mexican airlines have lost 9 billion pesos due to the 200 million seats in the US market that they have neglected due to the downgrade to Category 2.3.
“The downgrade hits airlines that do not have a robust codeshare, such as Aeromexico [with Delta] very hard,” explained Juan Carlos Machorro, a partner specializing in airport and aeronautical law at Santamarina y Steta.
“Viva and Volaris cannot launch new routes, increase frequencies and cannot use new equipment on routes they were already operating,” he said.
By number of passengers transported, American Airlines and United Airlines are the airlines that transport the most passengers between Mexico and the United States.
American increased the number of passengers transported by 5% in the first year of the downgrade and United moves practically the same number as in May 2021.
Jonathan Félix, director of Analysis at PCR Verum, said that low-cost airlines were the most favored, since most passengers between the two countries are people visiting relatives or friends, and they choose the cheapest fare. In addition, if Mexican airlines do not have the appropriate route or schedule, they choose an American one.
Rogelio Rodríguez, an aviation law specialist, said that the growth of US low-cost airlines is due to the Bilateral Air Services Agreement with the United States, signed in 2017, which eliminated the restriction that only two airlines from each country could operate the same route.
Machorro predicted that Mexican airlines will continue to lose ground to American airlines, since the Mexican government is not investing resources.
The federal government has run out of resources to contract pre-investment studies for eleven railway projects, according to notifications from the Railway and Multimodal Transport Regulatory Agency (ARTFM) to the Ministry of Finance and Public Credit (SHCP).
For analysts, this situation is due to the fact that priority has been given to the Mayan Train, a project whose cost is already estimated at 230 billion pesos, that is, an extra cost of 74 billion over the amount originally proposed, as EL UNIVERSAL reported a few days ago.
ARTFM has notified the tax authority of the need to reschedule the contracting of pre-investment studies, since there is no money for it.
Thus, the projects without allocation are the Hidalgo-AIFA Suburban Train, the Isthmus of Tehuantepec Passenger Train, the Naucalpan-Buenavista Light Train, the Xalapa Light Train, the Tapachula-Chiapas Airport Train, the Colima Regional Train, the Monterrey-Saltillo Interurban Train, the Monterrey-Nuevo Laredo Interurban Train, the Morelia Light Train, the Coahuila Suburban Train, and the Campeche Light Train.
In various reports, ARTFM acknowledges the insufficient budget to carry out these works, even in works considered a priority for this administration, which together required around 430 million pesos.
At the same time, this newspaper reported last week that the National Fund for Tourism Development (Fonatur) spends 25 billion pesos on consulting for the Mayan Train.
Juan Carlos Machorro, head of the transactional and financial practice area at Santamarina y Steta, said that it is not valid to privilege the Maya Train, a flagship project “that has so far proven to be a poorly planned project without responsible allocation and use of resources, and that probably does not have the operational, financial or social viability of the other eleven.”
This situation creates a problem of poor planning and responsibility of officials in the allocation of resources, he added, who will have to answer for these enormous distortions.
"It is inconceivable that they spend 25 billion pesos on consulting and advisory services for a train, and do not have 430 million available for studies of another eleven that could later prove to be of greater importance to the economy and society," Machorro stressed.
In the inkwell
The federal government alludes to the lack of resources for the studies of the Suburban Train that will link that entity with the new Felipe Ángeles International Airport (AIFA) and the Passenger Train project of the Isthmus of Tehuantepec.
Isidro Enrique Zepeda Ortega, head of the General Directorate of Studies, Statistics and Mexican Railway Registration of ARTFM, asked the SHCP to reschedule the contracting of companies for both cases because there is no budget.
In documents dated March 23 of this year, in possession of EL UNIVERSAL, the official explained that both works had to have been contracted and delivered in 2021, but the scheduled resources were not assigned to them.
For the pre-investment studies of the Suburban Train to AIFA, 42 million 372 thousand pesos were estimated, and for the Passenger Train of the Isthmus of Tehuantepec, it was 25 million 745 thousand pesos.
ARTFM had warned that one of the main risk factors for carrying out pre-investment studies was precisely “not having the timely availability of resources for investment.”
In this same case are the pre-investment studies for the Naucalpan-Buenavista Light Rail Train, with a cost of 53.6 million pesos, designed to determine the feasibility of implementing in a first stage, a passenger railway system in light rail mode, on the disused railway infrastructure of the "N" Line, from the historic Río Hondo station, in the Municipality of Naucalpan de Juárez, to the Buenavista terminal of the Suburban Train, over a length of 14.6 kilometers.
Also the pre-investment studies for the Colima-Manzanillo Regional Train, where 41.4 million pesos would tentatively be spent to determine the feasibility of implementing 100.5 kilometers in the metropolitan area, starting in the municipality of Colima, connecting with the municipality of Armería and ending in the municipality of Manzanillo (Port City of Manzanillo), using the railway infrastructure of Lines “I and IP”.
Another project is the Coahuila-Monterrey train, whose studies for 100 million pesos should have started this year, although there is not enough funding.
Also its 264.8 kilometer extension that would connect Monterrey, Nuevo León, with Nuevo Laredo, Tamaulipas, on the southern border with the United States, a project even committed by the head of the Executive to the current governor of Nuevo León, Samuel García.
The state leader went further, announcing in July of last year that bilateral cooperation between Texas and Nuevo León will be fundamental and strategic for economic recovery, which is why work would be done on the Monterrey-San Antonio train project, which would be part of the railway route that would cross Mexico, the United States and Canada as part of the T-MEC railway corridor.
The lack of resources also forced the rescheduling of pre-investment studies for works such as the Integrated Transportation System in the Eastern Zone of the Valley of Mexico: Trolleybus System for the Chalco-Tláhuac and Chalco-Santa Marta sections, and the Rehabilitation of Line A of the STC Metro.
In this case, it was Minerva Pérez Reséndiz, Deputy General Director of Multimodal Transport and Logistics of ARTFM who issued the corresponding letter to reschedule 27.5 million pesos for this year.
And tourism?
The tourist economy specialist of Grupo Empresarial Estrategia (Gemes), Humberto Molina, described it as regrettable that the resources from the Non-Resident Right (a fee charged to all foreign tourists in the price of the plane ticket) are being allocated to the Mayan Train, instead of promoting the country's tourist centers, especially at a time when all destinations that compete with Mexico are being aggressive in their promotion.
“Everyone wants to recover what they lost in the pandemic and destinations that compete with Mexico are carrying out very attractive campaigns to attract tourists; this is something we need to be able to consolidate the recovery,” he said.
“Sooner or later we will feel the lack of tourism promotion, because in 2020, 2021 and part of 2022 we saw this favorable situation where Mexico was one of the few destinations open to travelers from the United States, without any requirement, but as other countries begin to open, that situation no longer exists,” said Molina.
Source: El Universal
“Mexican Agaves, their genetic wealth, knowledge and diverse use for food, textile, fodder, ornamental, sweetener, medicinal, among other purposes, can be protected through various strategies for their conservation and sustainable use, such as designations of origin, geographical indications and plant varieties, which recognize their economic, social, cultural and environmental importance, writes Enriqueta Molina, expert in plant varieties at Santamarina + Steta.
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We share with you the guide “Fintech Law and Regulations 2022 | Mexico”. In this edition, Sergio Chagoya and Diego Ostos, in collaboration with experts from Lazcano Sámano, detail the development and key regulations of the Fintech sector in Mexico.
Read full article here.
printable version| September 2022
Read full note here.
printable version| September 2022
On August 24, 2022, the Federal Economic Competition Commission (COFECE) issued considerations on competition and free competition regarding the "General administrative provisions that establish the requirements for applications, modifications, updates and obligations of the activities of commercialization of petroleum or petrochemical products, and distribution by means other than pipeline of petroleum products, except liquefied petroleum gas for both activities" (the "DACG"), published on July 26, 2022 by the Energy Regulatory Commission (CRE).
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printable version | September 2022
Arkema Mexico, a subsidiary of the Arkema Group, dedicated to the design and manufacture of specialized materials, carried out the acquisition of Polímeros Especiales, SA de CV, a leading company in the region focused on the manufacture and marketing of emulsion polymers that generates annual revenues of USD$40 million from the sale of its products in Mexico, Central America and South America.
With this acquisition, Arkema will strengthen its regional market position in the coating solutions segment and drive the development of sustainable innovations.
Santamarina + Steta, with the support of the team led by Jorge Leon-Orantes, Ilse Bolanos and Raziel Celis, acted as legal advisor to Arkema in this acquisition.
At this conference and networking event, experts from Santamarina + Steta, Zettra Energía (electrical infrastructure company) and the consulting firm Energy by 5 México will share the current legal, regulatory, financial and infrastructure requirements necessary for electrical operations in Mexico.
Likewise, the development of new investment schemes for different regions of the country will be shared to promote the connection of new load centers in the main industrial zones. For more information about the speakers and the event program, visit: Presentation
