Hugo Cuesta
Partner
Cuesta Campos Abogados
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Applying International Standards to Local Ways

Wed, 02/21/2018 - 08:58

Q: In which legal areas do foreign companies face the most issues when establishing operations in Mexico?

A: A common pitfall that foreign companies encounter is antitrust. In Mexico, business arrangements evolve at a faster pace than legal requirements. Frequently, clients approach us for advice on antitrust matters after they have reached a preliminary agreement and that is a problem.

Q: How is Mexican law evolving after the strategic reforms introduced by Peña Nieto’s administration?

A: Based on the information we have received, we have concluded that the impact and benefits from a number of these reforms are being felt right now. As of today, US$70 billion have been committed in investments by foreign entities in the energy sector. That is one of the reasons the government needed to liberalize oil prices to adjust them to international markets. Right now, one of the main risks for the Mexican economy is the financial deficit, which is the result of the debt acquired by federal and local governments. Having a tighter fiscal policy is extremely important. Other significant reforms that have been approved and will be felt shortly are the Telecommunications Reform and, most importantly, the Education Reform. The latter will have the most significant impact on Mexico in the coming years.

Q: What modifications to the current fiscal scheme could boost foreign investment in Mexico?

A: Considering the US political administration’s intention to change the country’s fiscal scheme, Mexican authorities will be forced to enact changes in response. This fiscal adjustment should include two things. One is to significantly expand the base of taxpayers in Mexico; the other is to grant specific incentives to the most important taxpayers in the country, so those companies do not lose competitive advantages as a result of a very burdensome and heavy fiscal apparatus. An additional measure the government could take is to introduce a number of other deductions that are badly needed, such as employment benefits and medical expenses.

Q: How does Cuesta Campos contribute to anticorruption efforts in the country?

A: We are one of the strongest advocates behind a number of international standards that could be applied to companies to reduce corruption alongside Mexican anticorruption laws. We have worked on important initiatives, such as the 3de3 law, which demands that any candidate to any public position comply with the transparency provisions of this law. We also have seen a level of improvement regarding corruption, particularly in certain states. We believe that the appointment of the Anti-Corruption Prosecutor is urgently needed.

Q: What are the main challenges and growth opportunities that Cuesta Campos expects during 2017?

A: The main challenges we anticipate will come from the positioning of the US political administration and the possible reduction of foreign investment, particularly from American companies in Mexico. Another challenge we foresee is the exchange rate and market volatility, as well as the uncertainty surrounding global economies.

However, there are also significant growth opportunities, particularly for our banking and finance area. We expect a significant number of existing credits to be restructured as well as new loans. This situation will require some heavy lifting and the participation of experienced law firms to successfully renegotiate these types of agreements.

I would strongly encourage businesspeople to concentrate on the facts and not to be distracted by what they read in the media regarding the supposedly terrible situation of the country. There are various strong indicators that the Mexican economy is healthy, much less dependent on American investment and oil prices than in the past. We need to stop speculating and understand that Mexico is in it for the long haul and that the relationship with the US has always had ups and downs. We believe that, in the end, reason will prevail.