Mexico: Politics, Laws, Institutions, and Economy
Translated by Justine Second
I chose to combine my Spanish-English translation project with my international marketing group project which is to launch frozen bread in Mexico. The original data we collected comes from the website of the Spanish “Oficinas de comercio”, an organization to help companies to invest abroad and that belongs to the Spanish “Ministerio de industria, turismo y comercio”. This information is consequently in Spanish, however not all the members of the group understand Spanish. So, we needed a translation into English for them to use the data and build the marketing strategy.
Source texts: ICEX México Marco político ICEX México Marco legal, ICEX México Marco institucional, ICEX México coyuntura político-económica.
Mexico: political environment
The “Constitución Política” (Political Constitution) of the “Estados Unidos Mexicanos” (United Mexican States) dated February 5th, 1917, sets up Mexico as a Representative, Democratic and Federal Republic composed of 31 States and of one “Distrito Federal” (Federal District). All of the states are united in a Federation, but are free and sovereign within their internal regime.
The legislative power lies in the “Congreso de la Unión” (the National Congress) made up of the “Cámara de Diputados” (the Chamber of Deputies) (www.camaradediputados.gob.mx) and the “Senado” (the Senate) (www.senado.gob.mx). The Chamber of Deputies is composed of 500 members, 300 of which are elected by relative majority and 200 by proportional representation system. The latter uses the system of regional lists in 5 plurinominal voting districts of 40 seats each, renewed every three years. On the other hand, the Senate is composed of 128 senators. 96 are elected by relative majority and the other 32 are elected every six years according to the proportional representation principle, through the regional lists in only one national plurinominal voting districts.
The three major parties of in Mexican politics are the “Partido Revolucionario Institucional” (PRI), the “Partido de Acción Nacional” (PAN) and the “Partido de la Revolución Democrática” (PRD).
The executive power lies in the President of the Republic and in his cabinet. Felipe Calderón Hinojosa has been the President of the United Mexican States since December 2006 and his term of office is from 2006 to 2012. Calderón is the second president from the “Partido de Acción Nacional (PAN)” after his predecessor, Vicente Fox (2000-2006), put an end to 70 years of hegemony of the PRI (Partido Revolucionario Institucional). Calderón’s term of office began with high tensions, as the candidate from the “Partido de la Revolución Democrática –PRD”, Andrés Manuel López Obrador (dubbed AMLO), leader of the leftist coalition, did not recognize the election results of July 2nd, 2006. These elections were the most disputed of Mexico’s recent history. However, during his first year of government, Calderón managed to both diminish some political tensions and also to facilitate some necessary consensus in the National Congress in order to approve the most relevant reforms. Some of the approved reforms of 2007 include: the reform of pensions for the “Trabajadores del Estado” the changes in the electoral area, the fiscal reform which created new taxes and gave more autonomy and budget to the “PEMEX” ( Petróleos Mexicanos, a major Mexican oil company). In 2008 a more complex energy reform was approved, however it is a partial reform due to its limitation of only the hydrocarbon sector.
On July 5th, 2009 the latest significant electoral meetings were held, responsible for intermediate federal elections for the change of the Chamber of Deputies (every three years) and the “gobernaturas” in six States (Colima, Campeche, Nuevo León, San Luis Potosí, Sonora and
Querétaro).
The Partido de la Revolución Institucional (PRI) largely won these elections with 36% of the votes,
which enabled it to obtain 237 “diputados” (Members of Parliament) compared with 106 in the last period of office. Since then it has become the major political group in the Chamber. The current party in power, Acción Nacional (PAN), which obtained 27% of the votes, is no longer in the majority in the Chamber as it went down from 206 Members of Parliament to 143. The third main party in the Congress is the “Partido por la Revolución Democrática (PRD)” which has 71 Members of Parliament (nearly 12.2% of the votes) compared to 127 in the previous period of office.
As far as the elections for each States are concerned, the PRI obtained the ruling position in five of six States where they were held. It is the PAN that obtained the control of Sonora.
To learn more, here are the links to the “directorio de los Estados en México” (directory of the useful links to the various Mexican States) and to the website of the Republic Presidency where you can find information about the different branches of the Government: http://www.directorio.com.mx/estados/, http://www.presidencia.gob.mx/
Mexico: legal environment
In the past few years, many barriers barring foreign investment have been abolished in Mexico. A
new set of rules was promulgated to oversee this area.
The “Ley de Inversión Extranjera” (LIE) (Law about Foreign Investment) signed on December 27th,
1993 and its “Reglamento” (Regulation) dated September 8th, 1998 set up the current rules for
foreign investment in Mexico.
The organization in charge of the enforcement of the LIE is the “Comisión Nacional de Inversores
extranjeras (CNIE)” (National Commission for Foreign Investment). It belongs to the “Secretaría de Economía” (Secretary of State for Economic Affairs).
As far as the effects of the LIE are concerned, foreign investment means:
a) The participation of foreign investors in any proportion of the share capital of Mexican
companies.
b) Investment made by Mexican companies with a majority of foreign capital (for the effects of
LIE to be valid “majority in foreign capital” means when its participation is more than 49% of
the share capital), and
c) The participation of foreign investors in activities and transactions covered by LIE itself.
This law also includes activities restricted for foreigners and activities in which participation is not restricted.
You can find further information about the international and national regulatory environment for
foreign investment, administration procedures and statistics at the website listed below:
www.economia.gob.mx/normatividad empresarial/ inversión extranjera
Mexico: institutional environment
Bilateral relationships between the European Commission and Mexico were made official when the “Primer Acuerdo Marco” (First Framework Agreement) was signed in 1975. On July 1st, 2000 the “Acuerdo de Asociación Económica, Concertación Política y Cooperación” (Economic Partnership, Political Coordination and Cooperation agreement) between the European Union and Mexico established new prospects for the bilateral relationship. The ambition of political dialogue in this Agreement and the scope of the cooperation which includes 27 sectors to make it more comprehensive than the “TLCAN” (Tratado de Libre Comercio de America del Norte, that is NAFTA). The EU-Mexico Agreement has significantly improved the entry requirements for European products in the Mexican market. 48% of industrial European products are exempted from custom tariffs since the Agreement came into force and there is a one hundred per cent tax deduction since 2007. For agricultural products the schedule is delayed and the tax deduction will be total for determinate products in 2010.
Mexico: economic situation
On the economic level, the situation in Mexico became progressively worse through 2008 and 2009, as a consequence of both the global economic situation and the crisis in the U.S. Indeed, the prospects in regards to the evolution of the Mexican economy rely highly on the production activity of the U.S. In fact, the U.S. is the major purchaser of Mexican products and the first investor in Mexico. In the second term of the year, the PIB of Mexico dropped by 10.3% compared to the same period in 2008. The country then entered into a period of recession. In this context, the Mexican government is enforcing the necessary anti-cyclical economic measures including increasing public expenditure in housing and infrastructure and it is attempting to reinforce domestic demand.
