Center For U.S. And Mexican Law Studies Key Legal And Business Issues

Monday, February 25, 2013 - 14:26

The Editor interviews Stephen Zamora, Leonard B. Rosenberg Professor of Law, Director, Center for U.S. and Mexican Law, Director, North American Consortium on Legal Education, University of Houston Law Center. The University of Houston Law Center launched the Center for U.S. and Mexican Law in April 2012. The Center is the first independent research center in the United States dedicated to the study of Mexican law and legal aspects of U.S.–Mexico relations.

Editor: Please give our readers an introduction to the Center for U.S. and Mexican Law (the “Center”).

Zamora: The Center is an independent academic center within the University of Houston Law Center. Our goal is to take specific legal issues that affect Mexican society and U.S.-Mexico relations and engage  U.S. and Mexican law professors and law students to research them and make substantive contributions to the body of knowledge surrounding the legal aspects of U.S.-Mexico relations. Currently, we are the only institution of our kind in the U.S.

Editor: You were the keynote speaker at a recent symposium sponsored by Fordham University on the topic of freedom of movement in NAFTA countries. Is there a consensus emerging as to whether North America should adopt a freedom of movement policy similar to that of the EU?

Zamora: The Fordham International Law Journal presented a symposium on the topic of free movement and what NAFTA countries can learn from Europe’s experience. The symposium was well timed, given a consensus that is finally emerging in the U.S. about the need for immigration law reform.

The Fordham symposium was styled to consider whether greater freedom of movement within North America actually would be beneficial. Europe gradually implemented policies to promote free movement notwithstanding problems that included economic disparity among the original seven nations – and then more disparity as nations like Spain, Greece and Portugal joined. There is even greater disparity among NAFTA countries.

While free movement is a pillar of the EU’s structure, this option has not resulted in massive movements of people within Europe.  Approximately two percent of an EU country’s labor force comes from other EU nations. Of greater impact has been the parallel drive from richer EU countries to support infrastructure development in the poorer countries, thereby stimulating more productive jobs for citizens and decreasing the desire to move.

The issue of immigration was not on the table during NAFTA negotiations because resistance from labor and environmental interests would have made it impossible to achieve the political will to pass the agreement. The NAFTA countries hoped that NAFTA would bring prosperity to Mexico, thus reducing the flow of Mexican undocumented labor to the United States.  The opposite occurred - there was a dramatic increase in the movement of undocumented workers post-NAFTA. While the Mexican economy improved overall, certain Mexican industries suffered under the increased competition of an open economy, especially in Mexican agriculture. The displacement and low wages drove Mexican workers to the United States, which offered the hope of a living wage.

I contend that NAFTA has had a net positive effect on the Canadian, Mexican and U.S. economies.  While unskilled U.S. workers in certain industries experienced a negative impact, many U.S. companies profited from being able to maximize operations and enjoy cost efficiencies by strategically placing parts of their business in each country.  The increasingly integrated economies of the NAFTA countries helps keep jobs in North America that might otherwise have migrated to Asia or other regions.

Integration among the NAFTA partners has increased dramatically since the early 1990s, with increases in North American foreign investment and a quadrupling of international trade. Globalization is the new reality, and it calls for fundamental change in U.S. security efforts focused on immigration issues. Rather than build higher walls to keep people out, there should be greater efforts to secure Mexico and its economic prospects. As we saw in the EU, this might naturally check the movement of undocumented workers.

Editor: Please tell us about some of the Center’s research projects, particularly one that concerns oil and gas fields in the Gulf of Mexico. Is your location in Houston a factor in this project?

Zamora: As a gateway to Mexico, Houston has a large community of professionals with business experience in U.S.–Mexico trade and investment.  As an international energy capital, Houston is a natural launching pad for energy-related activities in Mexico.  The Mexican national oil company, Pemex, has a trading subsidiary based in Houston, and owns 50 percent of an oil refinery in Houston. Houston’s expertise goes far beyond the energy sector, however.  Law firms in Houston helped a little-known Mexican beer, Corona, build a large market in the United States.  Companies all over the U.S. rely on Houston-area legal experts when considering whether to invest in Mexico. Mexicans see Houston, with its business-friendly infrastructure and excellent professional community, as a great location for doing business in the U.S.

The Center has two projects currently underway, which are self-funded at the moment and will be conducted in stages. The Gulf of Mexico project will explore the important differences between the legal and regulatory frameworks of Mexico and the U.S. As an example, the Mexican Constitution prohibits any private investment in the exploitation of oil and gas; the government owns all rights to subsoil natural resources,  and the government-owned oil company, Pemex, has a monopoly on the distribution of oil and gas. In stark contrast, the U.S. energy industry is among the most competitive in the world, with oil and gas reserves owned by private parties who lease their lands to companies that extract, refine and distribute the resources for their own profit.

Rights to develop oil and gas in the Gulf of Mexico – an invaluable resource shared by many countries – are controlled by national and international law.  The center of the Gulf, with a potential for vast oil and gas resources, includes transboundary reservoirs that are shared by both countries. Mexico and the U.S. spent many years negotiating the subsoil rights to clearly demarcated areas of the Gulf of Mexico; a treaty has been signed and awaits the advice and consent of the U.S. Senate.  When the treaty enters into force, however, an important question will remain: How will the countries manage the exploitation of interconnected oil and gas resources in a way that is fair to both countries, and in a way that does not damage the environment of the Gulf. 

The Center will study the experience of other countries around the world that share transboundary resources, to examine possible models for implementation. We also will look at additional challenges specific to the Gulf of Mexico, such as arise from differences in the Mexican and U.S. legal and regulatory systems. For instance, the U.S. allows concessions to companies for the purpose of exploiting oil and gas, and U.S. companies have some of the world’s most advanced technology for deep-water drilling. By contrast, Pemex is taxed to such a great extent that it is the Mexican economy’s main source of income. As a result, Pemex has relatively poor resources to devote to research and development; thus, while it has a monopoly for exploiting the oil and gas reserves, it doesn’t have the ability to go down and get them.

The Center will also explore the environmental and worker safety issues in connection with exploiting oil and gas in the Gulf of Mexico. It’s a big pond, and no one knows, for example, where the oil will end up if a spill occurs: it could be Mexican beaches or our own beaches, and it might have tremendous effects elsewhere. So everyone has an interest in knowing how the resources will be exploited from both sides.

This binational project will draw upon Mexican and U.S. experts to study the differences in each country’s regulatory environment, to develop a best practices model for exercising each country’s right to exploit resources, developing effective regulatory oversight and monitoring the resulting activities.

Current regulatory practices are all over the map. Mexico’s regulatory oversight of Pemex was non-existent until the creation of a hydrocarbon commission, essentially to regulate a decentralized agency of the Mexican government, which consists of only 60 people. On the other hand, the U.S. regulatory structure is huge and covers a broad range of companies and activities; despite these resources, the Macondo oil spill reflects that regulations are sometimes disregarded.

Given their divergent regulatory environments, Mexico and the U.S. must collaborate if both societies are to benefit.  U.S. and Mexican oil rigs will be operating within sight of each other, and any breakdowns will potentially affect both countries. The Center’s project is intended to provide meaningful research and will be conducted in phases over several years. The Center is funding the first phase with funds provided by our law firm and corporate sponsors, and will look for institutional support to fund subsequent phases.

Editor: What about the Center’s project on cross-border legal services?

Zamora: The way lawyers are educated and regulated in the United States couldn’t be more different than their counterparts in Mexico. Here’s a trivia question: of the three NAFTA countries, one has 22 accredited law schools, another has just over 200 and the third has more than 1,200. Which country would you match up with the most law schools?

Canada has 22 law schools serving a population of around 30 million, and the U.S. has a little over 200 accredited law schools serving a population of over 300 million. Mexico’s population is about a third of the U.S. population, yet it has over 1,200 law schools. And which country has the reputation for the strongest enforcement of the rule of law? I would say the one with the fewest law schools.

Mexico experienced an explosion in the number of law schools because they are profit centers. The accreditation of law schools is very lax; schools don’t need to maintain a full-time faculty or law library, and once graduates receive a law degree, there’s no bar exam. These schools then churn out lawyers who can practice anywhere in Mexico.  In the United States, lawyers must pass a state bar exam to be licensed, and with some exceptions, they will only be able to practice law in the state where they are licensed.

Despite great differences in the preparation and licensing of U.S. and Mexican attorneys, legal services are freely provided across the border. We assume that a Texas lawyer will advise on Texas law, yet these lawyers also get involved in international deals that require going down to Mexico to study the applicable local law, and vice versa for Mexican lawyers. The purpose of this  project is to study the extent and the kind of services that are being provided, and to determine problem issues that arise in such services. The goal is to make sure that the lawyers who are providing cross-border legal services are well qualified, and that the regulations that govern the practice of law across borders are adequate to an integrated economy.

The notion of cross-border services is a term that is defined by the WTO’s General Agreement on Trade in Services.  The regime governing trade in services is very different from that which governs trade in goods under the GATT. For example, selling a good, such as Mexican tequila, in the U.S. involves transporting a particular product; passing through U.S. Customs, which verifies the product; and paying the applicable duty.

Selling a service is more complicated, with a variety of ways in which the services can be sold to citizens of another country. Generally speaking, Mexican and U.S. lawyers can provide services in their home country or in one another’s countries, resulting in four distinct scenarios, or modes if you use the WTO term, operating in different regulatory regimes. So how can consumers know – for instance, when the mode is a Mexican attorney practicing U.S. law – that the service is being provided professionally and without malpractice? The answer will vary according to the mode.

Just to give you an anecdote – a few years ago, the state of Texas filed a criminal case against a Mexican citizen who was practicing law in Corpus Christi. He advertised that he was an attorney licensed in Mexico, and Texas does allow foreign lawyers to give legal advice on foreign law so long as they disclose that they are not members of the Texas Bar. This particular Mexican attorney would go across the border, find potential clients, and bring those potential plaintiffs back to Corpus Christi, where they could file suit against U.S. companies. As it turns out, the Mexican citizen never completed his law degree in Mexico and was not a licensed attorney in Mexico.

His false advertisement violated Texas law, and the attorney general brought a criminal suit against him. I was called as an expert witness to refute incorrect testimony from the defendant’s expert who claimed that you don’t need a law degree to practice law in Mexico, and the state got its conviction. The point here is that people do exploit the system as it is, so our project is aimed at uncovering and eliminating this kind of abuse.

Editor: Please tell us about the Mexico Briefings program, and please close our discussion by telling our readers how to find you.

Zamora: One of the prime goals of the Center is to educate U.S. citizens about Mexican law, which is often understood by our institutions. As part of our effort to educate the public, the Center offers a program called Mexico Briefings, a series of events to promote the exchange of ideas between lawyers and other professionals in the U.S. and Mexico.  This also provides an opportunity for the Center's advisory board members, sponsors and friends to engage in dialogues with noted authorities.

Our February 25th briefing presented a dialogue about the prospects for improved relations under the new Congresses in Mexico and the U.S. as a result of recent elections in both countries. We featured two members of Congress: A Mexican congressman, Agustín Barrios Gómez, and a member of the Mexican Foreign Relations Committee; and U.S. Congressman Henry Cuellar, who is on the House Appropriations Committee and the subcommittees dealing with foreign relations and homeland security.  Political analyst Dr. Luis Rubio also provided insight into Mexico’s political agenda under newly elected President Enrique Peña Nieto and the newly elected Congress in that country.

In closing, I would point out that we are a very small organization that is just starting out. Our goal is to do an excellent job identifying worthwhile research projects, to carry out those projects with sufficient rigor that we will be able to publish results and provide ideas that will make a meaningful contribution. In doing so, we hope to become a useful source of expertise for the legal and business communities of both countries. I invite your readers to visit our website at http://www.law.uh.edu/mexican-law/contact-us.asp.

Please email the interviewee at szamora@uh.edu with questions about this interview.