Trade Deal's New IP Sections Present New Opportunities for Dreamers in Mexico's Silicon Valley
Guadalajara is popularly known as the capital of tequila and mariachi music, but aside from tourist attractions the Jose Cuervo Train and Herradura Express, recent years have also seen other structures pop up: the satellite offices of major tech companies like Oracle, IBM, Toshiba, and Intel. Farther West in the State of Jalisco are the annual MITA Tech Talks in Puerto Vallarta, a convention for startups and venture capitalists.
Jalicso’s emerging high-tech sector has earned it the nickname of “Mexico’s Silicon Valley,” but the phenomenon is not limited to this state. The Mexico City neighborhood of Tabacalera has earned the nickname “Little L.A.” because of the heavy presence of young arrivals from the United States and the new businesses that are employing them, including call centers and tech startups. Companies like Amazon have opened offices in Mexico City, and WeWork continues to have a significant presence of its workspaces in this city despite the company’s recent contraction.
Aside from the logistical benefits of “nearsourcing,” i.e. outsourcing to locations near the U.S.’s Silicon Valley rather than overseas to India, Mexico’s emerging tech sector has been fueled by the influx of young, skilled migrants that have been pushed out of the United States by President Trump’s crackdown on skilled workers subject to the H1B Visa and his vow to end the Deferred Action for Childhood Arrivals Program (“DACA”) that benefits more than 600,000 people known as “Dreamers” who were brought to the United States while minors. The fate of DACA is currently pending before the United States Supreme Court. If the Court sides with Trump, the southward flow of migrants will likely continue.
Both Dreamers and tech leaders see a silver lining around the cloud of the current immigration crisis. One optimist and advocate for the new arrivals is Wizeline CEO Bismarck Lepe, a son of immigrant farmworkers and graduate of Stanford University. “This may be a good soft landing for people who are incredibly well prepared and may be able to take advantage of building their American Dream back in Mexico,” he said. Since Wizeline established a presence in Mexico in 2015, it has heavily recruited Dreamers to apply for jobs that would allow them to temporarily work in Mexico before obtaining the necessary visa to return to the United States. Wizeline plans to use the L1 and TN visas, the latter covered by the North American Free Trade Agreement (and is unchanged in the new trade deal), that allows citizens of Canada and Mexico to work in the United States for certain commercial purposes.
Even if Dreamers are unable to return to the United States because of the immigration crackdown, plenty of companies, including Wizeline, are offering opportunities for permanent work in Mexico. Organizations like StartupGDL, a nonprofit venture of Bismarck Lepe, aims to recruit skilled talent to the growing startups in the Jalisco region. The City of Zapopan, part of the greater Guadalajara area and the location of several major tech companies, is heavily recruiting Dreamers by placing brochures in Mexican consulates in the United States.
Similar to StartupGDL, Hola Code is a Mexico City software start-up that focuses on “integrating returned or deported migrants and refugees in Mexico.” Founded by Marcela Torres, Hola Code uses WeWork spaces and offers a five-month relocation and training program for recent deportees. During this period, Hola Code provides meals, financial services, wellness programs, and training to participants. Students don’t pay for anything until they land a job, often with one of the company’s 100+ hiring partners.
Claudio Gage is a typical participant of Hola Code. His biology degree from UC San Diego may have made him an asset to the U.S. if he stayed. However, when returning from a short visit to Tijuana for dinner, he was denied reentry by federal agents because of his uncertain DACA status. Hola Code gave him hope and the ability to pursue his American Dream south of the border.
The Mexican government has been slow to adapt to the influx of migrants from up north, many of whom have difficulty securing legal status in Mexico and other paperwork necessary to earn a living. Despite the 2014 enactment of Somos Mexicanos, a government program aimed at helping returning migrants integrate, the program has fallen short of providing deportees with full relocation support.
Fortunately, several nonprofits have emerged to pick up the slack. For instance, New Comienzos is an organization founded by Israel Concha after he was deported from the United States. The Mexico-City organization provides relocation assistance to deportees and refugees, including shelter and job placement.
The New Trade Deal
Mexico’s substantial tech sector has been a decade in the making, and this trend is likely to continue with the imminent passage of the United States-Mexico-Canada Agreement (“USMCA”), which we discussed in a recent article on our Trade Page here. The USMCA includes significant changes in the area of intellectual property (“IP”). The following are some of USMCA’s most notable features on IP:
Limits the ability of parties to require another “to use or locate computing facilities in the Party’s territory as a condition for conducting business in that territory…”
Simplifies procedures for exporting small shipments, which is largely a concession to e-commerce companies like Amazon.
Limits the ability of members states to impose data-localization requirements that can limit cross-border data flows from local data centers.
Restricts governments from imposing tariffs or taxing data transfers.
Restricts governments from forcing companies to disclose their underlying source code, such as algorithms that power AI systems.
Victoria Espinel, president and CEO of software-industry trade group BSA, praised the new provisions. “This agreement is a big deal for CIOs, and it is entirely different from NAFTA,” she said. “The major technological innovations over the past couple of decades that shape our lives and have such a significant impact on...the jobs that CIOs do—they didn’t exist when NAFTA was negotiated.”
Jason Oxman, chief executive of the Information Technology Industry Council, also noted that the USMCA “lowers costs for the movement of data across borders. And it provides certainty that those costs won’t be increased by the imposition of tax on the kind of digital services that a CIO needs to buy.”
Though companies will be adapting to the new USMCA for the next few years, the deal’s changes in IP are likely to spur further cross-border investment in the tech sector. If the changes encourage tech companies to continue their near-sourcing to Mexico, many more Dreamers will be able find their place south of the border.
Please subscribe to the Camino Aztlán Newsletter for future updates about the USMCA, Dreamers, and Mexico’s Silicon Valley.