Mexico sets course for circular economy

1. Structure and Purpose of the LGEC. The LGEC establishes a nationwide framework to reduce resource extraction, extend product lifecycles, and minimize waste generation. Its core principles, prevention, hierarchy of options, progressiveness, innovation, and traceability, apply across all productive sectors. The law places circularity as a public-interest mandate and aligns the roles of the federal, state, and municipal governments to avoid regulatory fragmentation.
2. National Circular Economy System & Digital Platform. To coordinate implementation, the Initiative creates:
   1. National Circular Economy System, led by SEMARNAT and integrated by key federal ministries, states, and municipalities, ensuring consistent policy execution.
   2. National Public Information Platform, a digital tool compiling traceability data, circularity indicators, and compliance reports.
   3. Circular Management Registry, where producers and importers must register their circular management schemes once obligations are triggered by sector-specific agreements.
   These instruments together form the backbone of monitoring, enforcement, and transparency.
3. EPR. EPR is the centerpiece of the LGEC and becomes mandatory for producers and importers. Obligations include:
   1. Circular product design: durability, repairability, and recyclability.
   2. Take-back and recovery systems for end-of-life products and materials.
   3. Progressive, sector-specific targets defined by SEMARNAT through General Implementation Agreements.
   4. Individual or collective compliance mechanisms, including indirect circularity options under controlled conditions.
4. Differentiated timelines and obligations may apply to MSMEs.
   1. Incentives and Supporting Instruments.
   2. Tax incentives may be granted by the Federal Executive for activities aligned with circularity principles, under Article 39 of the Federal Tax Code.
   3. The National Circular Economy Seal recognizes products and services that meet circularity criteria and grants preference in public procurement.
   4. Voluntary environmental audits and concertation agreements complement formal obligations and support continuous improvement.
5. Harmonization with Existing Environmental Laws. To ensure coherence, the Initiative amends:
   1. LGEEPA, updating the definition of “waste,” integrating circularity criteria into sustainable-use provisions, and regulating virgin raw-material extraction under circularity standards.
   2. LGPGIR, adding circularity, valorización, and traceability principles, and aligning national waste-management programs with circular resource use.
   Sanctions rely on LGEEPA’s enforcement regime, avoiding duplication.
6. Impact Across Sectors. If adopted, the LGEC would significantly affect manufacturing, packaging, consumer goods, electronics, automotive, chemicals, retailers, importers, and municipal waste-management systems. It positions Mexico closer to global circularity frameworks while introducing substantial new compliance expectations for supply chains.

Authored by Mauricio Llamas and Sofia de Llano.