Volume 5, Number 21, Page 4
Mexican Congressional Highlights
Compiled by Alfonso Trujillo from the Cámara de Diputados press releases
Agriculture
In light of the negative effects NAFTA has had on Mexico’s agricultural sector, the Livestock and Agriculturse Commissions announced plans to pursue legal reforms during the next regular session, aimed at providing security, confidence, objectivity, and income-yield capacity to Mexican producers. Both commissions aim to address factors such as declining agricultural production, growing unemployment, worker migration, lack of investment resources, a commercial deficit, and diminished quality of life.
The Agriculture Commission will present a Rural Development Law initiative to the Congress, in an attempt to address these needs on a regional basis. Earlier, during a reunion with the Latin American Parliament (Parlatino), the president of the Livestock Commission stated Mexico’s government currently offers insufficient resources to better the production and living conditions of most farmers, and that the legislature must take measures to increase production subsidies, reduce the commercial deficit (which has increased almost 50% since 1993), improve technology, and increase price supports as opposed to social welfare programs. Boletin 874, 8/22/98 & 852, 8/3/98
Members of the Agriculture, Livestock and Agrarian Reform Commissions announced that they will jointly seek major increases in budgetary resources towards support of Mexico’s agricultural sector, in order to establish mechanisms of fiscal evaluation and simplify administration of agrarian reform. During a question and answer session with the subsecretary of the Department of Agriculture (Sagar), Jose Antonio Mendoza Zazueta, various concerns over the effectiveness of government programs such as Procampo and the Rural Alliance were discussed, as well as the likelihood of budgetary increases in rural development programs.
With respect to these questions, the Subsecretary affirmed his beliefs that there will be increases in available resources. Addressing specific questions over Mexican export quotas for coffee, problems in exporting produce to the U.S. and the implementation of point-of-origin inspections for such produce, Mendoza Zazueta responded that lowered tariffs in North American and European coffee markets are favorable to stemming the 4% decrease in Mexican coffee exports, that Mexican produce exports to Asia and Europe have increased and partially offset U.S. export problems, and that sanitary inspection procedures in Mexican states such as Sonora and Sinaloa, for products such as grapes & mangoes, have improved inviting private enterprises to establish independent certification labs in all productive areas such as these. Boletin 898, 9/4/98
Banking
The Financial Health Programs Investigation Subcommission presented before the Congress a report detailing Federal support aimed at privatization and financial rescue of Mexico’s banking system, as well as invitations for collaborative efforts with various actors in the Mexican banking system. Boletin 895, 9/3/98
Addressing the fact that fifty percent (50%) of Mexicans do not have access to institutional financing programs, the joint Agriculture, Social Development, & Cooperative Support Commission held the First National Cooperative & Unified Financing Forum, September 23-25, 1998. The forum’s objectives were to support the unification of the cooperative financing movement in Mexico, through the formulation of a Savings & Public Credit Institutions Law initiative. Discussion also involved the mobilization of savings, financial innovation, and commercial banking relations among Mexican citizens, challenges to the expansion of services in rural areas as well as agricultural sector security, and the restructuring of the Mexican banking system, to reflect the Canadian, German, English and Spanish social banking models. Boletin 917, 9/13/98
Jose Angel Gurria Trevino, head of the Treasury Department, spoke before the Mexican Congress to highlight economic matters discussed in the Fourth Annual Government Report, specifically on Executive policy in regards to the Mexican Banking system and the Savings Protection Banking Fund (Fobaproa). Gurria Trevino maintained that the government engages in rigorous scrutiny of banking actions and pursues sanctions to the fullest extent of the law.
He stated that the Executive branch has been forthright in sharing information with the Congress on the Fobaproa audits, and pledges further collaborative efforts with the Mexican legislature in light of the current economic instability caused by financial crises in Asia and Russia as well as falling petroleum prices. Gurria Trevino acknowledged that Mexico’s access to external financing and investment has been negatively impacted by these financial market instabilities, and that during the previous session the Executive had presented reform initiatives to the Congress aimed at revising the supervisory mechanisms of Mexico’s banking system, establishing a savings protection regimen for the smaller financial actors, aiding in the recuperation of credit debt and accelerating the sale of Fobaproa assets as measures to strengthen the Mexican economy .
After his presentation, two question and answer sessions were held, where Congressional concerns were raised primarily over conversion of Fobaproa liabilities into public debt without Congressional authority, and the ensuing consequences to the Mexican economy. Other issues discussed included policy concerns regarding rising poverty, unemployment, interest rates, and taxation, the impact of international market crises on the stabilization of the Mexican peso and efforts to raise the peso’s acquisitive power, sanctions on Mexican bankers involved in criminal activities and the impact all of the above would have on future Federal budgets. Gurria Trevino defended Fobaproa as a proper bailout of the Mexican banking system necessary for Mexico’s financial stability and reaffirmed the Executive ‘s commitment to increases in social spending. Boletines 909, 910, & 911, 9/9/98
Presiding members of the Treasury, Budgeting, and Chief Treasury Accountant Oversight Commissions formally signed an agreement, soliciting the head of the Treasury (SHCP) for information previously requested on the Fobaproa and FAMEVAL audit process. The solicitation affirmed Chief Treasury Accountant Oversight Commission Director’s rights to access the National Banking and Securities Commission database for data verification purposes, as well as a procedural review of the audits under norms established by the Internal Affairs & Political Coordination Commission. Boletin 872, 8/20/98
Commerce
Secofi’s efforts to provide without charge the services of the Mexican Enterprise Information System (SIEM) have failed to date because of insufficient resources and less-than efficient operations, according to members of the National Heritage & Industrial Development and Commerce Commissions. Proposals will be made by both commissions at the upcoming regular congressional session, aiming at reducing the financial burden on Mexican SBE’s and increase confidence in the SIEM. One possibility is that SIEM’s services may become regionalized, to cutting operation costs and improving the reliability of information gathered. Boletin 875, 8/23/98
Two separate reform initiatives will be presented before the Congress during the upcoming regular session, in support of Mexican small-business enterprises (SBE’s). The Social Development Commission will seek an increase in the 1999 Federal Budget for spending on programs sponsored by the National Social Enterprise Support Fund (Fonaes), in order to improve infrastructure, financing, employment and investment. In the upcoming regular session, members of the Micro, Small, and Medium Industry Subcommission will present a fiscal reform package aimed at reducing the tax burden upon Mexican SBE’s, limiting taxation to VAT, income tax and contributions to the National Workers’ Housing Fund Institute (Infonavit). Currently, tax collection from SBE’s comprise only ten percent (10%) of Mexico’s GDP, as opposed to 25-30 percent in other developed countries. Boletin 864, 8/12/98 & 861, 8/9/98
Economics
During a meeting with representatives of the Organization for Cooperation in Economic Development (OCED), the National Heritage and Industrial Development Commission called for administrative deregulation of foreign -owned businesses in Mexico, a concession to the global economic reality which faces Mexico today. In order to stay economically competitive, Mexican enterprises must be allowed to operate by the same parameters, in equal conditions, and with commiserate governmental support as their international counterparts. The commission advised that before any agreement with the European Community is finalized, Mexico’s financial systems must address the disparity in available credit between large and small business enterprises, in order to compete with better financed foreign companies. Boletin 860 & 858, 8/8/98
The Budgeting Commission formally approved the upcoming schedule of meetings between the Executive departments and their corresponding Congressional commissions. The meetings’ purpose was to review Federal Public Treasury spending in FY 1997, to run between September 9 - October 23, 1998. At the end of this analytical process Congress intends to determine how close expenditures for each budget item came to provisions established by the 1997 Federal Expense Budget. Boletin 899, 9/5/98
Immigration
In light of projections that fifty percent (50%) of the population of Southwestern U.S. states like California, Texas, and Arizona will be of Latin heritage by 2020, the International Affairs Committee announced the creation of an Affairs of Mexican Citizens Living Abroad Subcommission. The primary objective of this Subcommission will be to analyze economic, social, legal, and working conditions of immigrant workers, focusing on those located in the United States, and will involve collaboration with the Department of Foreign Relations to ensure these workers’ rights are protected. Boletin 900, 9/5/98
Securities
Among the many initiatives to be presented by the Justice Commission during the September session of Congress is a legal reform package that will increase sanctions against white-collar crimes. Individuals convicted for securities crimes such as fraud will receive stiffer penalties, from 10 to 15-year maximum prison terms, and current laws will be modified to close current loopholes and deficiencies. Boletin 866, 8/14/98s
From the Editor
For several months Mexico’s Supreme Court was preparing to issue a decision on a case dealing with the legality of compounding interests (see May 29, 1998 issue of the Inter-American Trade Report).
The matter under consideration was the common practice of banks inserting a clause in consumer loan contracts allowing them to compound interests. Two federal courts, one in the state of Chihuahua and the other in Mexico City, had issued conflicting rulings so the Supreme Court had the final word.
What initially appeared to be a common judicial decision created a political controversy throughout Mexico. First it was anticipated that one of the Chambers of the Court would rule on the case, but after an outcry among different pro-consumer groups the Supreme Court decided that the full court should decide the case.
After several months, and with the pressure of groups like “El Barzon,” the Supreme Court announced it would decide the case at a public hearing October 7. Members of “El Barzon” blocked the entrance of the Supreme Court for over 11 hours and at one point during the hearing, members of the group stood up to turn their backs to the Justices of the Court. At that time the President of the Court decided to move to chambers to end the session privately.
The decision of the Court, as was expected, has caused different reactions in Mexico but new developments may affect the decision of the Court, and more importantly, put members of the Supreme Court itself in jeopardy of prosecution.
A circular dated May 9, 1995 and signed by the President of the Supreme Court announces to the employees of the judicial branch that a special agreement had been reached with Banco Internacional (Bital), freezing interest rates that have been increasing due to the economic crisis of December 1994.
Now attention has turned to whether the President of the Supreme Court had a conflict of interest in the decision. Different opinions have been raised among legal scholars about the conflict of interest within the Supreme Court. Senator Juan José Quirino, who is the president of “El Barzon,” is seeking to start a “political trial” against several members of the Court.
Contributing Editor: José Felipe García
