Environmental Regulation
Sarah White
Colorado Technical University
MGM366-1301B-02
Professor: Alan R. Witty
March 18, 2013

Environmental Regulation International business expansion plans are vital for an organization looking at expanding into another country. With the economy today and the rise and fall of the almighty dollar, it has generated more international customers. Large and small businesses have several ways in which they can profit with international business ventures, and the opportunities are endless. It is always recommended that one registers a company’s trademarks within the foreign markets establishing solid business relationships at different trade shows are vital. Finding possibly an international business partner, who may be looking at entering your organizations market, can prove to be beneficial as well. The internet is a great source in which to expand globally. The first important step is to look for your organizations import and export opportunities. Being able to market in countries which have more strength against the American dollar will enable more export chances and the individuals which live in those countries can buy more. In this paper, I will be discussing Mexico as the country in which to expand into. When deciding to expand into any country, it is always a good idea to locate and hire a good well known corporate Business Attorney, CPA, Accountant and a Consultant, within that country to help guide your organization in the right direction with the laws and regulations. It is important to learn and understand fully the commercial laws, civil laws, copyright laws, labor laws, trade dispute laws, union laws, tax laws, contract laws, documentation laws, and import/export laws. In Mexico the language spoken is Spanish, yet many of the educated business men and women do speak and read English. The currency is called the peso. The Gross Domestic Product (GDP) measured Mexico’s economic output at nearly $1.7 trillion dollars in 2011, which is much less than the U.S. coming in at $14 trillion dollars, but is larger than Canada, which is coming in at $1.4 trillion. Mexico is no longer considered to be a third world country, but still the people do not make enough in which to afford the necessities. With this said pricing on our products needs to be understood and taken into consideration in which to make a profit selling locally. Mexico is ranked as the ninth largest producer of oil and exports. Close to three million barrels of oil per day. This is less than China, Iran or Canada, but more than Nigeria, Kuwait and Venezuela. U.S. Department of State (2012) Mexico is eager for organizations to bring business into the country, to boost their employment rate and provide needed revenue to the country. As a result of the North American Free Trade Agreement (NAFTA), bilateral trade between Mexico and the U.S. has tripled. There are tremendous opportunities in most sectors of Mexico. We are seeing this progress in environmental equipment, alternate energy, energy efficiency, agriculture, services, technologies that make manufacturing more efficient, tourism, and in safety and security equipment. Mexico is much like the U.S. in that its legal system has a Judicial Power, Executive Power, and a Legislative Power. Mexico’s legal environment has improved with its membership in NAFTA, The World Trade Organization, Organization for Economic Cooperation and Development and even in the Asia Pacific Economic Cooperation. Mexico is showing the world that their country is committed to the development of a comprehensive investment and trade field with internationally accepted rules. American Chamber Of Commerce of Mexico (2006). Mexico’s financial banking system plays an important role for the globalization with Mexico’s economy by providing financing to consumer’s credit through credit card services and supporting mortgage loans in the real-estate areas. The commercial sector offers investment and banking services with banks which participate with minority shareholders. Organizations wanting to do businesses in Mexico, can establish a Mexican company or they can acquire stock within an already established organization. In Mexico the law of commercial companies provides different ways that a company can be organized and there are several differences in the legal and tax treatment. In Mexico it is highly recommended to incorporate a limited liability stock corporation and adopt a form of fixed capital business or one of a variable capital business. Foreign businesses are legally recognized in Mexico and retain their liability characteristics from abroad. In order to carry out operations, they must be approved by the National Commission of Foreign Investments and the Ministry of Foreign Relations and registered with the Public Registry of Commerce. Mexico Data On-Line © 2008 (2007) There are several ways in which to do business in Mexico and just to name a few, I have chosen the Asociación en Participación (AP) and Sociedad de Responsabilidad Limitada (S. de R.L.). The AP or Asociación en Participación is a common form of doing business in Mexico. This is simply an agreement in which one or more partners provide goods or services to a managing partner in exchange for the right in which to participate in the profits of the commercial operation, but is controlled by the managing partner. The Sociedad de Responsabilidad Limitada is a form of Limited Liability Corporation which has become very popular in foreign business, and reduces the tax liabilities in the U.S. In order have this type of established corporation, it must have a minimum of two partners with a maximum capital of fifty (50) thousand pesos or a minimum of three (3) thousand Mexican pesos, of which fifty percent has to be paid out when the business incorporates. Mexico Data On-Line © 2008 (2007). Any foreign owned business that wishes to do business in Mexico must directly and indirectly deal with the Mexican legal system, even if the organization does not exist in Mexico. An organization could encounter the countries legal system with an international contract that they enter into with a Mexican business or even an individual even if that contract is done in a different country such as the U.S. Contracts are generally negotiated and cover any distribution of products, the transfer of any technology and/or franchises. Civil litigation in Mexico is very lengthy and expensive; therefore, this is the main reason most do not seek civil litigations. Plus there are no punitive damages awarded, there are no jury trials, and both parties must pay the attorney costs and fees. Unless a vital business objective has to be met through civil litigation. It honestly is not very practical. It is highly recommended for negotiations and/or mediations to be done in an office setting, or by written or telephonic communication. Mexico Data On-Line © 2008 (2007). The property of any organization must always be protected so that the business can feel that they have the competitive advantage over others and that their information will not be stolen or used without permission and counterfeited. In Mexico, intellectual property is protected under the North American Free Trade Agreement (NAFTA) and includes trademarks, patents and inventions, copyright of data including computer programs, trade secrets, protection or satellite signals and any devices to intercept signals, layout designs of semiconductors and integrated circuits, copyrights of sound recordings and geographical indications. The owners and authors of the exclusive rights to each that I have listed above can and should register their rights in Mexico for fifty (50) years, in which to protect the exclusive distribution and the reproduction rights. The owner may decide to transfer and or license their copyright only on privately negotiated terms. As for trademarks those should be registered for a term of ten (10) years, which is renewable for an unlimited number of ten (10) year terms, only as long as the trademark is being utilized. As for trade names, there is not a system which regulates them. It is more of a good faith system. The Mexican government Gazette set forth a presumption that a business is using good faith. However, the presumption only exists for ten (10) years. This could be important in a legal action, if one came up. The enforcement in Mexico for intellectual property rights are governed by domestic laws. Mexico’s legal system enforces intellectual property rights which include civil remedies by the Mexican authorities, which includes criminal sanctions for any willful counterfeiting or even piracy in the commercial sectors. North American Free Trade Agreement (NAFTA) has a requirement that all civil actions have to conform to the legal standards that are familiar with Americans and Canadians; such as orders to cease infringements, awards of any damages and costs of such actions, judicial review and administrative decisions and representation by legal counsel. Mexico Data On-Line © 2008 (2007, February). In Mexico the workforce tends to be young and growing rapidly. With more than one million employees each year, businesses have discovered that if they provide the employees with proper training, the employees’ skills are upgraded and good quality work is obtainable. In 1917 the Mexican Constitution introduced labor laws which are handled by the Mexican Federal Labor Law (MFLL) and regulates the minimum wage, employee benefits, labor contracts and the union activity in Mexico. Despite the fact that the wages in Mexico are very low compared to the U.S., the Mexican Federal Labor Law is strict with its prevention of any unsafe working conditions. As in the U.S. , employers are not allowed to discriminate on the basis of age, sex, race, social standing, and any religious or political beliefs. In order to dismiss an employee, the employer from the start has to define the employees contract as to if it is temporary or on going. The minimum legal age requirement in Mexico for an employee is sixteen (16) years old and only with the sole permission of his or her parents and a permit from the Secretary of Labor and Social Welfare. Minors and pregnant women are prohibited from working in any areas which have a potential health risk after ten at night 10:00 pm or any overtime. If the employee’s relationship with the organization is not defined as temporary, only a few conditions can be used by the employer to dismiss the employee without having to compensate the employee. Time limits on the length of an employee which is temporary has to be clearly defined, otherwise there is no time limit set. Employers in Mexico are fully responsible for hiring labor inspectors, to guarantee that the organization is in compliance with all occupational safety regulations and required to modify, if needed, their facilities for the safety and health of all employees. If an employee suffers from an occupational accident, that employee is authorized to have any and all medical attention which is necessary, even if a coworker was negligent. All medical care in Mexico is controlled by (IMSS) Medical Social Security Institute. Bureau of Democracy, Human Rights, And Labor (2005) In Mexico by law a blue collar employee is used to working six days with a forty eight (48) hour work week, which is the maximum allowed by the laws which have been set. The white collar employee normally works forty (40) hours a week and has more flexibility than those of the blue color employees and they can work into the evening hours. All employees are entitled to minimum wage and any overtime is paid at twice the hourly wage for the first nine (9) hours after the forty eight (48) hours for working on any legal holidays, Saturday or even Sundays, and then triple time beyond the nine (9) hours. Federal law stipulates that all employers in Mexico much provide the following benefits to all employees. Employees must offer profit sharing in which the employees receive ten percent of the business annual profits and executives and general managers do not participate in this. Firms are required to provide a Christmas bonus to all employees and this is equivalent to two weeks pay. Those that have worked for the company for less than a year get the bonus prorated. Companies are required to give all seven Federal legal holidays which are to be paid holidays to the employees. Vacation is based on time and given on seniority; six days have to be given after a year of service and after five years two more days are to be added. All workers are covered under Social Security by the public health care system. Employers are also required to pay five percent fixed payroll to finance the Institute for the national Fund for Employee Housing, which helps the employees to acquire a home. Under the Retirement Savings System all employers much provide retirement insurance and pay two percent of a worker’s salary to a retirement fund into a bank account under the workers name. Mexico Data On-Line © 2008 (2007, February). The Constitution in Mexico clearly prohibits forced labor on any human including children. Yet forced labor has been a problem. In Oaxaca, Veracruz, and Guerrero, a large group of local workers told the local police that they have been brought to the State of Chihuahua and forced to work and live in the fields in inhumane conditions. Many of the Northern States of Mexico are seeing an influx of very poor and native workers from different states that are becoming victims of abuse and poor labor practices. Many family owned businesses have their children working in the shops or in agriculture or rural areas. This has always remained an issue in Mexico. Child labor enforcement has been inadequate in the smaller business sectors. Yet with the mid-size and larger organizations such as maquiladoras and the industries, which are under federal jurisdiction, there is little to none and in the government work sectors child labor does not happen. According to a study by DIF and UNICEF, it was found that ninety thousand (90,000) children in the State of Michoacán were working in slave like conditions. In May of 2003, a report by the Chamber of Deputies in Mexico, found that five (5) million children, mainly indigenous children, are working in the rural agriculture areas of Mexico, in harsh conditions of exploitation and paid much less than an adult. American Chamber Of Commerce of Mexico, A.C (2006, January). When a corporation violates or engages in any labor or employment laws in any country, it can come with a price to pay. At times the price a business will pay can be tangible and intangible. It as well can damage the reputation of that corporation not only in that country but in the company’s home country as well. Any organization that is going to have their products manufactured in another country should have to make certain these types of incidences do not happen. All stock holders and the CEO’s should be held responsible for insuring the employees are protected, treated within human, moral and above all ethical standards. Companies should be held responsible, fined and if needed imprisoned. Corporations need to be aware of what is going on behind the manufacturing doors. This is an easy task, by simply doing UN announced visits to the sites. If anything is found that violates the human rights or labor laws, then that manager or organizations representative immediately handles the issues. If it is found that the representative or manger did not handle the issues, then by all means that individual should be held accountable. Some corporations need to be shut down because fining them just causes them to pay the fee and continue on as if nothing happened. It would be nice to see countries care more about the individuals, who are providing the cheap labor by insuring they are treated morally and ethically humane. Mexican and the European Union signed an agreement in 1997. This agreement included good trade provisions which were developed in the comprehensive Free Trade Agreement which was entered into force in 2000, for the part related in the trade of goods, and in 2001 for the trade of services. The EU of Mexico is the second largest export market after the U.S and Mexico is the third largest source of all imports after the U.S and China. Mexican imports are mostly mineral products, electric equipment, machinery, optic photo precision instruments and transport equipment. The exports to Mexico include chemical products, mineral products, transport equipment, machinery and electric equipment. For the service industry, the European Nation imports from Mexico are currently dominated by sea and air transport and the construction services. Investment stocks between Mexico and the EU is significant as well.
Mexico and the EU have a privileged relationship, allowing the EU to assist Mexico face the common challenges together. It has helped in strengthening the promotion and the protection of human rights, increasing insecurity and assisting against any climate changes. Currently the EU invests more than seventy five (75) million Euros in the Mexican environmental programs and projects. This union is also benefiting the young people of Mexico, who can enjoy exchange programs. The union of the EU and Mexico has had an impact on the economic and political sectors as well as the civil society, which actively participates in the political programs. European Commission (2012). In conclusion I have gone over what a business needs to do and what a business needs to take into consideration when expanding into Mexico. When looking at the laws in Mexico, they are not that much different than the ones we have here in the U.S. Yet it is always a good idea to make certain that the organization adheres to all of the laws of Mexico, especially when it comes to the labor laws. Luckily Mexico recognizes the intellectual property, copyright infringements and has provided ramifications when it is stolen by another. Mexico as well does have labor and human right laws in place. However, as we have read there are many issues still to this day with companies adhering to those. These issues are simply due to the economy in Mexico being very poor and the fact that for so many years it has been a common practice. As we know when a corporation falls into doing business in Mexico and engaging in these types of violations, there are consequences to them. I fear that with the way the economy is in Mexico and the way the people from Mexico have to live, this is highly overlooked by many. The impact, of the EU and Mexico’s relationship, is currently stable and it has been beneficial for both parties going into agreement with each other. I would like to see more investigations performed by the EU and other Mexican organizations to help the employees out more when it comes to the labor laws and seeing to it that they are fully enforced.

References
American Chamber Of Commerce Of Mexico, A.C (2006, January). Mexico's labor market and laws. Retrieved March 7, 2013, from http://www.mexconnect.com/articles/196-mexico-s- labor-market-and-laws
Bureau Of Democracy Human Rights And Labor 200502 Minnesotans for SustainabilityBureau Of Democracy, Human Rights, And Labor (2005, February). Minnesotans for Sustainability. Retrieved March 15, 2013, from http://www.mnforsustain.org/immg_mexico_human_rights_dept_of_state.htm#Section 6
European Commission 201210 Countries and regions MexicoEuropean Commission (2012, October). Countries and regions Mexico. Retrieved March 16, 2013, from http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/mexico/
Mexico Data On-Line © 2008 200702 Doing business in Mexico: general legal, business & entry issuesMexico Data On-Line © 2008 (2007, February). Doing business in Mexico: general legal, business & entry issues. Retrieved March 14, 2013, from http://www.mexconnect.com/articles/13-doing-business-in-mexico-general-legal-business-entry-issues
Repurposed: "This task contains portions of material that were originally submitted during the [Legal Operations in International Business] in [MGM366-1301B-02] with [Alan R. Witty].”
Repurposed: "This task contains portions of material that were originally submitted during the [Management in International Business] in [MGM336-1204B-03] with [Dr. Joseph Keller].”
US Department Of State 201206 U.S. Relations With MexicoU.S. Department Of State (2012, June). U.S. Relations With Mexico. Retrieved from http://www.state.gov/r/pa/ei/bgn/35749.htm