The New Head of Mexican Customs And The Nearshoring
Last Wednesday, the Mexican president, Andrés Manuel López-Obrador, announced that retired General André Georges Fallon Van Lissum would be Mexico's new Director of Customs. His appointment comes less than a month after the assassination of the former Manzanillo Customs operations administrator. The scenario is one of insecurity and high tensions in the customs system.
WHO IS GENERAL ANDRÉ FOULLÓN?
General André Foullón, before his retirement in 2021, served as undersecretary of the Ministry of National Defense (Sedena). Previously, he had been director of the Military College and deputy military and air attaché at the Embassy of Mexico in the United States based in Washington, as well as commander of the III Military Region in Mazatlán; commander of the 10th Military Zone in Durango and the 4th Military Zone in Hermosillo, among others.
Foullón has a master's degree in Military Administration for National Security and Defense and a Ph.D. in National Security and Development. He even has more years of service in the army than General Luis Crececio Sandoval himself, the current Secretary of National Defense.
THE CONTEXT
In 2021 a presidential decree replaced the General Customs Administration (AGA) with the National Customs Agency of Mexico (ANAM), removing the civilian command of the Tax Administration Service (SAT) and giving control of the agency to the Armed Forces. Specifically, ANAM's border offices are supervised by the Secretariat of the National Defense (SEDENA), and its maritime customs offices are managed by the Secretariat of the Navy (SEMAR). At the same time, ANAM independently operates its interior customs offices.
When such news broke in 2022, the private initiative proposed a gradual withdrawal fearing a disruption in the customs process, but the government ignored the request. By the end of December 2022, civilian personnel had already been replaced by 5,600 military personnel, assigned to 50 customs offices nationwide.
The novelty was not that soldiers were operating at customs points but that high-ranking military personnel was making administrative decisions within the customs system. The law allows most director-level positions within ANAM to be occupied by current or former officers in the Mexican armed forces. Consequently, numerous military personnel have been reassigned to ANAM to carry out customs-related duties.
The Mexican government's creation of ANAM and its military oversight intended to abolish corruption in customs administration. However, it resulted in a convoluted process for Mexican importers and their off-shore partners. The military's lack of experience and knowledge in basic customs affairs has created significant delays in administrative processing. Additionally, there are concerns about diminished transparency and a rise in corruption within the customs offices.
In 2022, Miguel Ángel Landeros, president of the Western Mexican Council for Foreign Trade (COMCE), pointed out that the militarization of customs in Mexico has caused the prices of international shipments to rise due to the operational ignorance of the military personnel. Landeros noted that import procedures, resolved in less than 24 hours, now take up to seven or eight days. Criticism is plentiful.
To try to fix such chaos, in May of 2023, the former head of Mexican Customs, Rafael Marín -recently appointed ambassador of Mexico to the World Trade Organization (WTO)- established highly experienced civil servants, mainly in Manzanillo, the country's principal port. They were to work hand in hand with the military. But instead of having an amicable relationship, conflicts with the military commanders abounded. And on May 30, just two weeks after the return of the civilians, Sergio Emmanuel Martínez Covarrubias, one of the few civilian administrators at the Manzanillo Customs Operation, was kidnapped and killed by an unidentified armed commando.
THE GENERAL'S CHALLENGES:
Stop the illegal entry of weapons and fentanyl
On April 13, Mexico announced the reinforcement of air and sea customs to prevent the passage of chemical precursors that generate fentanyl. This is an issue that directly touches the US-Mex-China relationship.
2. Improve port operations.
He needs to ensure ports regain speed and that companies handle their shipments promptly and efficiently. Such is a stark challenge. For example, on May 30, the military administration in charge of Customs in Ensenada, Baja, California, reduced operational personnel by 30%, causing a bottleneck at the port.
3. Fight Against Corruption
As we have discussed, this is the biggest challenge, and despite recent efforts, this appears as a lost cause.
For example, last year, it was uncovered that a corruption network was operating within the Baja California customs, primarily in Tijuana, involving military personnel and high-ranking customs officials. This revelation came to light following the hacking of Sedena by the Guacamaya Group, exposing a series of corruption cases.
THE U.S. FEAR IS IN NEARSHORING
With such a panorama, the United States fears foreign investment in Mexico, as highlighted in a recent report (June 13) by the Milken Institute. The report explores the advantages of Mexico joining the semiconductor production chain, explicitly concerning the assembly, testing, and packaging (ATP) and the semiconductor manufacturing equipment (SME).
Nevertheless, the report points out that
"the escalation of Mexico's security crisis is creating severe problems that, in addition to the tragic humanitarian toll, is behind a skyrocketing number of highway and railroad robberies that undermine its position as a stable alternative supply chain partner." But the Institute highlights that the current reorganization of Mexico's customs agency "has created a host of new problems, including administrative processing delays and a decline in transparency."
Mexico has the unique opportunity to become a key ally to the U.S. in the semiconductor business and other stream incomes, not only for its geographical position but also because of the USMCA agreement, which benefits the rearranging production chains. But to do so, it must, among other things, increase the possibilities of foreign investment through joint border infrastructure projects, modernize and transparencies its customs, harmonize regulations with the U.S., and promote greater cooperation in security.
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