Implementing Technical Regulations in Mexico

Assessment and recommendations

Mexico has an extensive system of technical regulations (NOMs) and follows a number of good regulatory practices (GRPs) in their development. The range of regulatory fields covered under the Mexican framework of technical regulations goes beyond what other countries usually address through this instrument. While not necessarily an issue in itself, this may nevertheless make international comparisons difficult and create confusion among stakeholders on key concepts and processes. Mexico’s system of NOMs is also fragmented across different legal frameworks and actors. A certain lack of unifying principles, combined with the breadth of issues covered, contribute to a disjointed and at times confusing approach to the use and implementation of NOMs.

This background creates areas for improvement across the implementation stage of NOMs, notably in the conformity assessment system and in regulatory inspections. The specific weaknesses vary across sectors – in some fields, the regulatory framework is still not fully in place; in others, enforcement of the existing framework is weak. Overall, Mexico presents the case of a dual economy where most efforts around the compliance and enforcement of technical regulations are channelled to the export sectors to provide the necessary confidence to trade partners on the safety and quality of products.

In the face of the challenges met in the downstream phase of the rulemaking cycle and to reduce fragmentation, there is a need for a whole-of-government policy and a systemic approach to the implementation of technical regulations. This involves building on the strong ex ante use of good regulatory practices to embed more systematic consideration of implementation and enforcement of technical regulations and anticipating the conditions and resources needed for their appropriate application. Similarly, there are areas for systemic improvement in the use of regulatory inspections to promote compliance with technical regulations. There is a need to shift towards a more strategic and co-ordinated implementation policy built on risk-based approach and active data collection to inform conformity assessment processes and regulatory inspections.

Recent and on-going legislative initiatives to reform the technical regulation system and regulatory inspections1 may well mark a turning point in policy makers’ awareness of the issues at stake and provide an important opportunity for Mexico to transition from a largely reactive approach focused on patching the most blatant gaps to a pro-active implementation policy. Nevertheless, to make a substantial impact these important reforms should be pursued together with proper accompanying measures – including clarifying roles and responsibilities, greater co-ordination, guidance and training of relevant authorities. Strengthening the implementation of technical regulations in Mexico will require a shift in the culture of enforcement across all players involved.

This review provides an overview of how key aspects of the delivery of technical regulations are organised in Mexico and highlights the challenges faced. Based on this assessment, the review proposes avenues for possible solutions and provides for the critical elements of a whole-of-government policy and the building blocks of a systemic approach to the implementation of technical regulations. It builds on previous work identifying areas of improvement, such as the Review of International Regulatory Co‑operation of Mexico (OECD, 2018[1]) and the Report on Standard Setting and Competition in Mexico (OECD, 2018[2]).

Key diagnostic elements

This assessment section is organised around the two key pillars of regulatory delivery of NOMs: the conformity assessment framework set in place to demonstrate compliance with NOMs; and regulatory inspections, including market surveillance activities. Both pillars are complementary and necessary to ensure the effective implementation of NOMs.

CAPs in Mexico in practice

Conformity assessment procedures (CAPs) and the infrastructure around them are key to reap the benefits from technical regulations, as they ensure that the requirements set under NOMs are fulfilled. In Mexico, as in other countries, a large number of public and private actors are involved in the different components of the technical regulations system. However, the dispersion of approaches to CAPs across a number of sector‑specific regimes has resulted in the absence of an articulated vision that promotes compliance with NOMs and addresses the gaps in quality infrastructure.

Mexico has set up a strong system around the development of NOMs, including a thorough development process that follows GRPs, notably RIA, stakeholder consultation and ex post assessment. To integrate, monitor and evaluate the activities of the technical regulation system, Mexico has developed a digital platform named the System for Norms and Conformity Assessment (SINEC). Mexico also deploys its public procurement system to promote products and services that comply with technical standards. Yet, compliance culture in Mexico continues to be weak, with limited knowledge and awareness of the importance of technical regulations among the public and even some sectoral regulators.

Absence of a cohesive and coherent approach to conformity assessment

Currently, the development of CAPs in Mexico is governed by different sector-specific legal frameworks and actors. This fragmentation makes it difficult to establish a clear rationale for how different assessment techniques should be selected, designed and implemented. Further, the diversity of regimes involving numerous stakeholders from the public sector, technical bodies and businesses, results in a regulatory system that may be difficult for market actors and consumers to understand and to abide by, creating risks of capture and conflicts of interest. Risks of conflict of interest arise as certain actors play dual roles in conformity assessment, performing fee-based conformity services under specific NOMs while also tasked with the surveillance some bodies or actors operating in the system.

In addition, a number of regulators choose to separate the design of NOMs from that of their corresponding conformity assessment processes. This occurs as the LFMN allows for CAPs to be designed as part of a NOM or at a later stage once a NOM has been issued. As such, a number of NOMs currently in force lack the relevant assessment techniques to evaluate that the requirements prescribed are being fulfilled. Without this, these NOMs become de facto unenforceable. In practice, the absence of CAPs for a specific NOM has at times resulted in the postponement of their effects. While the DGN has taken steps to ensure that new NOMs are developed simultaneously with their corresponding CAP, looking forward Mexico could take steps to reduce the existing stock of technical regulations for which a CAP is needed but has not been developed.

Mexico has made efforts to strengthen the design of laws and regulations, yet there is no common methodology for developing CAPs. The current framework for technical regulations does not include guidance for regulators on, for instance, selecting an adequate approach for the complexity of the product and level of risk that the NOM is trying to manage, and/or ensuring that suitable infrastructure is in place to perform a CAP. International examples of relevance on guidance for designing and issuing CAPs that may serve as inspiration to build a more coherent and consistent use of this tool include the EU framework based on modules (Box 2.3), and the Conformity Assessment Considerations for Federal Agencies provided by the National Institute of Standards and Technology (NIST) in the United States (National Institute of Standards and Technology, 2018[3]). Considerations in the ISO/CASCO toolbox (ISO, 2014[4]) and APEC’s Information Notes on Good Regulatory Practice (APEC, 2000[5]) may also provide useful elements.

Gaps in Mexico’s conformity assessment infrastructure

When designing NOMs and CAPs, regulators need to assess whether a conformity assessment body exists to perform a specific CAP or if the market can support its future existence. If no conformity assessment body is in place, technical regulations may include a transition period before entry into force to allow time to establish the required infrastructure. In Mexico, a number of CAPs embedded in NOMs currently in force have no supporting conformity assessment infrastructure. Recently, DGN has made efforts to ensure that the existence of CABs is considered when inserting CAP provisions in a NOM. In addition, institutions such as CONUEE and SENER often work directly with CABs during the design of a new NOM to ensure that the relevant conformity assessment architecture is in place to secure its implementation.

Conformity assessment relies on third-party approaches and is relatively costly

Depending on risk, conformity assessment approaches may range from first-party (self-assessment) to third party evaluation by accredited bodies. From this range of approaches, the Mexican framework favours third-party techniques (mainly certification, verification, calibration, and testing). These techniques provide greater confidence to buyers that their purchase complies with the regulatory requirements. They are also more costly and not necessarily commensurate to the risks. By comparison, first-party conformity assessment allows manufacturers and/or suppliers to self-attest the fulfilment of technical specifications in cases when the negative effects from non-conformity are low, but they necessarily entail a degree of confidence in the self-assessment – and a liability system that adequately puts the onus on producers and distributors to ensure compliance and safety. As Mexico’s conformity assessment system continues to develop and mature, there is room to extend the implementation of first-party techniques in certain low risk products. Some regulators have recently explored the use of this approach by introducing Suppliers’ Declaration of Conformity (SDoC) as an alternative for assessment of specific products.

A 2007 World Bank report noted that costs for a CAP in Mexico could be three to four times higher than the United States and EU (Guasch et al., 2007[6]). A number of factors may affect the cost of conformity assessment. In Mexico, a weak conformity evaluation culture may hinder the development of a stronger market for conformity assessment bodies. Additional factors may include the high upfront cost of the equipment required under certain assessment techniques. In certain cases, only one or very few CABs may be able to perform the CAP, so they may charge a monopoly price to the few businesses requiring the service and/or simply need to recoup their investment on a far smaller number of clients.

Assessment of regulatory inspections of NOMs

Regulatory inspections are meant to safeguard the public from risks to health and safety, among others, by ensuring that specific products and services are in compliance with applicable regulations. Through effective surveillance and regulatory inspections, government authorities help strengthen consumer trust that products and services available on the market meet regulatory requirements, thus protecting their safety and well-being. It also should contribute to a level playing field for businesses who are participating in the market.

In Mexico, the government authority in charge of the NOM is usually also responsible for its surveillance, including developing a regulatory inspections and enforcement programme. Both the LFMN and the LFPA, which defines the requirements for inspection visits, regulate inspections based on NOMs. However, the level and types of sanctions for non-compliance are often set in sectoral laws.

Mexico has had some discrete successes in building trust in some sectors through reliable and trustworthy delivery of NOMs, particularly in export markets for agricultural products, automotive products and others. Nevertheless, a number of significant challenges remain in enhancing the effectiveness of inspections in Mexico to foster compliance with NOMs and build trust more broadly and consistently. The need for further efforts is critically evident in the limited trust that Mexican citizens have in their government – only 28% of citizens trust their government compared to an average of 42% in the OECD (OECD, 2017[7]).

The situation is overall quite contrasting between different regulatory areas. Generally, non-food products are subject to well-defined NOMs covering the most significant issues, and there do not appear to be significant regulatory gaps. However, the enforcement of a large number of NOMs is left to PROFECO, which is essentially a law enforcement institution focusing on consumer protection rather than a body with strong technical competence. By contrast, on the food side the lack of an over-arching food safety law is a real issue, as is the division of competences between different bodies, but technical competence in bodies such as SENASICA and COFEPRIS appear stronger. Some inspection services (in particular within SENASICA) also have risk-based targeting approaches that are significantly more developed than average in Mexico.

Effectively managing and targeting resources for regulatory inspections

The first challenge is using resources for regulatory inspections more effectively and efficiently. Mexico overall spends the least per capita of any government in the OECD (OECD, 2019[8]). Although disaggregated data for inspections alone is not available, this is indicative of relatively low government resources available. It is, therefore, critical for Mexico’s government authorities and inspectorates to target their scarce resources to the most high-risk regulations and business, using risk assessment tools, data and co-ordination. In some sectors, notably energy and hydrocarbons, Mexico has developed programs aiming to target inspections to the riskiest businesses and most critical elements of regulations. However, in other areas, for example consumer products, inspections are performed randomly or based only on complaints. Complaints are generally considered (by regulatory practitioners and experts alike) as a poor source of targeting – as they inherently come “too late”, and often do not reflect the highest risks or harms but rather the readiness to comply – when they are not entirely futile or malicious, as also happens.

Building better co-ordination and data sharing to target regulatory inspections

Co-ordination and data sharing could allow government authorities in Mexico to reduce the duplication of inspection efforts and overlaps, and more effectively target businesses with the most severe or harmful non-compliance issues. Unfortunately, government authorities largely work independently of one another with relatively little co-ordination or data sharing, even within the same ministry. Most government authorities track the number of actions, fines, and visits, but they have not yet integrated more information into a broader evidence-based inspections strategy. The relatively high number of inspection bodies in Mexico may also play a role in the difficulties for co-ordination purposes. Among the countries that have developed co-ordination frameworks for market surveillance the UK’s MSNetwork provides an example (Box 3.6).

Reinforcing the compliance culture in Mexico

Finally, the compliance culture in Mexico represents a major challenge to reaping the benefits of technical regulations. Several notable incidences of fraud and corruption have reduced the level of trust in the system, although the Mexican government has already taken some corrective actions. For example, PROFECO has been able to reduce significantly the prevalence of fraud for gas pump measurements and has introduced a new Code of Ethics to limit conflicts of interest.

Recommendations

Based on the overview of Mexico’s framework and practices for the implementation of NOMs, this review identifies three broad areas of improvement in the regulatory delivery of NOMs:

• Strengthening the NOMs framework by:

  • systematising the consideration of implementation needs in the design stage

  • introducing a unified risk-based approach to conformity assessment and regulatory inspections

  • increasing consistency and coherence of the regulatory framework for food safety

• Addressing the limitations in the conformity assessment infrastructure; and

• Developing a more coherent approach to regulatory inspections to secure and promote compliance with technical regulations.

Strengthening the technical regulations framework

• Leverage further the role of the DGN as overseer and co-ordinating authority of the technical regulation system. The DGN could build on its role to ensure a whole-of-government approach to NOMs including by:

  • Issuing guidance to promote a coherent and cohesive approach to conformity assessment across sectors;

  • Promoting further co-ordination among the different actors in the system. In particular, enabling dialogue and co-operation between regulators with joint competences over specific NOMs; and

  • Ensuring a strategic relationship with EMA to strengthen the operation of the technical regulations system around accredited conformity assessment bodies. The model of the United Kingdom Accreditation Service (UKAS) interaction with the UK Government based on a Memorandum of Understanding (MoU) presented in Box 2.7 may provide a useful lesson in this regard.

• Promote a systematic dialogue between authorities responsible for implementation of technical regulations to avoid duplication, and exchange experiences and best practices across sectors.

• Avoid decoupling the issuance of NOMs and their CAPs by systematising their joint development where required. The reform to the LFMN provides an opportunity to discuss how to secure that CAPs are designed together with NOMs in cases where a specific CAP is needed.

• Systematise the consideration of regulatory delivery in the RIA process of NOMs. The rollout of the new Law on Regulatory Improvement, including through a RIA process overseen by CONAMER, provides an opportunity to ensure that the selected conformity assessment approach is aligned with the level of risk, and that the relevant conformity assessment infrastructure is in place to demonstrate compliance with the NOM.

• Promote the participation of actors involved in the implementation of NOMs from the early stages of their design phase. When relevant, enable the involvement in the design stage of NOMs of stakeholders that play a role in metrology, accreditation and CAPs, and of the actors that will be responsible for complying with the requirements. Allow them to provide feedback on potential challenges to implementation to identify possible obstacles or bottlenecks early on.

• Ensure that NOMs include provisions for entry into force/applicability that take into account the time needed for different actors to secure compliance with a new technical regulation. In particular, this involves recognising the timeframes that sectoral regulators need to set up or update the relevant procedures, and that addressees of NOMs require to adjust to the upcoming regulation. This could help avoid undue and repeated delays in the applicability of NOMs.

• Address the stock of NOMs that are de facto unenforceable for lack of a corresponding CAP. The DGN could develop a plan to work together with sectoral regulators to design and issue remaining CAPs targeting key areas or sectors.

• Leverage further the 5-year ex post review of NOMs to address implementation challenges, including those related to conformity assessment. A systematic collection of data on conformity assessment and regulatory inspections could provide essential input for the ex post assessment.

• Promote awareness of the benefits of NOMs and the importance of compliance with technical regulations across stakeholders. Mexico should continue promoting a culture of quality among citizens and businesses by highlighting the benefits of NOMs, particularly in key areas. Compliance is still a major challenge in Mexico and should be promoted across firms and, perhaps most importantly, SMEs that may have more difficulty understanding and/or implementing NOMs. DGNs and the various sectoral regulators have a key role to play to foster compliance through greater education and guidance, rather than sanction (see also below).

• Continue to use Mexico’s public procurement system to promote products and services that comply with technical standards. Detect and address the obstacles faced by sectoral regulators to reference technical standards in public procurement, including by disseminating mechanisms for identifying relevant NOMs (including through the SINEC platform).

• Improve and strengthen the legal framework for food safety. While, internationally, food safety issues are seen as distinct from technical regulations, they are handled in Mexico within the NOM framework. The review shows that there are co-ordination challenges among relevant sectoral regulators and a lack of an overarching legal framework. This results in inadequate risk management. International experience – including FAO recommendations (“Model Food Law”) and Codex Alimentarius – provide useful reference points to strengthen the existing legal framework.

Strengthening the conformity assessment infrastructure

• Ensure a coherent approach to conformity assessment across relevant sectors, including through guidance documents on the design of CAPs. In particular:

  • The DGN should develop a common methodology with step-by-step guidance for designing and issuing CAPs to help build a common understanding. This methodology should include, inter alia, guidance on: choosing adequate approach depending on risks, selecting among CAPs, considering the costs arising from conformity assessment and ensuring that suitable infrastructure is in place to perform an assessment technique. For this purpose, the expertise of other countries and international organisations presented in Box 2.3 could be of relevance;

  • As Mexico’s conformity assessment framework continues to develop, regulators could explore the use of additional approaches including first-party assessment techniques for products with low risk of negative effects from non-compliance. The recent experience introducing a SDoC alternative into the assessment process for NOM-199-SCFI-2017 on Alcoholic Beverages may offer an example on how regulators can gradually incorporate the use of this approach;

  • Promote consistency with relevant international obligations and standards; and

  • Organise training courses for regulators to clarify steps for the development of CAPs, and allow them to exchange experience on the issue.

• Encourage improvements in Mexico’s conformity assessment infrastructure to promote the role of CABs and use of NOMs. In particular:

  • Promote the development of capacities in areas where CABs are currently lacking. In particular, this involves building capacities to limit reliance on CENAM and PROFECO to perform fee-based conformity services that could be undertaken by CABs.

  • Ensure absence of conflicts of interest and address potential risks of capture. The ongoing investigation by COFECE may shed light on possible areas for improvement in the Mexican system to further enhance the independence of operation among participants in the NQI system and promote competition.

• In sectors and for NOMs which only correspond to a very limited “niche” market, and where demand is insufficient to make the setup and operation of Mexican CABs viable or cost-competitive, recognition of qualified foreign CABs (following procedures similar to those used for Mexican ones) may be considered.

• The Ministry of Economy may wish to use the opportunity of the on-going legislative initiatives to reform Mexico’s NOM system to develop a pilot / demonstration project to test the implementation of some of the measures foreseen in these reforms.

Develop a more coherent approach to regulatory inspections

• Government authorities responsible for enforcing NOMs must target regulatory inspections to make them more effective at reducing risks to citizens.

• Mexico could create a clear, government-wide enforcement policy with a focus on risk-based inspections that target real harms to society. This would give all government authorities and inspectorates a common policy framework, whereas this is now limited to the legal requirements of the LFPA and LFMN, with different approaches for individual sectors.

• Professionalism and methods should be strengthened. This is particularly true for non-food products, where the main actor (PROFECO) is more focused on consumer law than on technical aspects, which can be a problem when it comes to ensuring safety of products. The lack of methods for risk-based targeting or to guide inspectors during inspection visits (e.g. checklists) is also an issue across regulatory areas. Best examples in country (e.g. the risk-based approach of some departments of SENASICA) and internationally should be taken as basis for developing risk-based tools for all inspection fields.

• Mexico could create a co-ordination body, like the Energy Regulators Group in the energy sector, but for the food and manufacturing areas. Better co-ordination could reduce the overlaps that create a high burden on businesses in some sectors. Mexico could combine this with a plan to reduce the number of surveillance bodies as many other countries have successfully done to make inspections more efficient.

• Mexico should ensure that sectoral regulators collect and share data on inspections. The upcoming creation of the National Registry of Visits (Registro Nacional de Visitas Domiciliarias) overseen by CONAMER could allow government authorities to make use of new inspections data to target businesses that are more likely to create risks for citizens and identify patterns of non-compliance with NOMs. International experiences in introducing and using such systems can be looked at to ensure that the Registry becomes a useful tool for risk‑based inspections, rather than a purely additional “ex post” step for inspection bodies.

• As part of the LFMN reform, Mexico should build a flexible sanction system that focuses on promoting compliance rather than punishment. This may include aligning sanction powers and fines with the gravity of non-compliance, specifically the magnitude of the harm or risks to citizens, as well as differentiating depending on the overall compliance record, intent and profit from the violation or absence thereof, etc. The most severe penalties should be reserved for violations that are the most likely to cause real harm to citizens.

• Of course, sanctions are only one means to encourage compliance. Mexico should generally rely less on sanctions and warnings that require businesses to “comply; or else”. Mexico should allow inspectors to take a clear but flexible, risk-based approach during visits. This might include not checking the entire NOM, but rather only focusing on serious violations and risks. Regulatory inspections should aim to promote compliance and find solutions, particularly for SMEs.

• Corruption during inspections has been a problem in Mexico. Mexico should have clear and effective codes of ethics and training on conflicts of interest for inspectors. Mexico may also consider developing a government-wide HR strategy for inspectors that tackles such issues as ties to industry and sets inspectors’ wages appropriately to attract and retain qualified professionals and help reduce corruption.

• Mexico should ensure that in-country inspections and border inspections are linked, and that data is shared between authorities. There should be a systematic exchange of data and information between competent authorities in-country and customs to ensure that findings from controls indicating non-compliance lead to effective action to better target subsequent inspections and block/remove hazardous goods, be it at import or market stage. The data from customs should also be made available to the relevant government authorities. For specific high-risk cases, this information exchange process could allow customs officials to obtain verification of the reliability of certificates directly from the responsible government authority. Further work on assessing and improving the situation with border controls is needed. This review’s findings show that this is a key priority to ensure the effectiveness of the technical regulation system.

• The new Law to Promote Citizens Trust is an opportunity – if followed up by a robust implementation programme. The law could enable the use of key good practice principles and instruments, for instance risk-based planning, responsive regulation, consideration of businesses’ track records, among others. It is essential, however, to remember that such laws are never self-implementing. Transformations in inspections and enforcement methods and practices will require an implementation programme covering all aspects (structures, resources and skills, data, methods and tools, etc.).

References

[5] APEC (2000), APEC Information Notes on Good Practice for Technical Regulation, APEC, https://www.apec.org/~/media/Files/MinisterialStatements/Annual/2000/00_scsc3_017.doc.

[6] Guasch, J. et al. (2007), Quality Systems and Standards for a Competitive Edge, The International Bank for Reconstruction and Development/The World Bank, http://dx.doi.org/10.1596/978-0-8213-6894-7.

[4] ISO (2014), “Using ISO/CASCO standards in regulation”.

[3] National Institute of Standards and Technology (2018), Conformity Assessment Considerations for Federal Agencies, National Institute of Standards and Technology (NIST), Washington, http://dx.doi.org/doi.org/10.6028/NIST.SP.2000-02.

[8] OECD (2019), General government spending (indicator), https://dx.doi.org/10.1787/a31cbf4d-en (accessed on 10 September 2019).

[1] OECD (2018), Review of International Regulatory Co-operation of Mexico, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264305748-en.

[2] OECD (2018), Standard setting and competition in Mexico 2018, OECD, http://www.oecd.org/daf/competition/WEB-Standard-setting-Mexico-2018.pdf.

[7] OECD (2017), Government at a Glance - Country Fact Sheet: Mexico.

Note

← 1.  Namely, the Law to Promote Citizens Trust and other initiatives to reform the Mexican system around technical regulations including the Executive’s project for a Law on Quality Infrastructure.