Running Head: MEMORANDUM

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MEMORANDUM

Memorandum

In Brief

It is important to note, from the onset, that there are many commercial benefits that our company could reap by expanding internationally. Thus, the expansion into Mexico is not only timely, but also well considered. However, in engaging in the said expansion, the company ought to be aware of the pertinent aspects of both the U.S. and Mexican law. It is with this in mind that this memo highlights the most likely compliance issues or concerns in as far as the various aspects of law and ethics specific to Mexico are concerned.

Pertinent Aspects of U.S. Law

There are a number of laws and certain legal provisions specific to our expansion into Mexico. Key amongst these include, but they are not limited to; USMCA (which replaced NAFTA a month ago), Customs and Border Protection (CBP) laws, and laws relating to engagement in corrupt practices and money laundering.

For a long time, 26 years to be specific, businesses have had to comply with the specific requirements of the North American Free Trade Agreement (NAFTA). However, beginning 1st of July this year, NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA). Failure to comply with the various provisions of the USMCA could have a negative impact on our operations as well as reputation. Towards this end, it would be prudent on our part to ensure that we are aware of (and comply with) not only the rules of origin, but also prepare the company for the relevant audits and ensure that our compliance programs are modified accordingly. There are, however, various obligations of NAFTA that will survive under the new dispensation. Examples of the various provisions of the USMCA that we should be aware of include customs administration as well as trade facilitation, rules of origin and origin procedures, labor, intellectual property, investment, etc. For instance, with regard to labor, employers have specific obligations especially as it relates to discrimination and coercion avoidance. Further, when it comes to the certification of origin, we should have templates of certification of origin.

With regard to custom and border protection, it is important to note that the company ought to be aware of the various laws enforced by CBP on behalf of the governments various agencies. For instance, there are specific...

Some of the said items include, but they are not limited to, those items likely to threaten public safety or occasion harm to the nations flora and fauna. More specifically, some of the CBP policies that we ought to be aware of relate to; the flow of various cargo via the various POEs of the country and the enforcement of custom as well as trade laws.

Yet another law we ought to be aware of is the U.S. Foreign Corrupt Practices Act. This is particularly important given that concerns have been raised over the level of corruption in Mexico. The law was enacted with an aim of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business (Department of Justice, 2020). We also ought to be aware of the money...

…a serious concern. It therefore follows that some of the questions we ought to ask ourselves in this case is whether we shall be required to, at any point, make any payment so as to get things done. As I have pointed out elsewhere in this text, being a US business, we are bound by the U.S. Foreign Corrupt Practices Act effectively meaning that the company cannot pay to access favors that it would not have otherwise accessed were it not for the said payments.

Case Studies

There are numerous US companies operating in Mexico at present. These include, but they are not limited to, Nestle, Volkswagen, and Ford. All the listed companies had to comply with US laws in relation to starting operations in Mexico. For instance, when it comes to Ford, the automaker expanded its operations into the country under NAFTA. For instance, it was able to take advantage of the maquiladora program and import raw materials duty-free. It also appears that the company has complied with the U.S. Foreign Corrupt Practices Act. This is more so the case given that there have been no reports of underhand business dealings on the part of the company in an attempt to skew decisions in its favor. The companies have sought to address compliance issues by embracing change and adapting internal processes. For instance, following the rollout of the USMCA, Stuart (2018) pointed out that production costs would most likely raise thanks to various provisions of the agreement. According to the Struat, however, Ford embraced USMCA from the onset by focusing on areas that would be aided by the…