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GENERAL SITUATION IN MEXICO

Weekly Review # 85 I December 15, 2021

MANUFACTURING INDUSTRY FURNITURE MANUFACTURERS CLAIM INDUSTRY TO GROW 22% IN 2021 Furniture industry suppliers expect to close the year 2021 with 22% growth compared to 2020 and become one of the winning sectors of the pandemic by attracting new buyers from the United States and Canada, after the trade blockade led by the former country with China, said the president of the Mexican Association of Suppliers of the Wood and Furniture Industry (AMPIMM), Alberto Vazquez. He stated that 2022 will remain positive for the furniture industry’s productive chain after the domestic market increased the demand for wood furniture and similar products due to the home office, derived from the pandemic, whose inertia continues. After announcing the 2022 edition of MEM Industrial, the president of the sector’s suppliers informed that in the last few days, he made visits with business people from the United States and Canada to attract business in Mexico, and they will come to see the facilities. “Next year, we see it very positive. The following year will be better due to the fact that the relations of the United States with China and other Asian nations that are furniture suppliers have conflicts and continue to benefit Mexican suppliers, who are making contacts to supply furniture to the US and Canada” he said. As economies have reopened and recovered in several countries worldwide, the demand for furniture products and supplies has grown. Many factories have reached their production limits and cannot meet all that demand. The problem, he added, were the prices of the containers that rose to 15,000 dollars, a very large figure compared to 2,000 or 2,200 dollars per

SOURCE: El Economista

container that cost before the COVID-19 pandemic, so that the inputs from Asia, now are beginning to be supplied from Mexico, and in other cases have become more expensive. However, it is attractive for North American business people to do business in Mexico and be supplied with furniture and wood supplies. “Some (businessmen) have already signed deals to supply furniture, and others are waiting to achieve something (next year).” “In Mexico, we are interested in providing the quality of the products, and the partners we have are international companies,” said Alberto Vazquez, saying that they have high-quality products that help companies to export to the US. The director of MEM Industrial, Azul Ogazon, mentioned that the entire value chain of the wood and furniture processing industry will be supported under six categories: forestry technology; machinery and industry 4.0; suppliers; upholstery since the domestic market has been growing and there is a great potential to export, which is the most important thing.

MANUFACTURING INDUSTRY U.S. AUTO SUBSIDIES WOULD DE FACTO REPEAL THE USMCA: CANADA The automotive subsidies being considered for approval by the U.S. Congress are equivalent to a 34% tariff on related imports from Canada and, if approved, would imply “a de facto repeal” of the Mexico-USCanada Agreement (USMCA), warned the Canadian government. Consequently, it anticipated that if the subsidies presented in the initiative were put into effect, they would be countered with retaliatory trade tariffs on U.S. products, impacting other areas unrelated to the automotive industry, such as the dairy sector and copyrights. “We are deeply concerned that certain provisions of the electric vehicle tax credits proposed in the Build Back Better Act would violate U.S. obligations under USMCA,” they said. The subsidy ranges from $7,500 to $12,500 and would be higher if conditions are met for assembly in that country, with a certain percentage of U.S. components and unionized labor. “The proposal amounts to a 34% tariff on electric vehicles assembled in Canada. The proposal is a significant threat to the Canadian auto industry and is a de facto derogation of the USMCA,” asserted Freeland and Ng.

SOURCE: El Economista

Potential violations of the USMCA if U.S. subsidies pass-through • In the area of national treatment, the USMCA provides that each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation and sale or other disposition of investments in its territory. • Also, in the field of investment, the USMCA provides that each Party shall accord to covered investments treatment in accordance with customary international law, including fair and equitable treatment and full protection and security. • The USMCA requires each Party to maintain domestic competition laws that prohibit anticompetitive business practices to promote competition in order to enhance economic efficiency and consumer welfare and to take appropriate measures with respect to such practices. • Each Party may conduct a countervailing duty investigation according to regulations relating to subsidies involving unfair trade competition.

KEY POINTS OF PRESIDENT ANDRES MANUEL LOPEZ OBRADOR’S Morning Press Conference December 8-14, 2021

COVID-19 Undersecretary Hugo Lopez-Gatell reported that the week opened with a 5% reduction in cases of COVID-19, noted that the trend of hospitalization is also decreasing. He indicated that 137,919,624 doses had been applied, of which 80,966,414 people have received the complete scheme. This week, it is expected the reception of 6,110,040 doses of vaccines against COVID-19.

MIGRANT ACCIDENT IN CHIAPAS Luis Rodriguez Buzio, Commander of the National Guard, reported on the accident on December 8. The preliminary report is about 54 deceased and 105 injured people who were transferred to various health institutions. He mentioned that they were provided with consular services, funeral services, accommodation, and food, and injured people will be granted a card for humanitarian reasons.

The Secretary of Foreign Relations, Marcelo Ebrard, announced that by the end of 2021, Mexico will have received around 200 million doses of COVID-19 vaccines.

On the issue of migration, he reiterated that he addressed the issue of inequality and violence in Central American countries when he met with President Biden at the White House. He mentioned that it is necessary to act immediately because there are 300,000 people at risk migrating from Central American countries. He said that he has already sent “desperate texts” to continue with his social programs in the area to prevent them from migrating because “it deserves urgent attention.”

ELECTRIC REFORM The President said that Pemex is a company protected and backed by the Government of the Republic and the Federal Electricity Commission. The President indicated that previous administrations gave foreign companies more facilities than the CFE. When the energy reform was carried out, hydroelectric plants were not considered clean energy generators; they were excluded.

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