Central America and Caribe Health Measures

As the coronavirus disease 2010 (COVID-19) global pandemic continues to evolve, our Latin America team has been monitoring developments in the region and tracking measures implemented by governmental entities that may affect business operations.

Our Santo Domingo office recently published a newsletter, which can be found here, covering relevant official pronouncements, decrees, and resolutions.  Our Caribbean and Central America Desk also recently published an alert, which can be found here, addressing developments and government measures in the Spanish Caribbean.

If you would like to obtain additional information on the impact of COVID-19 on business and commercial operations in this region, please contact our Santo Domingo office or the Caribbean and Central America Desk.

Public-Private Partnerships in Dominican Republic

As the Dominican Republic established itself as Latin America’s fastest-growing economy in recent times, it became paramount to design, draft, reach a consensus and pass a public-private partnership law. In that sense, the latest legal framework proposal for the governance of public-private partnerships—which was passed into law by the Dominican Republic’s executive branch on February 20th, 2020,(hereinafter, the “Law”), is a landmark legislative achievement whose objective is to rule the provision, management and operation of public goods, infrastructure and services by means of a public-private partnership mechanism. This article gives the reader a brief overview of the following topics: (i) the definition and scope of the “public-private partnership” concept; (ii) types of public-private partnerships and procedures for its implementation; and, (iii) other relevant information, including recent developments regarding the Government’s interest to develop public-private partnerships to combat the COVID-19 pandemic. Available here.

Mexico’s Health Emergency Decree

On March 30 Mexico declared a health emergency and issued a decree with strict measures to contain the fast-spreading of coronavirus “COVID-19,” on non-essential activities in the public and private sectors that would be in force until April 30.  In order to prevent the health system from being overwhelmed with the increasing number of cases, the government of Mexico announced the following measures in Spanish and English. The Mexican Health Ministry divided into five groups those essential activities: health, security, economy, social programs, and critical infrastructure.

Regarding critical infrastructure, this determination mainly refers to the conservation and maintenance of the basic infrastructure for the production and distribution of services such as water, electricity, drainage, sanitation and gas, to name a few. The non-essential services of the social and private sectors must immediately adopt modalities of teleworking, remote work or the like, without the activities of their workers being present.

Mexico had been suffering an economic slowdown for a year coupled with the collapse of the price of oil and unstable stock markets. With the current health situation, several industrial sectors are being impacted, such as tourism, automobile industry, financial services, cross border trade, construction and food industry. Meanwhile, USMCA is not in force yet. Mexico tried to implement the Infrastructure Plan 2019-2024 that included a new Energy Plan. However, the government has swiftly prioritized a number of programs to take care of the current pandemic. President Andres Manuel Lopez Obrador (AMLO) is developing an economic contingency plan that might include lower salaries to government functionaries while he is calling on the private sector to support and maintain its workers. Investors will pay close attention to the package designed by the federal government with tax measures and allocation to public spending that minimizes the closure of companies, restores national production of global value chains, subsidies and protection of employment. 2020 will be a year of economic contraction and this situation will weaken the financial well-being that affects the employment and social security for the Mexican population.

A client alert with the latest developments from Mexico is included here.

US Policy Prognosis: The Legislative Response to COVID-19

Our Public Policy Team is operating at the epicenter of the evolving coronavirus disease 2019 (COVID-19) global pandemic, providing clients with timely updates, guidance and resources to weather the complex uncertainties, overcome challenges, mitigate risks, enhance resilience, maintain business continuity or normalize business operations as quickly as possible. We have just issued the following publications to highlight the US legislative efforts in response to COVID-19 and to highlight some international trade-specific issues and what may come next.

USA Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in English
Spain Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in Spanish

Coronavirus|COVID-19: Implications to Commercial and Financial Contracts Under the Brazilian Legal Framework

The coronavirus pandemic (also known as “COVID-19”) outbreak has challenged humanity to control the spread of the virus and save human lives. While the world is incredulous at the rising death toll, and more than a third of the global population is experiencing social distancing and self-isolation measures for the first time in history, country leaders have been negotiating stimulus aid packages to ease the economic impact of the coronavirus outbreak. At the same time, companies from all industries affected by the coronavirus pandemic have been seeking means to mitigate losses and legal grounds to validate the non-compliance with commercial and financial contracts.

In Brazil, the situation is undistinguishable from the rest of the world. Multinational and local companies that carry out commercial activities in Brazil have been strongly affected, due to the coronavirus pandemic.

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COVID–19 and Impacts in Latin America

The first quarter of 2020 is not ending on a positive note for most parts of the world, including Latin America. In the midst of the global COVID-19 pandemic outbreak caused by the novel coronavirus, the region is also facing the consequences of a historic dengue epidemic and feeling the impact of the oil pricing dispute between Russia, Saudi Arabia and other OPEC countries.

It is just a matter of time, as seen in Europe, until there are more widespread cases of COVID-19 among the estimated 629 million population in the Latin American region. From a trade perspective, the coronavirus outbreak has caused severe, but widely varying disruptions across the global economy, including increased consumer demand of particular goods and reduced production due to a lack of key inputs from abroad or quarantined employees.

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The Western Hemisphere | Recap of Early 2020 U.S. Engagement

In January, U.S. Secretary of State Michael Pompeo travelled overseas for a trip that included stops in Germany, Colombia, Costa Rica, and Jamaica.  This was the Secretary’s ninth trip to the Western Hemisphere since assuming office in 2018 and his first overseas trip for 2020, underscoring the Trump Administration’s renewed emphasis on the importance of the hemisphere to the United States.  This visit sought to build upon furthering shared priorities – combatting the spread of terrorism, strengthening democracy, expanding prosperity, and ensuring security in the hemisphere, including addressing the situation in Venezuela.

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Brazil announces it will adhere to the international agreement on government procurement

On January 21, Brazil’s Ministry of Economy, Paulo Guedes, announced at the World Economic Forum in Davos that Brazil will adhere to the plurilateral Agreement on Government Procurement (GPA). The GPA regulates the procurement of goods and services by the public authorities of the parties to the agreement, based on the principles of openness, transparency, and non-discrimination between national and foreign companies. The plurilateral agreement is an important mechanism for the international trading system and its membership has gradually broadened. Currently, 48 countries, including the US, Canada, Japan and China, are parties to the GPA.

By ratifying the GPA, the Brazilian government expects to increase foreign investments in the country by attracting foreign companies to public tenders. In addition, according to Mr. Guedes, the acceptance of the market access commitments set forth in the GPA aligns the Brazilian government’s purpose of improving the strategies and policies aimed at combating corruption in the Public Administration.

The date has not yet been confirmed of Brazil’s ratification of the GPA.

The Impact of Section 232 tariffs on Brazil and Argentina

South AmericaOn December 2, President Donald Trump announced Section 232 tariff exemptions previously granted to Argentina and Brazil would terminate “effective immediately.”  In his December 2 tweet, President Trump criticized the two countries for “presiding over a massive devaluation of their currencies, which is not good for [U.S.] farmers.”  The U.S. reached agreements with Brazil and Argentina in early 2018 that provided exemptions from the 25 percent tariffs on steel imports and 10 percent on aluminum imports to the United States.

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International Tax Policy: Newest Developments

The international tax policy landscape is in the process of some key changes that are important for Latin American businesses to monitor. In particular, businesses should pay attention to two key developments.

First, the Organization for Economic Cooperation and Development (OECD) is asking for input on a global minimum tax proposal, a key part of the organization’s effort to rewrite international tax rules by the end of 2020. On Nov. 8, 2019, the OECD asked for comments on the latest version of its minimum tax proposal, which would create a set of rules aimed at ensuring that companies pay a minimum rate even if they are operating in low-tax jurisdictions back home. For years, the OECD has sought to address concerns that multinational companies are not paying their fair share of taxes in some countries where they have a significant number of users. The OECD is trying to find agreement among over 130 countries on its global minimum tax, which is likely to change shape over the next several months.

Second, the U.S. Congress is considering tax legislation that could have an impact on multinational businesses. Congress is considering attaching extensions for dozens of expired tax incentives, among other provisions, to government spending legislation that must pass by November 21, which is when U.S. government funding lapses (and the government could shut down until a deal is reached). As relevant to multinational corporations, Capitol Hill tax-writers are considering fixing an error in the Tax Cuts and Jobs Act (TCJA) that has caused multinationals and private equity firms to report and pay taxes on some previously exempted overseas investments.

Any potential fixes to the U.S. tax code are linked to the government funding legislation, so it will be important to watch how those negotiations unfold during the remainder of the year. The bigger picture here.

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