Volume 5, Number 5, Page 4
Congressional Highlights
MEXICO
compiled by Alfonso Trujillo
Taxes — Addressing the Budget, Planning, and General Account Commission and the Treasury Commission jointly, the head of the Department of the Treasury defended their approximately US$2.08 billion spending increase in the 1998 Federal Expense Budget. Boletín 495, 2/20/98.
Taxes — During a special joint assembly of both congressional houses, the head of the Department of the Treasury held a question and answer session to discuss the state of the Mexican economy and to elaborate upon a future budgetary framework with possible substantive reforms to sustain economic growth. Among the issues discussed were the stabilization of revenues from the Mexican petroleum industry with regard to the world market as well as internal price controls; the level of federal subsidies for Mexico’s energy sector; the structuring of the national debt and levels of taxation; access to credit and the participation of Mexican SBE’s in the international export market; dispersal of budgetary resources to local levels of government; and the appropriate use of the Federal Economic Contingency Fund. Boletin 496, 2/20/98.
Business Organizations — The National Heritage and Industrial Development Commission convened their Legislative Action Forum in Support of the Mexican Industrialization Program, setting forth their agenda to innovate policy intended to strengthen the participation of Mexican SBE’s in the international export market; achieve goals of modernizing legal norms; improve the qualifications of Mexico’s labor force; reduce importation; and create the National Technological Center for the Development of Small Business Enterprise to promote balanced regional industrial development. Boletines 486 & 489, 2/17/98.
Taxes — The Science and Technology Commission sent to the Department of the Treasury a proposal detailing a fiscal incentive program to promote technological development and competitiveness of Mexican businesses— incentives that may include income tax reforms. Boletín 484, 2/15/98.
Transportation — Members of the Communication and Transportation Commission agreed to form a subcommission to follow up on the Total Development Project of the Tehuantepec Isthmus, which proposes the transformation of Mexico’s transportation system through the creation of a viable commercial alternative to the Panama Canal and the upgrading of existing modes of transportation (railroad, marine) and communication infrastructure. Boletín 480, 2/14/98.
Environment — The Permanent Commission announced unanimous opposition to the establishment of a radioactive waste confinement facility in Sierra Blanca, Texas, 20 miles from the Mexican border. The commission contends that such a facility would violate the 1983 Peace Accords between the U. S. and Mexico and would pose a great risk to inhabitants in the surrounding region, which experiences high seismic activity. Boletín 474, 2/11/98.
Labor — The Social Security and the Treasury Commissions will consider a proposal to have the federal government suspend delivery of workers’ savings to licensed retirement savings account institutions, in order to investigate alleged duplication of accounts. The proposal would also ensure that the administrators of these Retirement Savings Accounts (IRAs) do not collect handling fees on inactive accounts. Boletín 472. 2/11/98.
Trade — The Permanent Commission met with a legislative delegation from France on February 11, 1998 to discuss the pending commercial treaty between Mexico and the European Union (EU). The meeting focused on opportunities for Mexico to sustain more balanced commercial relations at the international level, in order to reduce its trade dependence on the U.S. and increase commercial exchange with the EU and with France in particular. Boletín 468, 2/11/98.
Labor — In response to the demands of Mexico's disabled population, the director of the National System for Integral Family Development (DIF) informed Congress of DIF's plan to promote the incorporation of the disabled into the labor force. The plan aims to encourage public policy based on a culture of respect and tolerance for this segment of the population. Boletín 466, 2/11/98.
Consumer Law — The head of the Department of Commerce and Industrial Development (SECOFI) met with the united Agriculture, Commerce, National Heritage and Industrial Development, and Distribution of Consumer Goods and Services commissions to outline plans for deregulating and privatizing the national sugar industry, as part of other import monitoring practices implemented to guard against a financial crisis similar to that suffered by the Asian countries. Boletín 464, 2/10/98
FROM THE EDITOR
by Felipe Garcia
Two regions that compete for foreign investment have suffered economic debacles this decade. First Mexico entered into an economic crisis in 1994. The crisis affected Mexico and then spilled over into the rest of Latin America in what is now known as the “tequila effect.” Three years later, the rising economies of the Orient began to struggle. Markets in countries like Hong Kong, Taiwan and South Korea plunged, sending financial shock waves to the rest of the world's markets.
The impact of the Asian crisis in Latin America is being felt primarily in three areas: foreign investment, antidumping and exports.
Investors have become skeptical about putting their money into emerging markets. Investment that used to flow into Latin America — mainly to Argentina, Brazil, Chile and Mexico — is slowing down while investors reassess their investment strategies.
Products imported into Latin America from Asia have been subject to extensive antidumping investigations. Mexico has announced that the Department of Commerce and Industrial Development (SECOFI) will closely observe the trade balance with Asia in order to detect possible dumping practices. SECOFI will pay special attention to steel, petrochemical, chemical and textile products.
Asia's economic boom prior to its crisis afforded a strong market for Latin American exports. Mexican cement giant Cemex is one of many companies whose exports to Asia skyrocketed during this period. In 1996, Cemex exported 4.31 million tons of cement, of which 2.61 million were shipped to Asia — a figure almost double its 1995 exports. Now, Cemex and other companies are reevaluating their strategies for sales toAsia.
Latin American countries face the challenge of reinforcing business relationships with existing trade partners, helping them to recover their confidence. This will not be an easy task. Argentina and other countries have already started this process (see p. 1103). Canadian and Argentine companies have taken concrete steps toward increasing joint investments.
Meanwhile, Latin American countries can take advantage of trading with partners in their own region, where no one has to be convinced of the potential that exists.
