Weekly Report 79 by PRODENSA

GENERAL SITUATION IN MEXICO

Weekly Review # 79 I November 3, 2021

MANUFACTURING INDUSTRY STPS LAUNCHES VOLUNTARY LABOR VERIFICATION PROGRAM The Ministry of Labor and Social Welfare (STPS) published in the Official Gazette of the Federation the creation of the Voluntary Verification Program, which will allow employers to register digitally and avoid ordinary inspections, as long as they comply with the requirements. However, the authority will not relinquish its power to monitor compliance by employers with the labor obligations established in the labor regulations and the application of the corresponding sanctions in case of non-compliance. The program is part of the Alternative Mechanisms to Inspection, which are the schemes that the STPS made available to employers to report or prove compliance with labor regulations, including the use of private agencies for their evaluation, the actions of agreement and collaboration through agreements, notices of operation, questionnaires, evaluations or similar requirements so that the employers or their representatives and the members of the commissions that must exist in the work centers, provide the required information. According to the agency, the program’s purpose is to increase the coverage and rationalization of the resources and services provided by the labor inspection. On the other hand, that “the employers have alternative schemes that allow them, in a simple, transparent, friendly and free manner, to comply with the obligations derived from the labor regulations, as well as to encourage compliance for the benefit of the workplace and the workers.” The aspects that employers may report voluntarily are the level of compliance with the general working conditions, training and education, safety, and health, among other aspects, that prevail in their workplaces.

GOOD NEWS AMLO AGREES TO VACCINATE CHILDREN AGED 12 TO 17 AGAINST COVID-19

Upon meeting the goal of vaccination against COVID-19 for adults, with at least one dose, President Andres Manuel Lopez said that his government is willing to comply with the disposition of judges who order to vaccinate minors. Although he clarified that these orders of the judges, especially that of a judge who gave a five-day ultimatum to vaccinate all minors between the ages of 12 and 17, are not final resolutions. “We are going to comply with what the judges are resolving, but they are not yet final resolutions. Here the Secretary of the Interior, who is a lawyer, can explain to us what effects these protections have. “Yes, there is something that I want to say, which is essential and which is supported by doctors, scientists, those responsible for the entire public health strategy. We have to take care that the private, the particular, is not placed above the public ”, he explained. Accompanied by the head of government of the CDMX, Claudia Sheinbaum, and the governors of Quintana Roo and Baja California, Carlos Joaquin Gonzalez and Jaime Bonilla, states that have the greatest advances in vaccination, the President said that the vaccination plan applies based on principles of equality so that the public interest prevails.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference October 27-November 2, 2021

VACCINATION The President pointed out that currently, the seriously hospitalized people are the ones who did not accept to get vaccinated. He assured that Mexico is one of the countries with the most vaccines applied and will continue with the vaccination plan. He said that they are being produced and packaged in Mexico half of the vaccines. ELECTRIC REFORM To an express question about the study prepared by the United States Department of Energy. United that makes several warnings about the Electricity Reform, President Lopez Obrador pointed out that they do not have information on what is being done in the country. He reported that he just sent a letter to President Joe Biden stating his position on the program that heads the American President on carbon emission.

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

MEASURES TAKEN BY STATES IN MEXICO

BAJA CALIFORNIA The State of Baja California remains considered medium-risk or yellow light for the State government and high-risk or orange light for the Federal government. Official reports confirmed 2,849 active cases, with hospital occupancy at 26.01%. The vaccination plan is subject to new dates due to the entry of the new government that occurred this Monday.

SONORA The State of Sonora is considered lowrisk or green light with six municipalities in the medium-risk tier or yellow light and only one municipality out of 72 in the high-risk tier or orange light. 28 new cases were reported in the past 24 hours. The vaccination plan continues this week by applying the second dose of Astra Zeneca and Pfizer to the adult population and the vaccination in adolescents between 12 and 17 years of age with comorbidities in different municipalities.

MEASURES TAKEN BY STATES IN MEXICO

COAHUILA The Secretary of Health in Coahuila announced that a new variant of COVID-19 was detected. Epsilon is classified as “of interest,” not of concern, but that requires the authority of health to keep it under surveillance. The cases occurred in Saltillo and Torreon. So far, there are variants, Alpha with 27 cases, Gamma 10, Delta 10, and Mu 4. TAMAULIPAS Tamaulipas will continue the first half of November without significant restrictions on economic activity due to the COVID-19 pandemic, as the Ministry of Health allows all businesses to continue the sale of free alcohol and the operation of bars, canteens, entertainment, and concert centers. NUEVO LEON This week began the application of the Pfizer vaccine to children between 12 and 17 years of age with comorbidities. The Secretary of Health in Nuevo Leon, Alma Rosa Marroquin, reported that 37 thousand minors are registered and estimates that the biological against COVID-19 will be applied to all in a month and a half.

MEASURES TAKEN BY STATES IN MEXICO

QUERETARO In Queretaro, with data until November 2, there have been 224 cases of the disease in the state, 129 women and 95 men. The accumulated record is 97,700 cases; 51% are women, and 49% are men. 262 patients were discharged from the hospital, resulting in 91,566 discharges (93.19%). With mild symptomatology, isolation, and home management, 607 patients and 97 were hospitalized, 35 seriously ill. Five thousand 940 deaths have been recorded. Concerning the availability of general hospitalization beds and beds with ventilators, with information as of October 31, there is an occupancy rate of 19 percent, based on the Negative Network of Acute Respiratory Infections (IRAG). In Queretaro, 14 percent occupancy of beds with ventilator and 22 percent occupancy of beds without a ventilator. JALISCO Nine weeks after the return to classes, the strategy designed for returning to the classroom in Jalisco continues to work, as the reported incidence of COVID-19 infection in schools shows a slight decrease. The incidence of active cases of

COVID-19 detected in basic education schools continues to be minimal, with only 0.0014 percent of students, that is, 24 active cases; 34 cases were reported among educational personnel, equivalent to 0.0275 percent of the total staff. Cases were identified in 55 schools, which corresponds to 0.41 percent of the 13,415 basic education schools in the state. According to the epidemiological follow-up carried out by the Jalisco Ministry of Health (SSJ) in coordination with the Jalisco Ministry of Education (SE), this week it is reported that in the age group of students from 3 to 14 years old (basic education) there are 117 cases that started symptoms in the last 15 days, of which only 24 were identified in schools. Most of the positive cases in this age range occurred in the AMG with 73 since this area has a higher demographic concentration.

MEASURES TAKEN BY STATES IN MEXICO

AGUASCALIENTES There are already 35,837 accumulated cases of coronavirus and 436 cases under medical control and with infectious capacity. The balance of the pandemic activity indicates that there are 11,603 suspects and 86,204 who tested negative. According to the federal report, there are so many suspected cases, many negative cases, and so many people have managed to beat the disease and recover their health, but we must not let our guard down. It is worth noting that the Centenario Hospital Miguel Hidalgo reports that it has an 80% occupancy of therapy beds, while the General Hospital of Zone No. 1 of the IMSS, which attends the largest number of infected people in Aguascalientes, remains without available beds. From November 1 to 14th, Aguascalientes continues to be in a yellow traffic light, with a medium risk of infection.

GUANAJUATO Until November 2, 2021, in Guanajuato, 189,590 cases of COVID-19 have been confirmed, 646 are under investigation, while 251,074 cases have been ruled out. As for community-transmitted cases, 189,434 have already been identified, and there have been 13,009 deaths in the state. Guanajuato started the month of November as the second place nationally in active COVID cases. The last time Guanajuato ranked second nationally was in February 2021.

MEASURES TAKEN BY STATES IN MEXICO

STATE OF MEXICO The government of the State of Mexico informed that the immunization of people over 18 years of age against COVID-19 will conclude in November. So far, 81 percent of the population has already received two doses. CDMX National and international companies, as well as trade associations and confederations, recognized the work of the head of government Claudia Sheinbaum after concluding the vaccination campaign against coronavirus or COVID-19 in people over 18 years of age in Mexico City. They agreed that this action plan will allow encourage economic recovery. On October 28, Mexico City reported an advance of 99.5% in adults with at least one dose, as well as 95% with a complete immunization scheme; with these figures, Mexico City is one of the leading cities in the world in terms of immunization, even ahead of Tokyo, New York, and Los Angeles.

ECONOMIC GROWTH IN MEXICO MEXICO’S ECONOMIC ACTIVITY POINTS TO AN IMPROVEMENT IN OCTOBER: IMEF

The Mexican economy has shown signs of recovery after the gradual opening. Economic activity in Mexico points to an improvement at the beginning of the fourth quarter of 2021, after the weakening recorded during the third quarter of the year, according to the Mexican Institute of Finance Executives (IMEF). “The Mexican economy has recovered since the third quarter of 2020, thanks to a gradual reopening. However, it was temporarily affected by the consequences of the contagion outbreaks during December and the summer of this year, as well as by the recent implementation of the reform against labor outsourcing,” the institute highlighted in its statement. It added that the U.S. economic rebound was the first

SOURCE: El Financiero

boost to the national economy’s growth, triggering a rapid reopening of the manufacturing sector, although recently marred by the shortage of some inputs. IMEF also highlighted that “the increase in mobility has boosted the recovery of the rest of the sectors, which allowed a rapid recovery of private formal employment and, consequently, of private consumption.” During October, the IMEF Manufacturing Indicator registered an increase of 0.8 points with respect to September to 50.7 units, returning to the expansion zone (above 50 units) after a month in the contraction zone (below 50 units). On the other hand, the IMEF Non-Manufacturing Indicator registered an increase of 1.7 points to close at 52.1 units, adding eight months in the contraction zone.

TOWARDS THE “NEW NORMAL”

DISTRIBUTION OF DEATHS PER STATE DUE TO THE PANDEMIC

INFORMATION UPDATED ON NOVEMBER 1ST 2021 AT 19:00 HRS LOCAL TIME.

NEW CASES REPORTED: 994

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

CONFIRMED CASES: 3,808,205

NEW DEATHS REPORTED: 99

CONFIRMED DEATHS: 288,464

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 18.48

0 to 10.0 (12 states)

40.1 to 50 (2 states)

10.1 to 20 (7 states)

50.1 to 60 (0 states)

20.1 to 30 (7 states)

60.1 to 70 (0 states)

30.1 to 40 (3 states)

>70 (1 states)

Elaborated by Prodensa with information from the Health Ministry of Mexico

PANDEMIC’S SITUATION IN THE WORLD • As of November 1st 2021, globally there have been reported 246,594,191 confirmed cases (296,434 new cases) of COVID-19 and 4,998,784 deaths (4,671 new deaths*). Lethal rate: 2%. In the last 24 hours, 456,522 cases and 8,086 deaths were reported globally.

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

TOWARDS THE “NEW NORMAL” INCIDENTS OF CONTAGIONS IN THE POPULATION BY REGION AS OF NOVEMBER 2

DEATH INCIDENTS IN POPULATION BY REGION AS OF NOVEMBER 2

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

EHS LABOR

NEW LABOR RECORD PUBLIC SYSTEM AND 2ND PHASE OF THE LABOR LAW REFORM IMPLEMENTATION. Starting November 3, a new era in Mexico’s labor system begins. The Federal Center for Conciliation and Labor Registry takes national responsibility for all Labor Registration. (Union and Collective Contracts Registration). With the full transition of the labor registration, a new public system will keep record of all Collective bargaining agreements, Collective contract and salary reviews, Internal Work Rules, and Union registration. The system will be digital and open to the public. Also, starting this month the second phase of the Labor System that transitions from the administrative system to the new the judicial systems begins in 13 states: Aguascalientes, Baja California, Baja California Sur, Colima, Guanajuato, Guerrero, Morelos, Oaxaca, Puebla, Queretaro, Quintana Roo, Tlaxcala y Veracruz. All new labor disputes, both individual or collective, in those states will be handled by the new labor courts under the new system.

ALVARO GARCIA HR, Vice President

BOOSTER SHOTS - FREQUENTLY ASKED QUESTIONS Are booster shots the same formulation as existing vaccines? Yes. COVID-19 booster shots are the same formulation as the current COVID-19 vaccines. However, in the case of the Moderna COVID-19 vaccine booster shot, it is half the dose of the vaccine people get for their initial series. If we need a booster shot, are the vaccines working? Yes. COVID-19 vaccines are working well to prevent severe illness, hospitalization, and death, even against the widely circulating Delta variant. However, public health experts are starting to see reduced protection, especially among specific populations, against mild and moderate disease.

DAVID ANTUNEZ Environmental, Health, and Safety Director.

TRADE COMPLIANCE

HOW IS DIGITAL TRANSFORMATION IMPACTING YOUR TRADE COMPLIANCE STRATEGY? Multinational companies investing in Mexico have a great concern about minimizing their risks levels regarding taxes and customs duties, particularly in a changing and complex regulatory environment. Trade compliance requires strict observance of provisions comprised in various laws such as customs, value-added tax, general import and export taxes, the federal fiscal code, among others, even with the income tax law. In addition to the changing environment, audits and verifications from the Tax Administration Service and some states of the Mexican federation have become more constant due to the improvement in their ability to identify deviations or alleged irregularities using more precise risk models based on technological systems. It is highly recommended that upper management provide guidance and support to have strong reliability on high-tech solutions to maintain strict adherence to applicable regulations and reduce human errors. In some cases, investing in new or better technologies may represent a higher cost –outside the budget– but in the medium and long term, it should be the right decision for the best interest of the corporations.

ALBERTO ORTUZAR International Trade Compliance Director

Contact us for detailed information about our International Trade Compliance Solutions. We are ready to assist you with your trade compliance strategy.

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.