Amid the COVID-19 pandemic and global economic challenges, women are disproportionately fighting unemployment and struggling to survive, as they remain pillars of the family and a foundation of society. According to the U.S. Bureau of Labor Statistics, some 270,000 women left the workforce last month. During the month of December, the economy saw a decrease of 227,000 jobs in the US, with women accounting for 196,000 job losses. Some economists have characterized this as a “she-cession.” The pandemic has also forced many women to choose between caring for their children at home, as schools closed, and working. The gender equality remains a concept in the US and elsewhere. Continue Reading
The Evolving Mexico-United States Relationship, Amid a New Administration in Washington
Mexico continues to face challenges in 2021, as it continues to grapple with economic fallout from the global COVID pandemic and amid policy shifts emanating from the United States, as President Joe Biden assumed the office in January. Mexican President Andrés Manuel López Obrador, 67, also tested positive for coronavirus after a recent business trip; he is currently quarantining at the National Palace in Mexico City.
Within his first three days of office, President Biden issued several executive orders. Among these, executive action included halting funding for the construction of the wall along the U.S.-Mexico border and preserving a path forward for those individuals brought illegally to the United States as a child by their parents that are now adults (so called “Dreamers”/ Deferred Action for Childhood Arrivals “DACA” program recipients). President Biden also signed letters that had the United States rejoining the Paris Climate Agreement and halted the U.S. withdrawal from the World Health Organization. Notable for Mexico, President Biden appointed Ambassador Roberta Jacobson as his southwest border coordinator within the National Security Council.
The End of Outsourcing in Mexico?
On November 12, President Andrés Manuel López Obrador announced a bill initiative that, if enacted, will have a significant impact on outsourcing and the use of service entities currently in use to minimize Mexican employee profit-sharing obligations. The initiative includes amendments to the Federal Labor Law, the Social Security Law, the Mexican Tax Code, including changes to income and value added tax regulations, and several others. The President submitted this initiative to Congress and it is expected to pass more or less as proposed. Labor Secretary Luisa María Alcalde said outsourcing hurts workers by allowing companies to avoid granting benefits to subcontracted employees, a local paper reported. She also cited other abusive practices the law aims to curtail, such as companies firing workers before Christmas and rehiring them early in the year to avoid paying year-end bonuses.
How the U.S. Presidential Election Outcome Could Affect Latin America
As US citizens go to the polls, Latin American governments, businesses and citizens should examine how a re-elected President Trump or a newly elected Vice- President Biden may shape Western Hemisphere relations.
The results of this election will certainly affect Latin America, as each candidate views the region through fundamentally different lenses. President Trump has taken a transactional approach to foreign and trade policy, emphasizing trade deficits and surpluses while examining bilateral relationships in the context of narrowly defined US interests, such as stemming the flow of migration in the region. Former Vice President Joe Biden believes Latin America’s prosperity and security is fundamentally in the mutual interest of the US, and will adopt a far more comprehensive approach to Western Hemisphere relations.
Mexico’s Infrastructure Plan 2020-2024
On Monday, October 5, Mexican President Andrés Manuel López Obrador presented a package of 39 infrastructure projects that he intends to move forward in conjunction with the Mexican private sector. These projects would invest approximately 300 billion pesos in the communications, energy, tourism and water sectors. This announcement represents the reactivation of the previous plan that was presented in November 2019, but postponed by the 2020 global health pandemic. It is estimated that this investment package will represent 1% of Mexico’s Gross Domestic Product (GDP) and will generate 185,000 jobs, according to Jorge Nuño, spokesman of the Unit of Investments of the Ministry of Finance.
Mexican President Visits Washington
With the U.S.-Mexico-Canada Agreement (USMCA) recently going into effect on July 1, the President of Mexico made his first visit to the United States on Wednesday, July 8. This marks his first visit to the White House and his first foreign trip since taking office in December 2018; it comes ahead of the U.S. election cycle in November. President Andres Manuel López Obrador’s delegation includes Secretary of Foreign Relations Marcelo Ebrard Casaubon; Mexican Ambassador to the United States Martha Bárcena Coqui; Secretary of Economy Graciela Márquez Colín, and the head of the Office of the Presidency, Alfonso Romo Garza. Canadian Prime Minister Justin Trudeau declined to join the meeting, which initially had been envisioned as a two-day North American Leaders Summit but has been pared back to one day.
Mexican Supreme Court issues an injunction of the SENER Policy
On June 22, 2020, Mexico’s independent antitrust regulator (“COFECE”) filed a legal claim (controversia constitucional) with the nation’s Supreme Court arguing that the Ministry of Energy’s (“SENER”) Agreement setting forth the Policy of Reliability, Safety, Continuity, and Quality of the National Electric System (“Policy”), as published in the Official Gazette of the Federation on May 15, 2020, not only violates articles 16, 28, and 133 of the Mexican Constitution, but also Mexican laws applicable to the energy sector. COFECE asks the Supreme Court to clarify the limits of SENER’s authority “concerning the constitutional principles of competition when [SENER] issues a regulation that severely affects the competitive dynamic[s] of a market.” On June 29, 2020, the Supreme Court agreed with COFECE granting an injunction against the “effects and consequences” of the Policy until the matter is definitively resolved. Continue Reading
Mexican Court Orders a Definitive Suspension of the Enforcement of SENER and CENACE Measures
On Wednesday, June 10, the Mexican court specialized in economic competition issued an order granting the definitive suspension of the Ministry of Energy’s (“SENER”) Agreement setting forth the Policy of Reliability, Safety, Continuity, and Quality of the National Electric System (“Policy”) and the independent system operator’s (“CENACE”) preoperative testing restrictions. This means that neither the Policy nor CENACE’s restrictions may be further pursued or enforced until a final judicial order on the matter is issued (“Order”). The Order is one of a growing number of judicial orders against the López Obrador administration’s recent attempts to restructure the Mexican electricity market to the detriment of renewable energy producers and outside of the established regulatory and legal parameters.
CRE Adds its Name to the List of Agencies Disturbing Mexico’s Legal and Regulatory Certainty
Since our May 20 blog post, the Energy Regulatory Commission (“CRE”) added its name to the list of agencies disturbing Mexico’s legal and regulatory certainty. Additionally, the López Obrador administration has spent time publicly defending recent Ministry of Energy (“SENER”) and independent system operator (“CENACE”) regulatory changes affecting renewable energy projects.
On the evening of May, 28, 2020, CRE, in extraordinary session, passed two resolutions modifying the tariffs applicable to the transmission services used by “legacy renewable and cogeneration energy contracts” (those contracts executed prior to the 2013 Energy Reforms, “Legacy Contracts”), to bring them to 2018 tariffs. In support of the new tariff structure, the head of the Federal Electricity Commission (“CFE”) publicly asserted that renewable energy engages in unfair competition because they do not pay for access to the grid and get paid even when they do not consistently produce energy. This assertion is incorrect. Although Legacy Contracts receive “preferential” treatment, such projects are required to pay interconnection tariffs, albeit low interconnection tariffs. Legacy Contracts receive preferential treatment because, at the time they were executed, the Mexican government sought to promote renewable energy project development in Mexico. Since renewable energy projects were more expensive to develop versus projects using conventional energy sources, Legacy Contracts enjoyed an economic incentive to development in the form of low interconnection tariffs. Legacy Contracts were also specifically carved-out of the Ley de Industria Electrica’s application, which means the they should continue to enjoy such treatment and be governed by the Ley del Servicio Público de Energía Eléctrica until the end of their term.
COVID-19 and Construction in Latin America
The impact of COVID-19 on global economies is being unfolded as we continue to experience the period of prolonged economic uncertainty. As the virus’ epicenter has shifted from Asia to Europe, and now Latin America, financial markets have plummeted and with them sectors such as the project development, infrastructure or construction sector on a worldwide scale. The construction sector, has started to experience the effects of the pandemic, nonetheless, the coming months will unravel the extent to which the effects will affect the sector in Latin America.
As witnessed, the majority of Latin American governments set strict quarantine measures almost at the same time as Europe began its lock down. Along with the international travel bans and internal mobility restrictions, measures to ensure employee health and safety, supply and material delay have decreased the expectations for the rest of 2020 and upcoming years. These factors have meant a major setback for the construction sector at all levels, from project planning, to proposals and bidding, to the most affected of all, ongoing construction projects. The impossibility of workers to go on site given lock down provisions, health and safety adjustment in the work place and job cuts, have slowed down the sector.