Business Between the United States and Mexico

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Business Between the United States and Mexico

• Mexico has the worlds tenth largest population.
• Its income per head is larger than all the
  regions other major economies.
• Mexicos GDP is ranked as 14th in the world.
• Mexicos free market economy has entered the
  elite trillion-dollar class.
• The United States accounts for 87 of Mexicos
  exports.
• The United States provides 61.8 of Mexicos
  imports. (Down from 74 in 1999.)
• Mexicos GDP growth on an annual basis is almost
  identical to the United States.
• (2004-2005 figures.)

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Business Between the United States and Mexico

• Mexico is having to compete with India and China
  for foreign investors looking for more
  competitive labor costs, and economies with huge
  growth potential.
• However, many U.S. firms still prefer Mexico for
  their international location.

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Business Between the United States and Mexico

• There are advantages to locating in Mexico.
• Geographic proximity
• Advantageous for companies wanting to manufacture
  a product outside the U.S., and then import back
  into the states.
• U.S. experts can reach a site with a problem
  within hours.
• Products can be shipped by truck or rail from
  virtually anywhere in Mexico to any U.S. location
  within days.
• Cultural and language differences are less of a
  problem than with Asia.
• The Mexican government has a comprehensive job
  training program that helps companies financially.

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Business Between the United States and Mexico

• Competition has been expanded in seaports,
  railroads, telecommunications, electricity
  generation, natural gas distributions, and
  airports.
• The government is aware of the need to upgrade
  infrastructure, modernize the tax system labor
  laws, and provide incentives to invest in the
  energy sector.
• Labor costs are approximately 1/8 that of the
  U.S.

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Business Between the United States and Mexico

• However, the World Banks report, Doing Business
  in 2005, found that
• Mexico has the worst legal system in Latin
  America, and the most job-unfriendly labor laws.
• Mexico scored 2 out of 10 for the fairness and
  effectiveness of its courts.
• Nicaragua scored 7 and Guatemala scored 4.
• It is harder to fire employees only in Cameroon,
  the Republic of the Congo, and 3 other countries
  than in Mexico.

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Maquiladoras

• Manufacturing operations that temporarily import
  goods and then ships finished goods out of the
  country as exports.
• The most common type of maquiladora is a majority
  or wholly foreign-owned plant.

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Maquiladoras

• Many maquiladoras are located near the border
  with the United States.
• This can result in an increase in the number of
  companies providing supplies being located in
  U.S. states that are near the Mexican border.
• In 2003, Mexican trade with
• Texas was worth 48 billion,
• California was worth 10 billion, and
• Arizona was worth 5.2 billion.

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Doing Business in Mexico-Cultural Differences

• Time
• Business hours differ, and are less exact.
• Slow down.
• Power
• Management style is autocratic and paternalistic.
• Decision-making is centralized and undemocratic.
• Collectivism
• Importance of relationships (and family).
• Cement relationships first.
• Teamwork.
• Masculinity
• Treatment of men and women in the workplace
  differ.
• Respect and formal manners
• Affection

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Doing Business in Mexico-Cultural Differences

• Resources
• Making It in Mexico Business Customs and
  Practices
• Geert Hofstedes Cultural Dimensions

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Mexican Legal System

• Modeled on civil law tradition, most notably the
  French system.
• Involves a complete set of written legal codes.
• If there is a gap or uncertainty, the legislature
  completes the law.
• The code is the exclusive source of procedures
  rights.
• Rights rules that have not been codified do not
  exist, and are not implied.
• The legislature, and not the courts, is the
  traditional source of legal reform.

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Mexican Legal System

• Appellate decisions are generally not binding.
• Exception Jurisprudencia, when an identical
  legal issue is decided in an identical manner for
  the 5th consecutive time.
• Stare decisis is insignificant.
• The legislature is the primary source of the law
  as well as changes to the law, and the role of
  the judiciary is limited.

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Mexican Legal System

• The juicio de amparo (amparo)
• Is a writ of protection that secures individual
  rights guaranteed by the constitution
• Allows individuals to protect constitutional
  rights in criminal, civil, administrative, and
  labor disputes.
• The major weakness is that a favorable judgment
  resolves only the instant controversy, but does
  not set precedent or protect similarly situated
  parties.

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The Hierarchy of Law in Mexico would be

• Mexican Constitution
• Treaties
• Federal Law
• Regulations
• State Constitutions
• State Laws

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Relevant Mexican Law

• The Mexican Constitution
• Federal Labor Law (FLL)
• Antidiscrimination Law

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International Law

• Public vs. private
• Public rights between nations, or nations and
  citizens of different nations
• Private controversies between private persons
  resulting from relationships with more than one
  country

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International Law

• Sources Customary and Conventional
• International customs
• Countries follow practices out of a sense of
  legal obligation.
• Customary law was codified in the Vienna
  Convention on the Law of Treaties.
• Conventional laws
• Treaties international agreement A treaty is
  an agreement between 2 nations that has been
  ratified by each. (Under the U.S. Constitution,
  Article II, Section 2, the president agrees, with
  the advise consent of the senate if 2/3 of
  senators agree.)
• Bilateral 2 nations.
• Multinational- several nations EU NAFTA
• For a collection of multilateral treaties, visit
  the Fletcher School at Tufts.

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International Law

• International Organizations conferences
• Organizations through the United Nations.
• International Court of Justice.
• World Trade Organization
• European Union
• NAFTA

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International Law

• Comparative law
• Common law system
• Derived from English traditions
• The law has primarily developed and continues to
  be modified through judicial decisions.
• Civil law system
• Derived from Continental European traditions
• The law is developed and modified through enacted
  law.

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NAFTA

• The United States, Canada, and Mexico launched
  the North American Free Trade Agreement (NAFTA)
  in 1994.
• It opened up free markets between the 3 countries.

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North American Agreement on Labor Cooperation
(NAALC)

• NAFTA countries are not required to enforce the
  laws of the other countries, but by signing, they
  have agreed to enforce their own laws.

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Relevant International Law

• Convention 111 of the International Labor
  Organization (ILO) on Discrimination in Respect
  of Employment and Occupation states,
• Article 11(1) of the Convention on the
  Elimination of All Forms of Discrimination
  Against Women (CEDAW)
• International Covenant on Civil and Political
  Rights (ICCPR)
• American Convention on Human Rights (ACHR)

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Universal Declaration of Human Rights

• http//www.un.org/Overview/rights.html