On today’s legal deadline, the Chamber of Deputies appears set to approve the expenditure law for 2011. The Finance Commission unanimously approved the expenditure proposal at 2am. The President’s request for increases for the security agencies, including the funds to create the unified police forces, were approved. The principal cause of delay in approving the expenditure package had been negotiations to allocate funds for highway construction between the different states. (Excelsior 11/15)
In a rare use of his veto power, President Felipe Calderón vetoed a change in corporate law that would have allowed for single shareholder corporate entitities. The President vetoed the measure not because he opposed the substance, but because the legislation that emerged from Congress created a new category of entity, with special rules, rather than just eliminating the requirement for more than one shareholder. “The Federal Executive power under my command has stated that it is in favor of a minimal regulation that gives agility to the mechanisms for setting up and operating companies; the legislation does not do this,” he said in his veto statement. The measure was originally submitted to Congress in March 2008 by the PAN and PRI and was quickly passed by the Senate, but has languished and been modified in the Chamber of Deputies. Congress can change the draft law based on the President’s observations, let the veto stand, or try to override the veto with a two-thirds majority. (Reforma 11/9)
President Calderón sent forward revisions to the military criminal code to bring Mexico into compliance with the rulings of the Inter-American Court of Human Rights by making soldiers and sailors accused of the crimes of torture, forcible disappearance, and rape subject to prosecution in civilian courts. The law would require military investigators to refer cases where there was probable cause to the federal investigating magistrate. Those accused and convicted would continue to be held in military, not civilian, prisons. (Universal 10/19)
By a vote of 85-8, the Senate approved the Law on Public-Private Partnerships that had been proposed by the Executive last November and has been pending a vote since April. The law modernizes the framework for so-called PPPs, whereby the private sector provides services under long term concessions that are normally considered to be public sector responsibilities, such as operating tollroads, ports, and municipal water systems. While Mexico has undertaken a large number of PPPs since the beginning of the Calderón government, participants have been looking for modernization of the legal framework. The law now goes to the Chamber of Deputies. (Reforma 10/12)
A federal judge declared the government’s reform of the income tax law last year that created new corporate fiscal consolidation rules unconstitutional. The judge was acting on suits filed by many of the country’s largest corporations that objected to the change in the Income Tax Law that limited their ability to use tax losses from one subsidiary to offset taxable income from another. Previously, companies had 10 years to use tax losses; last year’s measure reduced this to five. The judge held that the changes violated the constitutional protection against retroactive law. The case now goes to the Supreme Court, which is not expected to take up the case until mid-2011. The judge’s decision does not affect the obligation of the companies to continue paying taxes under the new rules. (Reforma 10/12)
Acting on a long proposed initiative, President Calderón sent to Congress the constitutional legislation to create 32 unified state-level police forces that would do away with most of the 2,000 municipal police forces and establish uniform standards for recruitment, training, and control. “It is necessary to make a sharp change in course in the model for police organizations that will permit the Mexican State to guarantee public safety across the entire country,” he said. Municipalities would be able to keep their own police forces in some cases, if they demonstrated that their forces met the minimum standards. “On the day that, in addition to having a reliable, well-trained, and professional Federal Police to confront criminality, we also have in each of the 32 states reliable, well-trained, well-paid, well-armed police forces, that day we will be able to decisively close the space for criminality,” he concluded. The 2011 budget proposal already includes Ps. 2.4 billion for funding the initiative. PRD Senator Carlos Navarrete cautioned that the legislation would be subject to “exhaustive analysis” and “modification if needed” in the Senate. Meanwhile, Aguascalientes became the first state to create on its own unified police force. The mayors of the 11 municipalities in the state signed the agreements to cede control of their police forces to the state’s Secretary for Public Safety. (Universal 10/7, 10/11, Reforma 10/11)
Congress recessed until September 1 without passing any of the pending reform proposals. (Universal 5/1, Reforma 5/1)
Political reform: President Calderón put forward his 10-point reform last December, followed by the PRI’s package in February, and a PRD version. All of these, plus others, languish in the legislative commissions without any consensus.
Labor reform: Labor Secretary Javier Lozano proposed a comprehensive reform in March to make labor contracting rules more flexible and making unions more transparent and democratic. It is strongly supported by the business community. May Day marches by the major labor unions across the country attacked the proposed legislation, and neither house has yet voted. (Universal 5/2)
Fiscal reform: No specific proposals have been made public, despite widespread recognition that urgent change is needed on both the spending and revenue side of the budget.
New media law: The PAN and PRD congressional delegations proposed an integrated reform in mid-April, after the PRI tried to ram through a Televisa-drafted bill. Hearings will continue over the summer. (Universal 4/28)
National Security reform: The Senate approved a law 105-1-1 clarifying the procedures and standards for deploying the military in public safety (i.e., crime fighting) operations, while punting on the question of subjecting members of the military to civilian court jurisdiction for some crimes. The law as passed is believed to be strongly opposed by at least parts of the military. The Chamber did not bring it to a vote. (Universal 4/28, 5/3)
Competition law: A watered down version of the Government’s proposed law to strengthen the Federal Competition Commission and stiffen penalties for monopolistic practices was passed by the Chamber 386-15-2; the Senate has not acted. (Excelsior 4/30)
Human Rights law: A constitutional reform strengthening constitutional protection for human rights and giving the language in the Constitution and giving the National Human Rights Commission (CNDH) the power to investigate “grave violations of individual rights” passed the Senate in early April. The Chamber has not yet acted. (Universal 4/9)
PAN Deputy Javier Corral and Senator Gustavo Madero introduced a new telecommunications bill, even as the PRI-controlled commissions in the Senate and Chamber of Deputies passed legislation that allows for the granting or renewal of telecommunications concessions without a public tender. Reforma reported that the PRI bill was drafted on the computer of Televisa executive Francisco Javier Tejado, who was also reportedly present at all the commission’s meetings. The PAN alternative would create a new autonomous regulatory body to replace the ineffective Cofetel. It would seek to provide an integrated approach to telecommunications regulation, including convergence, and it would also open the sector to foreign ownership—100% in telecommunications and 25% in radio and broadcast TV. (Reforma 4/9, Universal 4/9)
The President’s proposed anti-trust reform, like many of his recent announcements, has 10 points:
- Make it possible to terminate proceedings before the Federal Competition Commission (Cofeco) by mutual agreement, rather than engage in endless litigation. Provide incentives for cooperation.
- Provide for oral argument.
- Simplify the notification for market concentrations. In addition, make it easier to approve restructurings and mergers.
- Restructure Cofeco to make it more efficient and transparent.
- Empower Cofeco to investigate and sanction anti-competitive practices by government agencies and enterprises.
- Give Cofeco subpoena powers; currently it relies on companies to provide information voluntarily.
- Strengthen the sanctions available. The Commission would be able to levy fines of up to 10% of a company’s annual revenues.
- Simplify the determination of whether a company (or group of companies) has monopoly or oligopoly power.
- Empower Cofeco to issue preventive orders to stop probable anti-competitive behavior, before a final ruling is made.
- Empower Cofeco to make company inspections.
Following through on one of his pledges in the last Presidential Informe, President Felipe Calderón submitted legislation yesterday to address the lack of competition and domestic monopolies in many economic sectors. Calling the reforms “unprecedented” and “urgent,” Calderón said:
The lack of solid competition in domestic markets has damaged the efficiency and competitiveness of our economy. The presence of monopolistic or oligopolistic practices hinders us from reaching the rates of growth needed to create more jobs and improve the welfare and quality of life of Mexican families. It is estimated that more than 30% of household spending is in markets where there is some problem with competition, and that in these markets consumers spend about 40% more on goods and services than would be the case if companies were operating in a more competitive environment.