Mexico Manufacturing
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This Week in Mexico – March 7 , 2020

This Week in Mexico

Coronavirus: Mexico may consider border-crossing limits

Summary

Mexican health officials say the virus would spread from the US to Mexico, as confirmed cases remain low in the country. Mexican Deputy Health Secretary Hugo Lopez-Gatell has said authorities would consider mechanisms to control the flow of people entering Mexico from the United States in an effort to limit the spread of the coronavirus. “The possible flow of coronavirus would come from the north to the south. If it were technically necessary, we would consider mechanisms of restriction or stronger surveillance,” Lopez-Gatell said at a news conference on Thursday.

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U.S., Canada, European nations meet to discuss concern over Mexico energy policy

Summary

The United States, the European Union, Canada and six European nations have held joint talks on concerns over Mexico’s energy policy, sources told Reuters, as President Andres Manuel Lopez Obrador pushes for a bigger role for the state in the sector. The unusually broad diplomatic encounter is a measure of how the leftist Lopez Obrador’s break with the energy policy of the previous government is worrying economies that have traditionally been some of Mexico’s biggest foreign investors. U.S., Canadian and European officials privately voice concern that Mexico’s energy policy is eroding the legal foundations of contracts worth billions of dollars with the previous administration, in what they fear is a creeping squeeze-out of their interests. Mexico’s government denies it is undermining those deals, but says prior contracts were often damaging to the country, and has sought to renegotiate the terms of some. At Friday’s meeting in Mexico City hosted by the U.S. embassy, diplomats from Britain, Canada, the EU, France, Germany, Italy, the Netherlands and Spain discussed their concerns and how best to relay them to Lopez Obrador, said five people familiar with the gathering. Asked for comment, the U.S. embassy responded to Reuters that it did not discuss its diplomatic conversations. The other foreign embassies did not reply to requests for comment, nor did Lopez Obrador’s office.

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Mexico to invite oil and gas investment

Summary

Mexico will soon invite private firms to invest in oil and gas projects to help a flagging economy hit by the fallout of coronavirus, Finance Minister Arturo Herrera said on Wednesday, but cautioned energy auctions were not on the cards for now. Herrera said a long-awaited energy plan will be unveiled soon that will detail where and how much private firms can invest. “It’s not just a general outline, we’re going to tell them this project here, here and here, this amount and size is open to investment,” Herrera said in an interview on the sidelines of a banking conference in Acapulco. Under President Andres Manuel Lopez Obrador, Mexico has pursued a more statist approach to the energy sector and suspended auctions of oil fields.

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Battle over oil discovery is test case for Mexico investors

Summary

Energy companies trying to do a deal with Pemex to share one of Mexico’s biggest oil discoveries accuse the state giant of dragging its feet to win control of the project, in a test case for foreign investment under President Andrés Manuel López Obrador. A consortium made up of Talos Energy of the US, the UK’s Premier Oil and Wintershall DEA of Germany discovered the nearly 700m-barrel Zama field in 2017. They are awaiting a decision from the Mexican government on how to share responsibility for a resource that spills into acreage owned by Pemex.  But negotiations with Pemex have become bogged down, raising the alarm in a sector already concerned by Mr López Obrador’s efforts to build up the state-controlled company and limit private oil participation. “I don’t understand who a delay benefits — it’s not us, or the arrival of first oil, or workers or the Treasury — we can’t figure out who else that benefits except Pemex,” Tim Duncan, Talos chief executive, told the Financial Times.  Pemex is demanding a 50-50 split on the project and wants to operate it despite its fragile finances and lack of experience working at the depths of the Zama field, about 60km off the coast of Tabasco. The target is to begin pumping oil by 2023 — a year before the end of Mr López Obrador’s six-year term — by which time the president has promised that Mexico’s oil production will have risen to 2.6m barrels a day from 1.73m at the end of 2019.

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Moving Your Manufacturing From China: Look South (Again) to Mexico

Summary

The new North America Free Trade Agreement (NAFTA) has taken shape in the form of the United States Mexico Canada Agreement (USMCA). The USMCA is the updated version of the trillion-dollar free trade agreement between the three countries that is 25 years old. The new deal includes big changes for the automotive industry and new policies and standards for the environment and, most importantly, labor. It provides better protection for intellectual property and some provisions for digital trade.

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