Over the past week, both a former U.S. ambassador to Mexico and the current U.S. ambassador to Mexico, Earl Anthony Wayne and Christopher Landau, respectively, have expressed concern over what Wayne labeled “restarting and reinventing the supply chains” of Mexican materials for U.S. corporations.

Landau agreed fully with Wayne in his video conference for the Woodrow Wilson Institute on Friday, May 8.

Both, of course, were referring to bilateral trade between Mexico and the United States, and the advent of a new trade era.

Definitely, these knowledgeable diplomats see the trees, but are somehow missing the forest as the components of what they simply call “supply chains” are, in fact, an intertwined group of commercial and government activities for which the rules, once the new United States-Mexico-Canada Agreement (USMCA) regulations go into effect on July 1, will surely change, not radically, but exponentially, making bilateral trade a more complex activity.

On the Mexican side, there are a myriad of seemingly unsolvable problems to resolve. And, of course, the main one is the official aspect, specifically, the Customs Administration with a slew of privately owned customs agencies that manage export-import merchandise and are an intricate part of the logistics of the transnational supply chain.

Mexico’s Customs Administration has been in disarray for many years and is a well-proven source of corruption.

During the administration of current Mexican President Andrés Manuel López Obrador (AMLO) alone, the government has made three changes at the helm of the Customs Administration, with both former directors Ricardo Peralta and Ricardo Ahued failing to restructure the upper commands of the bureaucratic structure which, experts claim, is where the corruption is at.

Peralta explained that he first wanted to make the Customs Administration more efficient with the increased intensive use of modern technology to replace what’s known as “discretion” in charging tariffs for merchandise in transit, which is now the chief detected source of corruption.

Apparently, Peralta spurred a rebellion inside the Customs Administration and had to call it quits in a few months.

Ahued, meanwhile, proposed setting up a sort of “business center” through the hiring of 1,200 new officials to manage it and bring the 49 customs offices under centralized control.

He too had to call it quits since he also detected that Customs is controlled by the so-called “mandos altos,” or higher-up officials, who will not let anyone from “the outside” gain control over their kickbacks.

Adding to an established personnel structure, the AMLO administration adamantly refused to invest in new employees, forcing both Peralta and Ahued to take up other positions in the administration.

Now it is the turn of Horacio Duarte to take control of the Customs Administration.

Like his two predecessors, he’s received specific orders from AMLO to do away with corruption, a move aimed at bringing through legal tariffs more than 500 billion additional pesos into the coffers of the Treasury Secretariat (Hacienda).

Most likely, Duarte – on seeing the failures of Peralta and Ahued – will settle for maintaining the status quo since it is unlikely that his boss, Treasury Secretary Eduardo Herrera, will grant him the budget to bring about a real restructuring,

Consequently, if you can count, don’t count on radical changes in the official structure of Mexico’s Customs Administration.

The other side of this tortilla is of course the privately-owned customs agencies.

In the old days, a title to one of these agencies only came through inheritance.

But now, with the advent of new political times in Mexico many in the so-called “political class” have joined the old families in the export-import management business.

These agencies negotiate with the Customs Administration officials “at discretion” to set the amounts companies pay for either clear definite exports to Mexico or the United States, or for the usual merchandise for temporary internment into Mexico as parts for maquiladora assembly plants, only to be exported again.

There is definite complicity between the public government and the private customs agents – not to be confuses with one another – as both form part of the same link in the supply chain.

Definitely, it looks impossible for AMLO’s mandate to boot-out corruption totally from the Customs Administration be feasible, but, hopefully, the new administrator will be able to lower it somehow, as will be demanded by the upcoming USMCA.

…May 12, 2020


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