ICC Mexico criticizes regulation on the dispatch of hydrocarbons

The International Chamber of Commerce Mexico (ICC Mexico) criticized this Thursday a new regulation on the dispatch of hydrocarbons and minerals in Mexico.

The government of Mexico published on June 11, in the Official Gazette of the Federation, the Seventh Resolution of Modifications to the General Rules of Foreign Trade for 2020, which provided, as of the next day, that the authorization for the dispatch In a Place Different from the Authorized One (LDA) for petroleum, hydrocarbon, mineral and other chemical precursor merchandise, only State Productive Companies may have it.

«(This is) to the detriment of private initiative companies,» said ICC Mexico.

At a global level, the ICC has 130 National Committees around the world and we are a consultative body of the UN, WTO, OECD, G8, G20, World Bank, Business Industry and Advisory Council (BIAC), International Labor Organization (ILO) , and International Organization of Employers (IOE).

Indeed, the federal government of Mexico modified the corresponding rule to establish that authorization may only be granted for the entry or exit of merchandise from the country by a place other than the authorized one, or, where appropriate, an extension, to the productive companies of the State, its subsidiary bodies and subsidiary productive companies, in the case of the following merchandise:

• Hydrocarbons, petroleum products, even mixed with other components that do not come from oil or natural gas, petrochemicals and their specialties, as well as biofuels, including those listed in Sectors 12 «Ethyl Alcohol» and 13 «Hydrocarbons and Fuels», of Section A , Annex 10 and Annex 14.
• Chemical precursors.
• Minerals.

ICC Mexico

“We understand the Federal Government’s concern about fuel smuggling, we support efforts to end such practices that damage the Nation’s resources, and we agree on the need to strengthen the legal framework applicable to the institutions and authorities responsible for monitoring compliance. in this matter, as well as inter-institutional collaboration,” said ICC Mexico.

But he added that the new provision has several implications:

– Immediately, almost 30% of the operations carried out only by ports will be lost.

– It will have an in crescendo impact on the collection of taxes for our country from the point of view of importers.

– Practically, it will acquire an expropriating effect because the infrastructure for unloading the controlled areas that exists in the ports is, for the most part, privately owned.

– It is discriminatory because only State Productive Companies may have such authorization.

– Represents a great economic blow not only for what already exists and is going to be lost, but also for what is going to stop investing.

– It not only affects the private companies that have the authorization to dispatch in the LDAs, but also their clients and the entire production, logistics and distribution chain in the food, pharmaceutical and other sectors, which will result in a significant impact on the existence of products and prices for the final consumer.

– It could cause a shortage of hydrocarbons and related products, since the State Production Companies themselves depend, to a significant extent, on imports from individuals.

– In times of serious economic crisis, employment and wages, as a result of the Covid-19 or SARS-Cov2 pandemic, it will impact millions of jobs in companies that will be affected by the reduction of their operations.

– The rule is contrary to the foundations on which Mexico joined international free trade agreements, including the Agreement between Mexico, the United States and Canada (T-MEC), but also the Economic Cooperation Agreement with the European Union and the Trans-Pacific Economic Cooperation Agreement (TPP).