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 government’s various agencies. For instance, there are specific restrictions on goods that must not be permitted to find their way into the US. Some of the said items include, but they are not limited to, those items likely to threaten public safety or occasion harm to the nation’s 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 laundering laws in place at present. This is a key consideration as it would ordinarily relate to the transfer of financial assets within the two countries. For instance, we would be expected to take all precautions to ensure that suspicious financial transactions...

Some of the rules still in effect include the “know your customer” regulations.
Yet another aspect of law that would be of relevance on this front is the World Trade Organization regulations. In basic terms, these are roles that seek to govern global/international trade which our company will essentially be engaging in by virtue of expanding to Mexico. It is important to note that thanks to the various provisions of WTO, the company would amongst other things be protected from various forms of protectionism that the Mexican government could undertake via the utilization of technical standards or regulations. WTO regulations also protect the company from treatment deemed discriminatory. The key areas of greatest relevance in as far as WTO regulations are concerned are Trade-Related Aspects of Intellectual Property Rights (TRIPS), General Agreement on Trade in Services (GATS), and the General Agreement on Tariffs and Trade (GATT) (WTO, 2020).

We also ought to be aware of, and take into consideration, key employee rights in as far as our conduct of business in Mexico is concerned. Of great interest on this front would be Title VII. Towards this end, the U.S. Equal Employment Opportunity Commission – EEOC (2020), points out that “U.S. citizens who are employed outside the U.S. by a U.S. employer – or a foreign company controlled by an U.S. employer – are protected by Title VII…” It should, however, be noted that those persons who are not citizens of the U.S. are not advanced the said protections. It therefore means that Title VII would apply to U.S. citizens working in Mexico but would not apply to any non-U.S. citizens that we hire in the course of our engagement in the said country.

In the course of doing business, the company could also want to protect its inventions and creations. To protect ourselves against copycats, we ought to be well versed on the relevant intellectual property laws. This is more so the case as it relates to copyright, trademark, as well as patents. The U.S. Customs and Border Protection office would come in handy in our efforts to record copyrights as well as trademarks registered within the U.S. Already, there is in place a U.S. and Mexico trade agreement relating to IP protection as initiated by the WTO. It would, thus help, to be familiar with the so called Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The Sherman Act would also govern our operations in Mexico. This is particularly the case when it comes to undertakings likely to result in the restriction of competition as well as commerce in the marketplace. Specifically, in as far international operations (specifically trade with Mexico) are concerned, it would help to be aware of the specific provisions of Section 1 of the Act, 15 U.S.C. 1 as well as Section 2 of the Act, 15 U.S.C. 2. Last, but not least, our conduct of business in Mexico would also be governed by the U.S. Export Administration Regulations. This is particularly the case given that the advancement of our interests into Mexico could involve the transfer of technology, software, or even certain products from the U.S.

Legal Implications

From a legal perspective, the decision to launch operations in Mexico has upsides and downsides. To begin with it should be noted that ‘employment at will’ is not recognized in Mexico (Gomez, 2018). In basic terms, employment at will means that “employer does not need good cause to fire” (Gomez, 2018, p. 173). It therefore follows that in establishing operations in Mexico, our company will be losing on this front. For instance, it would be challenging for us to fire workers who perform poorly at the workplace. This is more so the case given that…