The “New Normality” and the reactivation of the automotive industry

Today, in the morning conference of Andrés Manuel López Obrador, details of the agreements approved yesterday by the General Health Council regarding the progressive lifting of containment measures against the health emergency generated by the SARS-CoV2 virus were provided.

INFECTED MUNICIPALITIES

Firstly, it has been confirmed that the restrictions will be lifted in non- infected municipalities that are in the vicinity of non-infected municipalities. These places will resume without restrictions school activities, mobilization in public spaces, closed or open, and work activities, essential and non-essential.

REACTIVATION OF THE AUTOMOTIVE, CONSTRUCTION AND MINING INDUSTRIES

Furthermore, in the morning conference it was mentioned that, as of May 18, construction, mining and transport equipment manufacturing will be added to the list of essential activities.

The relevant reactivation derived from the negotiations initiated by the governments of Mexico, the United States and Canada to reactivate some productive sectors, from the letter issued by 11 United States senators requesting the Secretary of State said country to define, jointly with Mexico, the essential activities of the latter to avoid affecting the United States supply chains and, finally, at the local level, from the letter issued by the main automotive associations to the Ministry of Health, requesting a prompt reopening of the sector to maintain the jobs it generates.

In relation to the above, it will also be important to consider that on April 30, 2020, the Ministry of Economy published in the Federal Official Gazette the Agreement by which the Ministry of Economy informed the producers of passenger vehicles or light trucks in North America of the procedures for the submission of applications to use an Alternative Transition Regime established in the Appendix to Annex 4-B of Chapter 4 of the USMCA, treaty that will enter into force on July 1, which will give producers the possibility of complying with the regional content of 75% in five or more years, instead of three as originally agreed.

WEEKLY TRAFFIC LIGHT

Additionally, it has been confirmed that, as of June 1, 2020, the Ministry of Health will define weekly the color of the traffic light for each entity in the country. Each color will be associated with a level of permitted intensity of economic, educational and social activities, which will be specified in the corresponding guideline. Thus, the red color will imply that only essential activities can be carried out in said entity, the orange color will imply that all activities can be carried out in the entity with reduced staff, the yellow and green color will allow activities to be carried out in ordinary terms in compliance with the health measures that will be issued by the Ministry of Health, the Mexican Social Security Institute and the Ministry of Labor and Social Welfare. It should be noted that school activities will only restart when the relevant entities are located in the green color.

According to the federal government, authorities are working on specific protocols for the reactivation of specific sectors such as the automotive and tourism sectors.

It is expected that in the afternoon conference the federal government will provide additional technical considerations regarding health control measures that will be applicable in this “new normality”.

For any questions or comments that may arise in relation to the information provided above, please contact any of our partners or associates.

Yours sincerely,

Cannizzo, Ortiz y Asociados, S.C.