Published on October 27, 2020

NEWS UPDATE 01 MAY 2020

Coronavirus is spreading exponentially in Mexico, but this week´s update also includes good news! On Tuesday, the European Union and Mexico announced to have concluded the negotiations of their new trade agreement. Once ratified, practically all trade in goods between the EU and Mexico will be duty-free. The agreement also includes progressive rules on sustainable development. The treaty opens the door for new opportunities for Dutch companies in Mexico, particularly in the agrifood and manufacturing industries.


As Mexico published figures indicating a 1.6% contraction of the economy in Q1 compared to the last 3 months of 2019 on Thursday, President López Obrador warned that greater economic difficulties are foreseen for the next months, to be combated through the earlier introduced strategy of government spending austerity. Meanwhile, the US and Mexico simultaneously confirmed that USMCA will be implemented starting 1 July, as planned. Experts believe the treaty will aid in overcoming the economic crisis caused by coronavirus more rapidly, particularly since Mexico´s manufacturing industry is a key player in North American supply chains. The oil price showed signs of recovery on Thursday and Friday after a slight increase in fuel demand and the OPEC+ agreement to reduce production measures came into effect.

Over in The Netherlands, King Willem-Alexander celebrated his 53rd birthday during Kingsday at home, for the occasion dubbed Woningsdag (“home-day”). In a nationally televised speech to the nation, he paid tribute to healthcare workers and others battling the virus and hoped for better times ahead. The country is demonstrating a steady decrease in the number of new corona patients and deceased daily. Prime-Minister Rutte explained on Wednesday that no mayor announcements on further ease of the corona measures would be announced this week. The Crisis Committee of Ministers (MCCb) did not deliberate on economic measures this week, and it was also announced that the frequency of the sessions will be further reduced.

 

Dutch Kingsday in Mexico

 

The Embassy of The Netherlands in Mexico, the Dutch Association, Holland Alumni Network and Holland House Mexico hosted a virtual toast to King Willem-Alexander on Monday afternoon in Mexico, thus gathering over 200 Dutch and Mexicans. Local entrepreneurs, including HHM member and waffle baker Koen Houwen offered authentic Dutch snacks that had been home delivered to the participants earlier.
 

Furthermore, the Dutch Embassy delivered 430 bouquets of tulips to IMSS medical personnel, in recognition of their work in the battle against COVID-19. The flowers were delivered to the Infectiology Hospital of the La Raza National Medical Center, the public hospital responsible for coronavirus patients.

 

Corona crisis in Mexico

On Thursday, the National Institute of Statistics and Geography (INEGI) announced a 1.6 percent deceleration in the country's GDP in Q1. President López Obrador optimistically stated that “some predicted that the drop would be greater and fortunately it was not”. He reiterated that the earlier announced economic measures of austerity will help the recovery of the expected further economic contraction.

Ending speculation on possible pandemic-related delays, the USMCA regional trade deal now appears on track to go into effect July 1. On the Mexican side, a successful reboot assumes the country will by then be past its first wave of COVID-19 infections and deaths, as it is now experiencing rapid escalation, to the extent that this might allow authorities to consider opening the US-Mexico border to non-essential trade.

It also requires some break in mounting hostilities between the private sector and the President over the government’s economic response to the crisis in order to decide on urgent questions, such as how to implement the treaty, while also deciding which regions will be ready to open trade traffic by when and whether certain industries need to open more quickly than others. President López Obrador said. “Even the US war industry is supplied with parts manufactured in Mexico”. The president added that there is constant communication between the economic authorities of the three regional partners to craft the best reactivation plan and that once this is done, foreign investments are likely to thrive in Mexico.

“What changed is that there is a rising desperation about the depth of the economic crisis associated with COVID-19,” said Duncan Wood, director of the Wilson Center’s Mexico Institute, responding to questions from BNamericas. “As we have seen from recent experience, supply chains matter a great deal and the pressure from the US government on Mexico to reopen parts of its economy essential for US supply chains shows this in spades.”

Nonetheless, Minister of Foreign Affairs (SRE) Marcelo Ebrard said Mexico follows its own agenda. “This is not a bilateral issue since there has not been any contact with the Secretary of State,” he said. Ebrard highlighted that the priority in Meixco is public health. “The stages set are clear. This is what the president has decided and Mexico is going to follow this agenda”.

After catastrophic weeks for international oil prices and hence the Mexican economy, prices jumped this Thursday morning, buoyed by signs that excess supplies are not increasing as rapidly as expected and signs of a slight increase in fuel demand, which has collapsed due to global confinement restrictions linked to the coronavirus. Furthermore, the agreement reached by OPEC+ on 12 April to reduce global oil production came into effect today, 01 May, thereby contributing to a further climb of the oil price. "If we see continuity in this trend in the coming weeks, this could suggest that the oil market has left behind the worst of the crisis," said Warren Patterson, head of commodity strategies at ING.

Monitor the spread of the Coronavirus in Mexico: (see map here).


Sources: 1,2,3,4,5,6,7,8,9

 

HHM Committee
Human Resources, Diversity & Inclusion

The first session of the HHM committee Human Resources, Diversity & Inclusion was held last Thursday. The aim of the committee is to contribute to the sustainability and productivity of the participating companies and their surroundings; through the identification, active promotion, and implementation of policies and practices that stimulate equality, diversity, and inclusion in the workplace.

During the meeting, business coach Hernando Santemaría from ActionCoach Mexico provided a practical presentation of measures to ensure effective home office. The committee will gather every six weeks and is open to HHM members only. The following organizations are represented in the committee: The Dutch Embassy in Mexico, Vopak, Red Explorer, Aktion, Mexico Business Publishing, Control Union, Baker McKenzie, Mowat, Leaseplan, Shell, DLL, IPS Powerful People, KLM, Randstad.

 

Free Trade Agreement Mexico - European Union

Last Tuesday, the European Union and Mexico concluded the last outstanding element of the negotiation of their new trade agreement. Trade Commissioner Phil Hogan and Mexican Minister of Economy Graciela Márquez Colín agreed on the exact scope of the reciprocal opening of public procurement markets and a high level of predictability and transparency in public procurement processes. With this, the EU and Mexico can advance to the signature and ratification of this agreement in line with their respective rules and procedures.

Dutch companies import 1.9 billion euros worth of goods from Mexico annually and export 2.5 billion euros worth of goods to the North American country. ”Since the previous trade agreement (2000), trade between the EU and Mexico has increased by about 8 percent annually. In total, trade has increased by 148 percent since then. With this new trade agreement, trade relations for Dutch trading and manufacturing companies are further facilitated and strengthened”, explains Evofenedex director Bart Jan Koopman.

Key points for Dutch entrepreneurs include the following. Import duties will no longer apply to 98 percent of the products, an advantage of EUR 100 million for the EU. In the Netherlands, the liberalization of tariffs is particularly important for agricultural products, such as dairy, poultry, egg products, flower bulbs and grains. Customs procedures for many products are also simplified. For dispute resolution, Mexico has accepted the EU's proposal to establish the Investment Court System. Anti-corruption provisions and a chapter on sustainable development have now also been included in relation to the existing EU-Mexico agreement. Notably Human Rights have also become part of the agreed terms.

Sources: 1,2