Background on Key Figures and Relevance
Sergio Gómez Lora, Director of the Index USA Office, suggests that Mexico, the United States, and Canada will discuss adjustments to regulate Chinese investment as part of a strategy to protect national security. This discussion is crucial given the recent agreements between Mexico and the U.S. to set criteria for foreign direct investment (FDI) related to national security.
In December 2023, the U.S. Department of Treasury and Mexico’s Secretariat of Finance signed a Memorandum of Understanding, emphasizing the importance of controlling FDI to safeguard national security. A bilateral working group was established to exchange best practices in controlling investments for national security.
The U.S. Department of Treasury has provided extensive technical guidance to Mexico’s Secretariat of Finance on establishing an investment control mechanism similar to the U.S. Foreign Investment Committee (CFIUS).
The CFIUS reviews transactions that may involve foreign investment to determine if they affect national security and can recommend blocking, modifying, or unwinding operations that pose risks to the U.S.
Current Investment Regulations in Mexico
Approximately 95% of all FDI transactions in Mexico do not require government approval. Investments needing government authorization and below 3,000 million pesos are automatically approved unless the proposed investment falls within a legally reserved sector.
The National Foreign Investment Commission (CNIE), under the Ministry of Economy, is the government authority determining if a restricted sector investment can thrive.
The CNIE has 45 business days to decide after receiving an investment request. Approval criteria include employment and training considerations, as well as contributions to technology, productivity, and competitiveness.
The CNIE can reject acquisition requests of Mexican companies for national security reasons. The Secretariat of Foreign Affairs must issue a permit for foreigners to establish or modify the nature of Mexican companies.
Government Efforts to Accelerate Investment Approvals
Humberto Martínez Cantú, president of Index, highlighted that the federal government is expediting permit approvals for expanding or opening new manufacturing plants. He mentioned a commitment made to Dr. Claudia Sheinbaum (President of Mexico City) for more investment and employment.
T-MEC Investor Treatment
The 2020 T-MEC, like its predecessor the USMCA, grants U.S. and Canadian investors national treatment and most-favored-nation status. Only the U.S. and Mexico are part of T-MEC investor dispute settlement provisions, though access is restricted based on whether the investor has a government-covered contract.
Most U.S. companies investing in Mexico have fewer resources under the T-MEC than under the USMCA, as they must meet criteria to qualify for arbitration.
Key Questions and Answers
- What is the main topic of discussion among T-MEC countries? They are discussing adjustments to regulate Chinese investment as part of a strategy to protect national security.
- Who are the key figures mentioned in the article? Sergio Gómez Lora, Director of the Index USA Office, and Humberto Martínez Cantú, president of Index.
- What recent agreements have been made between Mexico and the U.S. regarding FDI? They agreed on criteria for regulating FDI related to national security.
- What is the role of the National Foreign Investment Commission (CNIE) in Mexico? The CNIE determines if restricted sector investments can thrive and has 45 business days to decide on investment requests.
- How is the federal government supporting manufacturing plant expansions and openings? The government is expediting permit approvals for these projects.
- How does the T-MEC treat U.S. and Canadian investors? The T-MEC grants them national treatment and most-favored-nation status, with access to dispute settlement provisions restricted based on government contracts.
