Francisco A. Laguna
In October, I gave a lunch presentation at Keller and Heckman’s TSCA and International Chemical Regulatory Law Seminar in Washington, DC. The discussion centered on 5 Latin American countries: Argentina; Brazil; Colombia; Mexico; and Venezuela. We’re converting my speech into a five-part blog series. This fourth article focuses on Mexico.
TransLegal has offices throughout Latin America and is available to assist clients with any level of representation required. Click to review the projects TransLegal has completed in the region. Currently, we are working on several projects in Mexico that involve biotechnology, foods and the use of GMOs for industrial purposes.
There is a concept under Mexican law: what is not prohibited is permitted. Of course, there is the related corollary – not sure if it’s permitted, but until you’re caught, go for it.
This approach has resulted in complicated rules and regulations that fall into 3 categories: those that attempt to address too many “what ifs”; those that require companies to apply for authorizations and permits across the board; and those that are just confusing. This can make doing business in Mexico costly, time consuming and sometimes frustrating.
For example, we had to apply for a license for a client to carry out certain scientific and commercial activities in Mexico. We read the regulations, and frankly the client could have fallen within 3 different permits. The activities covered by each of the permits included elements of what the client wanted to do, but not exactly all of it. We went to the authority for clarification, which took months to obtain, including various meetings with assistants, technical people and ultimately the head of the division. Even when we received the requested guidance from the agency, we were told, “of course, we can change our position, during the application process.”
The Mexican system gives public officials broad discretion on various levels, which makes corruption an issue of concern. Post-Walmart, we all understand how widely corruption had permeated certain sectors of the Mexican bureaucracy. There have been some steps to curb bribery, such as a move to establish an Inspector General’s Office to investigate allegations of corruption, but enforcement to date is not overly robust.
Like Colombia, Mexico is a member of the Pacific Alliance that also has signed free trade agreements with numerous countries. To attract FDI to take advantage of an economically integrated community of what could soon be 6 countries, Mexico has to be a place where doing business is easier than the rest.
The clarity of Mexican laws greatly affects that ease. Unfortunately, sometimes, they are clear as mud. That, combined with agency discretion, can present interesting situations. A prime example is a recent immigration case we handled. A client required a visa to conduct his activities in Mexico. We reviewed the facts and the visas included in the 2013 immigration law. We concluded that he needed a visitor visa for remunerated activities. Yes, such a thing does exist. We confirmed our conclusion with the Ministry of Foreign Relations. The client happily goes to the Mexican consulate to apply for his visitor visa. Consulates, by the way, fall under the jurisdiction of the Ministry of Foreign Relations.
Client meets with a consular officer who tells him that to conduct his business in Mexico, he needs to be a Mexican permanent resident, which is a much more complicated process. Well, you can imagine that the client was no longer happy, and he was particularly unhappy with me. We go back to Foreign Relations, and our contacts confirmed, again, that we were right. However, they also noted that the consular official had ultimate discretion, but that we could appeal his decision.
In addition, the apparent mass-kidnapping and execution of 43 university students in the state of Guerrero by local government and police officials in concert with drug traffickers does little to promote FDI in the country.
Mexico has to address the bureaucracy, the corruption and the violence to achieve a higher place on the global economic stage.