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Q&A: manufacture and distribution of fashion goods in Mexico – Lexology

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Manufacture and distribution
What legal framework governs the development, manufacture and supply chain for fashion goods? What are the usual contractual arrangements for these relationships? (What initiatives are you seeing from a legal perspective to address global supply chain issues?)
There are several statutes applicable to development, manufacture and supply chain regarding fashion goods.
These include:
 
The usual contractual arrangements include manufacturing, packaging, logistics and distribution, shipping, sale, licensing, design and marketing. Retailers should be cautious in protecting confidential information (trade secrets), intellectual property rights, data protection, materials and quality requirements. They must include, among others, an adequate description of goods and services, pricing, expected timeframes for delivery, distribution channels, supply chain strategies, service and management details and liability insurance.
What legal framework governs distribution and agency agreements for fashion goods?
In general terms, the Code of Commerce governs distribution and agency agreements for fashion and other goods. However, agency and commercial distribution agreements are not specifically regulated under Mexican laws, and therefore are considered atypical. These agreements are usually complemented with clauses or additional agreements that include licenses to use intellectual property rights, either to manufacture protected products (such as industrial designs) or to use specific trademarks. For this purpose, retailers must adhere to the Federal Law for the Protection of Industrial Property. In addition, employment contracts play a significant role in protecting intellectual property created by employees, works made for hire, or when independent contractors or providers are commissioned to develop certain designs on behalf of retailers and such designs could be eligible for copyright or trademark protection (or both).
What are the most commonly used distribution and agency structures for fashion goods, and what contractual terms and provisions usually apply?
The most common structure of distribution for fashion goods in Mexico is a producer-customer through the producer’s own stores (either physical premises or online); however, there is also a tendency to include a retailer (with inner boutiques), therefore implementing the structure producer- retailer-customer. Each party purchases the goods to sell them to the next participant of the distribution chain. 
Do any special import and export rules and restrictions apply to fashion goods?
Due to the amendments to the General Import and Export Tax Law, as of 29 October 2019, and until September 2024, the import duty for footwear, textiles and clothing will be between 25 and 30 per cent for countries with whom Mexico does not have a free trade agreement. 
What are the requirements and disclosure obligations in relation to corporate social responsibility and sustainability for fashion and luxury brands in your jurisdiction? What due diligence in this regard is advised or required?
Textiles, in general, must comply with the Mexican Official Norm NOM-004-SCFI-2006. For clothing, specifically, the company must inform consumers of the name of the manufacturer or importer, brand, country of origin, fibre composition (including components), product care and size. An in-depth due diligence process for best practices is highly recommended. Companies must not only assess production of goods, from a perspective that is supported by components of IP portfolios, data collection and advertising strategies – as required in all acquisition processes but must also determine if the company promotes a positive brand image to build ownership among the stakeholders and loyalty and empathy with consumers and competent authorities in the relevant jurisdiction. Brands should focus on environmental and health impacts when assessing product manufacturing, in relation to the following, for example:
 
A thoughtful and diligent social media strategy is crucial, as platforms have become the principal tool to spread and promote corporate social responsibility campaigns.
What occupational health and safety laws should fashion companies be aware of across their supply chains?
The Mexican Constitution provides for the standards and principles to be observed across supply chains. The Federal Employment Law, the Federal Regulation on Occupational Safety and Hygiene in the Working Environment, Regulations of the Ministry of Labour and Social Welfare and several other Mexican official statutes regulate standards relating to topics such as:
 
These standards are typically applied through employment contracts, where employers have strict duties in connection with occupational health, safety and psychological regulations.
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