Weekly Report 61 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review # 61 I June 30, 2021

MANUFACTURING INDUSTRY TRADE FRICTIONS IN NORTH AMERICA PERSIST ONE YEAR AFTER USMCA After bitter discussions to renegotiate the trade agreement between the United States, Canada, and Mexico, the USMCA, which came into force amid the pandemic, is far from having an end to trade frictions between the three countries. But it could, under the leadership of Joe Biden’s administration, turn the tide in terms of labor legislation. The U.S.-Mexico-Canada Agreement (USMCA) will celebrate its first year of existence on Thursday. On July 1, 2020, it replaced the North American Free Trade Agreement (NAFTA) that had been in place since 1994, at the behest of the Donald Trump administration. The three partners always said this new agreement would be beneficial to their economies and their workers. But over the past year, the range of litigation between the U.S. and Canada on the one hand, and the U.S. and Mexico on the other, has expanded. Certainly, the USMCA removed a “cloud of uncertainty”

and thus improved the business climate, a sine qua non for promoting trade and investment, notes Jeffrey Schott, an expert at the Peterson Institute for International Economics think tank. Paradoxically, however, it also led to the emergence of numerous conflicts. “NAFTA was the vision of a North American single market that would gradually become more and more integrated, somewhat in the image of the European Union, although without going as far as the EU,” recalls Edward Alden, an expert at the Council on Foreign Relations. “The USMCA set the rules for the three distinct North American economies to cooperate where they can while setting rules to fight where they can’t,” he added. Therefore, we will see an increase in the number of disputes in the coming years because with “the framework of these rules, (countries) will act in their own interests, quite aggressively,” he estimated.

MANUFACTURING INDUSTRY

NEARSHORING TO INTENSIFY IN MEXICO Nearshoring will intensify in Mexico, driven by its logistical and legislative advantages compared to the rest of Latin America, said Ricardo Rocha, director of Logistics and Services for Latin America and the Caribbean at Maersk, the world’s largest shipping company.

Near-shoring is the practice of transferring a business operation to a nearby country, especially in preference to a more distant one. “Mexico has a strategic location and a logistical-legislative model that allows it to grow differently from other Latin American countries,” said Rocha.

Rocha pointed out that Mexico benefits from the trend that large U.S. importers want to diversify their supply risks from China and, in general, to have a nearby supply as part of the lessons learned from the COVID-19 pandemic.

In the last decade, Mexico has gained a share in total imports of products to the United States, going from 12% in 2010 to 14.9% in 2020. From January to April of this year, that share was 14.1%, although with atypical conditions, such as a shortage of semiconductor chips, a temporary restriction of Texas gas, and problems derived from the pandemic.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference June 23-29, 2021

COVID-19 Dr. Hugo Lopez-Gatell reported that the national scenario shows an increase in the pattern of confirmed cases of 12 percent, compared to last week. In general, it has a decrease in mortality and hospital occupancy derived from the application of vaccines and preventive measures. Around 44,385,584 doses have been applied in total, while more than 19 million people have a complete vaccination scheme. Rosa Icela Rodrigez, Secretary of Security and Citizen Protection pointed out that the vaccination program is being coordinated in the border areas of the northern part of the country. During this week, 93,395 doses of J&J vaccines donated by the US will be applied in 4 municipalities in the border area of Sonora. OPENING OF BORDERS The respective procedures are being carried out between California, the US, and Baja California, Mexico to open the border since it is on a par with the vaccinated population. The President pointed out that there is interest in the border area to open up as soon as possible. Regarding restrictions on people vaccinated with vaccines not recognized in certain countries, the President pointed out that it was decided to vaccinate the border population with J&J and Pfizer to avoid mobility problems with the US.

SOURCE: https://www.youtube.com/channel/UCxEgOKuI-n-WOJaNcisHvSg

FAKE NEWS The President of the Republic pointed out that every week, at the Morning Conference, a “Who’s Who” will be presented to expose false news and combat misinformation. This, after publicizing the tweet that generated the rumor that one of his sons would buy the Cruz Azul, soccer team. He indicated that he will seek a way to counteract information from traditional media. TAMAULIPAS ACTS OF VIOLENCE Regarding the alleged criminal acts that occurred in recent days, the President regretted the events and indicated that the matter is being investigated. There are already detainees, and he will ask his administration to report the progress. PRIVATE SECTOR The President indicated that he is not against business people and the private sector. He recognized that not everything could be done with public investment. That is why the private sector is also needed for the development of the country. He pointed out that his government is against corruption, of those who have amassed great fortunes overnight, and of those who have stolen money from Mexicans.

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA Continuing considered in the low-risk tier or green light, except for the city of Mexicali, the State of Baja California continues to see a decreasing amount of COVID-19 cases. Official reports confirmed that there are 330 active cases on a state level, with hospital occupancy at 22.94%, with 303 hospital beds available, as well as 232 respirators available for COVID-19 patients. The vaccination campaign has been quite aggressive in the last weeks, as the total number of applicated vaccines is at 2,387,735 according to official reports, getting the vaccination close to 100% of the State’s adult population.

SONORA The State of Sonora has the vast majority of its municipalities in medium risk tier or yellow light, and 4 municipalities, including Hermosillo, Caborca, Novojoa, and Cajeme, in the high-risk tier or orange light. According to the official report on June 28th, the State has 2,373 active COVID-19 cases, a big increase from the 1,897 active cases one week ago. There are currently 187 hospitalized COVID-19 patients, with 117 patients are considered acutely ill and 42 critical patients using respirators. All these statistics showed an increase from the previous weeks, which led the State to change measures and request less mobility from its citizens. According to the Health Secretary, approximately 85,000 Johnson&Johnson vaccines that were not used in Baja California were sent to border cities in Sonora, which will target the group of 18 to 39 years old. Most of these vaccines were sent to San Luis Rio Colorado, Nogales, Puerto Peñasco, and Sonoyta in an effort to start with the opening strategy of the border with the USA, which has been restricted only for essential travel since March of 2020.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA Ten cases of COVID-19 have been detected in students and teachers from different schools in the state of Coahuila since they returned to classes a month and a half ago. The Secretary of Education assured that the contagion occurred outside of the school. For this reason, the entity emphasized that the “Pilot Program for a safe return to the classrooms” is effective and will remain. TAMAULIPAS The second dose against COVID-19 began on Monday, June 28, for people from 50 to 59 and pregnant women in the municipalities of Nuevo Laredo and Victoria. The authorities announced that the program that will take place for 5 days.

NUEVO LEON The State Governor, Jaime Rodriguez Calderon, said that the state will keep the mandatory use of face masks in Nuevo Leon because COVID-19 infections are latent every day. There are still more citizen sectors to be vaccinated. Asked whether he would withdraw this measure, given that this restriction has already been removed in cities like Texas, the governor said that the state is not yet in the status to decide on this type.

MEASURES TAKEN BY STATES IN MEXICO

JALISCO Jalisco’s Ministry of Health informed that during the week of June 20-26, 200 thousand 11 vaccines against COVID-19 were applied, 15 thousand more than in the previous week. Most of them were administered in the metropolitan area and 13 municipalities of the Valles Region to people over 40 years of age and pregnant women with more than nine weeks of gestation and stragglers over 50 years of age. 131 thousand 37 doses of the pharmaceutical company Pfizer-BioNTech were applied; 65 thousand 696 of the laboratory AstraZeneca; 2 thousand 194 of CanSino and 1 thousand 84 of Sinovac (only applied in pregnant women). In total, more than two million vaccines have been administered in the state. Despite the appointment system at the University Center of Exact Sciences and Engineering (CUCEI) of the University of Guadalajara (UdeG), long lines continue to form for people who arrive three hours before the appointed time. For this Monday’s event, 6,500 doses were available from the pharmaceutical company Pfizer-BioNTech; six modules were installed inside the university center to simultaneously apply the vaccine to 100 people.

GUANAJUATO Guanajuato’s Ministry of Health announced the new infections and deaths due to COVID-19; among the information released on June 29, it is noteworthy that only ten patients have been confirmed hospitalized due to the disease, most of them women. The number of deaths due to coronavirus registered on June 29 in the state was six, with Comonfort, Guanajuato capital, Irapuato, Leon, San Miguel de Allende, and Silao being affected.

MEASURES TAKEN BY STATES IN MEXICO

QUERETARO COVID-19 rates continued to fall in the state during June. Between June 16 and 22, no deaths were reported due to this disease, said the state government’s organizational spokesman, Rafael Lopez Gonzalez. He pointed out that the state is one of the entities with the best Reproductive Index of the disease, representing an indicator that shows the average number of infected people for each person with COVID-19 during the infectious period. However, he affirmed that we must be alert because neighboring states are registering an increase in cases. The rate of reduction of active cases has stopped, going from -124 weekly average to -24. In addition, he called not to relax the sanitary measures even though other states are doing so, since the virus continues to be present in the state, and if the positivity and the number of active cases increase, so will the number of hospitalizations and deaths.

AGUASCALIENTES Aguascalientes will begin tomorrow, Tuesday, June 29, the application of vaccines against COVID-19 to people between 30 and 39 years of age, making it the first non-border state in the country to begin vaccination in this sector, according to Aldo Ruiz, state delegate of Development Programs in the state. Ruiz Sanchez informed that the “roadrunner brigades” will be deployed in the municipalities of Cosio, San Jose de Gracia, and Rincon de Romos from 8:00 a.m. to 5:00 p.m. or until the available doses are exhausted. More than a year into the pandemic and with more than three thousand two hundred deaths due to COVID-19 in Aguascalientes, only 5.68% of the entire population in the state had access to PCR tests that the public health system performs to detect COVID-19 and to keep the Federal Government informed of the situation. According to information from the Institute of Medical Services of Aguascalientes (Issea), as of June 28, 81,5 thousand 5 PCR tests had been applied in public hospitals in the state, which, compared to the 1,425,607 inhabitants recently counted by the National Institute of Statistics and Geography (Inegi), represents the 5.68% above. In other words, in Aguascalientes, not even one out of every ten people was tested in the public sector.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO Increases in cases have been recorded. Even though the State of Mexico registers a hospital occupancy rate of 12.8 percent, in medical units focused on the care of patients with COVID-19, there are already seven hospitals with 100 percent occupancy in their general beds. Health authorities registered 27 cases of the new Delta variant.

CDMX Health authorities informed that cases had increased 11% from last week, and it is expected to continue increasing. In Mexico, 223 cases have been identified with the Delta variant of COVID-19, described in India with the B.1.617.2 lineage and circulating in 12 states of the country, but basically concentrated in Mexico City. Alberto Cedro Tanda, the researcher in medical sciences and coordinator of the SARS-CoV-2 sequencing project at the National Institute of Genomic Medicine (Inmegen), explained that 66.7 percent of the samples sequenced in Mexico City in the first two weeks of June reported a predominance of the variant.

VACCINATION PROGRESS

As of June 26, 43,912,990 doses of vaccine have been applied in all of Mexico since December 24, of which 18,953,253 have the complete scheme. 63 percent of people over 18 years of age who have received the vaccine have a complete scheme, and 37 percent have started it and are waiting for the required number of days to receive their second dose. By state, Baja California remains the state with the highest percentage of the vaccinated adult population, followed by Mexico City, Tamaulipas, Yucatan, and Zacatecas. As of June 28, Mexico has had an availability of 51 million 961 thousand 165 doses from Pfizer-BioNTech, AstraZeneca, Sinovac, National Research Center in Epidemiology and Microbiology Gamaleya, Cansino, and Johnson & Johnson.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON JUNE 29, 2021 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 1,661

SOURCE: https://www.gob.mx/salud/

CONFIRMED CASES: 2,507,453

NEW DEATHS REPORTED: 44

CONFIRMED DEATHS: 232,608

INCREASE OF CONFIRMED CASES SINCE THE FIRST REPORT MAP WITH THE DISTRIBUTION OF THE INCIDENCE RATE OF ACCUMULATED CASES OF COVID-19 BY ENTITY OF RESIDENCE.

National rate 1944.18

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of June 28, 2021, globally there have been reported confirmed 180,817,269 cases (325,138 new cases) of COVID-19 and 3,923,238 deaths (6,467 new deaths*). Lethal rate: 2.2%. • In the last 14 days, the number of new cases accounts for 3% (5,001,927) of the total of accumulated cases.

SOURCE: https://www.gob.mx/salud/

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF JUNE 28

DEATH INCIDENTS IN POPULATION BY REGION AS OF JUNE 28

SOURCE: https://www.gob.mx/salud/

EHS

RECOMMENDATIONS HOW TO ASSESS AND RESPOND TO POST-VACCINATION SIGNS AND SYMPTOMS IN EMPLOYEES

These approaches apply to employees who have received COVID-19 vaccination in the last 3 days (including the day of vaccination, which is considered day 1) and are not known to have had exposure to COVID-19 in a community, nonhealthcare workplace, or healthcare setting in the last 14 days. Employees experiencing symptoms who have had exposure to someone with confirmed COVID-19 in the previous 14 days should be excluded from work and evaluated for COVID-19. Tailor the approaches suggested in the following recommendations to fit the characteristics of the specific case and the workplace: Signs and Symptoms Not Typical after COVID-19 Vaccination ANY signs consistent with COVID-19 (e.g., cough, shortness of breath, runny nose, sore throat, loss of taste or smell) Suggested Approach Exclude from work pending evaluation by a healthcare provider for potential causes, including SARS-CoV-2 infection, as appropriate. Criteria for return to work depending on the suspected or confirmed diagnosis. Employees with confirmed or suspected COVID-19 should isolate at home, follow government-recommended steps, and not return to work until they meet criteria to discontinue home isolation (or return to work, if healthcare personnel) in consultation with healthcare providers. Unvaccinated workplace contacts should be notified and advised to quarantine and self-monitor for symptoms.

DAVID ANTUNEZ Environmental, Health, and Safety Director.

LABOR

RECOMMENDATIONS UPDATES FOR COVID-19 PREVENTIVE MEASURES IN THE WORKPLACE The Occupational Safety and Health Administration (OSHA) has made several updates to the guidance to mitigate and prevent the spread of COVID-19 in the workplace. Although in some places in North America, the use of respirator covers is no longer mandatory, it is important to consider that the OSHA Guide mentions that the employer is obliged to evaluate the risks in the companies. When there is a need to provide respiratory protection, the use of respirator covers may be mandatory. Another document that can also serve as a reference for employers, in view of the relaxation of measures in some states, is the Aerosol Transmissible Disease (ATD) standard of California (CAL/OSHA). This standard is intended to prevent the development of infectious diseases in workers who could become infected by exposure to air that has the potential to contain viruses (including SARS-COV-2). While the CAL/OSHA ATD standard is only mandatory for certain health care facilities in California, it can provide guidance for all other businesses.

ALVARO GARCIA HR, Vice President

BASIC PROTECTIVE MEASURES AGAINST COVID-19

1 2 3 4 5 Wash your hands frequently with soap and water for 20 seconds.

When coughing or sneezing, cover your nose and mouth with a disposable tissue or use the inside corner of your arm.

Avoid shaking hands and kissing.

Keep your workspace clean and don't share personal items and utensils.

If you show symptoms of a cold or flu, go to a doctor. Do not self-medicate and inform your supervisor and Human Resources department.