agreement emphasizes intellectual property protection, enhanced labor standards, and a reduction in trade barriers for certain industries, including automotive and agriculture. One of the most significant changes is the stricter rules of origin for products to qualify for tariff exemptions, which has forced many businesses to reevaluate their supply chains. The labor provisions also impose stricter regulations, especially concerning collective bargaining rights and working conditions in Mexico. Overall, the USMCA encourages greater collaboration but demands close attention to new compliance requirements. Likewise, taxation issues become relevant when reviewing a potential M&A deal across the border. What common challenges do companies face when navigating the complexities of crossborder transactions, and how do you assist them in overcoming these obstacles? One of the most common challenges in cross-border M&A transactions is navigating the cultural and legal differences between the two countries. For example, Mexico’s legal system is based on civil law, while the U.S. follows common law principles, which can lead to differing interpretations of contracts and legal obligations. Regulatory hurdles, such as obtaining necessary permits, adhering to local labor laws, and understanding tax implications, also create complexities. I assist clients by providing comprehensive legal due diligence that identifies these challenges early in the process, and by crafting tailored strategies that address both the legal and business aspects of the transaction, ensuring smoother operations. We also work closely with our U.S. colleagues to make sure we serve as a bridging tool for a smooth implementation of the transaction. In your experience, how important is due diligence in crossborder transactions, and what are the key elements that companies should focus on? Due diligence is absolutely essential in cross-border transactions, as it helps identify potential risks and liabilities before finalizing a deal. Companies should focus on several key areas, including financial audits, compliance with local and international regulations, tax obligations, and potential environmental liabilities. Labor laws and employee benefits in Mexico are also critical, given the stricter regulations imposed by the USMCA. Several legal reforms that Mexico has implemented recently force buyers and sellers to apply certain criteria that, if not done correctly, could create huge liabilities for the parties. Additionally, intellectual property rights and any potential litigation risks should be thoroughly assessed. In my practice, I ensure that clients receive a complete overview of these aspects so they can make informed decisions, and by working closely with our U.S. colleagues, we help clients understand both sides of the border. How do changes in political and economic relations between the U.S. and Mexico affect cross-border business operations? Political and economic relations between the U.S. and Mexico directly impact trade policies, regulatory enforcement, and market opportunities. For instance, shifts in leadership or changes in trade policies can result in new tariffs or regulations that affect business operations. The rise of nationalism or protectionist policies can complicate negotiations and create uncertainties around market access. In recent years, issues such as immigration policies and security concerns have also influenced investment decisions. It is crucial for businesses to stay agile and adapt their strategies to reflect the changing political and economic landscape, including working with legal advisors who can provide insights into future trends. We believe that regardless of politics, the business relationship between Mexico and the U.S. is too significant to depend on political views. Can you explain the role of arbitration and dispute resolution in cross-border transactions? How do you guide clients through this process? Arbitration is a preferred method of dispute resolution in cross-border transactions because it offers a neutral forum and typically faster outcomes 48 LAWYER MONTHLY NOVEMBER 2024 Due diligence is absolutely essential in cross-border transactions, as it helps identify potential risks and liabilities before finalizing a deal.
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