Cargo preference for foreign-flagged vessels?

Shipping & Transport - Mexico

Cargo preference for foreign-flagged vessels?

Contributed by M & L Estudio Legal June 24 2015

The Chamber of Deputies (the lower house of Congress) recently passed the Law for the Development of the Merchant Marine and Naval Industry.

The new law aims to provide special instruments to promote and incentivise the Mexican merchant marine industry, especially for vessels engaged in international trade and shipyards operating within the Mexican territory.

Author

Juan Carlos Merodio Lopez

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The most important measures proposed in the legislative initiative are as follows:

• 􏰀  Creation of the Committee for the Support of the Merchant Marine and Naval Industry 􏰁 the main objective of this committee will be to participate in drafting public policy instruments. It will be composed of one representative each from the treasury, naval, economy, transport and communications, fisheries and energy ministries. The marine associations may act as advisers to the committee. 
• 􏰀  Creation of the Folio Especial for vessels engaged in international trade 􏰁 Mexican shipowners will be authorised to register foreign-flagged vessels with the maritime authority in a special category of the Maritime Public Registry, referred to as the 'Folio Especial'. Once registered, foreign-flagged vessels will be subject to the same treatment as Mexican-flagged vessels in order to obtain the benefits introduced by the new law, especially with regard to cargo preference (discussed below). To register a foreign-flagged vessel in the Folio Especial, the shipowner must comply with certain requirements, the most important of which is a commitment that the vessel will have at least 50% Mexican crew within three years. 
• 􏰀  Cargo preference for Mexican vessels and foreign-flagged vessels under the Folio Especial 􏰁 of special importance in this bill is the stipulation that Mexican vessels and foreign-flagged vessels registered in the Folio Especial will have preference in respect of all import and export cargo of the Mexican government, whether the central administration or governmental organs. Of course, if this legislation is finally passed and becomes effective, it will provide tremendous advantages and incentives. Other benefits granted to Mexican vessels in international trade will equally be granted to foreign-flagged vessels registered in the Folio Especial. 
• 􏰀  Mexican naval industry 􏰁 shipyards and other installations within the Mexican territory may benefit from special treatment or preference in building, repair and maintenance work required by Mexican private shipowners and entities of the Mexican government. For such purposes, Mexican shipyards will first need to undergo a special registration process ('Constancia de Preferencia') before the maritime authority.
  As mentioned, the new law was approved by the Chamber of Deputies. It has now been turned over to the Senate for review, debate and approval. If finally approved by the Senate, it will become binding law.
  For further information on this topic please contact Juan Carlos Merodio at M & L Estudio Legal by telephone (+52 55 5207 1187) or email (j.merodio@ml-estudiolegal.com.mx). The M & L Estudio Legal website can be accessed at www.ml-estudiolegal.com.mx.
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