Foley & Lardner Sees US-Mexico Trade Continue as Companies Scramble to Produce Essential Goods

The cross-border team at Foley & Lardner is working long hours to counsel corporate clients in Mexico and the United States on how they can continue operating as the coronavirus spreads and how they can get into the fight against the pandemic while protecting their people.

Countless residents in both countries are staying home in an effort to contain COVID-19, while movement across the U.S.’ southern border has been restricted. As of Thursday, there were more than 80,000 confirmed cases in the U.S. and 585 reported in Mexico.

For both countries, it is crucial that goods continue to flow across the U.S.-Mexico border as the virus spreads. Prior to the outbreak, Mexican workers supplied one in three fresh fruits and vegetables consumed in the U.S. while also producing medical equipment, including ventilators.

Mexico’s $1.2 trillion manufacturing-heavy economy, meanwhile, depends on U.S. consumers purchasing its exports.

Companies on both sides of the border are navigating a patchwork of local restrictions and suggested quarantines, with little clear guidance at the federal level on how to respond to the global pandemic.

Foley partner Alejandro Gómez-Strozzi, who provides advisory and consulting services related to international commerce and administrative law in Mexico, says trade has so far not been disrupted as companies scurry to determine to what extent they should continue to produce goods and services while also taking care of their employees and doing what’s right for public health.

“Troubled times are a source of business, and we have been really busy trying to help our clients balance as needed in order to be disrupted less,” said Gómez-Strozzi, who is based in Mexico City. “And to make things more interesting, the Mexican government has not been very clear as to what should and should not be done.”

The Mexican government issued guidance March 24 telling employers to temporarily halt activities that lead people to commute or concentrate in large groups. That guidance is very much open to interpretation. Many who can work remotely are doing so, while manufacturing largely continues.

Gómez-Strozzi says he’s helping clients, on a case-by-case basis, assess how to accommodate the executive order while also fulfilling their contractual requirements. Suppliers of foodstuffs such as poultry and eggs, for instance, should consider themselves essential, he said.

On the other side of the border, in Washington, D.C., Foley partner Christopher Swift is counseling clients who are eager to get into the fight against the epidemic, without compromising the health and safety of their personnel and the general public.

He has been involved in discussions with U.S. companies trying to retool to manufacture ventilators in the U.S. Personal protective equipment for medical professionals, meanwhile, is coming into the country from locations such as China and Mexico, where there are fewer reported infections and the items are cheaper to produce, he said.

While cross-border trade continues to flow, Swift says companies have largely put plans to invest in Mexico on hold. Prior to the global pandemic, 160 U.S.-based executives from the manufacturing, automotive, retail and technology sectors indicated in a Foley survey that they intended to move business to Mexico, expand internationally for the first time via Mexico or grow existing Mexican operations—and to do so rapidly, within the next one to five years.

“We expect to see future investments in cross-border manufacturing activity deferred for at least a quarter,” said Swift. “There’s just too much going on in the U.S. for people to focus on plans they had a month ago.”