Introduction
The Mexican government’s proposed reform to the Federal Telecommunications and Broadcasting Law has raised concerns not only domestically but also among North American trading partners. The reform allegedly violates fundamental principles of the United States-Mexico-Canada Agreement (USMCA), particularly those related to regulatory independence, fair competition, and digital trade.
Historical Context
While the current concerns from North American partners may seem new, they are expected given the objections and reservations expressed by both countries during the judicial and energy reform approval processes. Although these domestic policy decisions aim to return Mexico to the era of a monarchical presidency, as described by Mario Vargas Llosa as “the perfect dictatorship” under the PRI, Mexico is now realizing how internal policy decisions can spark international controversies threatening the country’s trade relations.
USMCA Friction
Tensions with the USMCA began in July 2022 when both Canada and the United States invoked Chapter 31 of the treaty, formally requesting consultations over practices they deemed discriminatory. Essentially, the energy reform was designed to unfairly favor Pemex and CFE at the expense of foreign private investment, which could be seen as a violation of Article 2.3 ensuring national treatment for goods from treaty member countries.
The judicial reform also raised concerns in the Canadian and U.S. governments, albeit indirectly. Although the USMCA does not explicitly regulate its members’ judicial structure, it does contain clauses requiring fair and equitable treatment for foreign investors, as seen in the energy reform case. It also demands protection against indirect expropriations and promotes impartial, transparent institutions. When the outcome of a reform results in a strengthened Executive branch with subordinated institutions and a potentially politicized Judicial branch, it’s only a matter of time before the USMCA’s Chapter 31 is invoked again due to disputes initiated by the U.S. and Canadian governments, leading to legal uncertainty—a nightmare for investors.
Telecommunications Reform and USMCA
The proposed Telecommunications and Broadcasting Law, by centralizing regulatory power in the Executive branch, seems to follow a similar path of contention as energy and potentially judicial policies. Legal experts agree that replacing an independent, autonomous body like the Federal Telecommunications Institute (IFT) with a subordinate entity under the President’s control directly violates Article 18.15 of the USMCA, which mandates that telecommunications regulatory bodies be independent, free from improper influences, and operate transparently and objectively.
Replacing an independent, autonomous body with one where the Secretariat of Infrastructure, Communications and Transportation or the Secretariat of Gobernación holds discretionary decision-making power would break the institutional design crucial for Mexico’s adherence to international competition and transparency rules.
Preferential Treatment and Discrimination
Another noteworthy aspect, according to the current draft of the proposed law, is the intention to allocate spectrum without bidding to state operators like CFE Telecom and exempt them from certain regulatory obligations. This preferential treatment could be considered discriminatory against all telecommunications market operators, mirroring the pattern observed in the energy sector: favoring state enterprises under the guise of national sovereignty and development, disregarding multilateral commitments against discrimination. The USMCA requires all actors, public or private, to compete under equitable rules; any unjustified exemption or advantage for state enterprises could lead to legal action from trading partners.
State Control Over Digital Environment
Although Article 109 was removed from the initiative, allowing for the blocking of digital platforms for regulatory reasons, the spirit of state control over the digital environment persists in the proposed institutional design. This raises serious doubts about Mexico’s intention to comply with international standards on digital trade, network neutrality, and free access to content—all essential for the development of the digital economy in North America. The Mexican authorities’ control over personal data is not a minor issue, especially considering that during President López Obrador’s term, the Pegasus surveillance software was used over 450 times to infringe on Mexican citizens’ privacy rights. Would a monarchical presidency seek access to the personal data of all the country’s residents?
Lessons from Past Controversies
The accumulated experience with energy controversies and warnings about the judicial reform should serve as a lesson for the new telecommunications initiative. If the Mexican government aims to reform the institutional framework to achieve development, inclusion, and technological sovereignty goals, it must do so while respecting USMCA commitments. Using “strengthening national sovereignty” as justification for treaty violation is counterproductive in practice, effectively isolating the country from global investment and growth circuits.
Potential Consequences
Continuing this pattern across various economic sectors puts Mexico at risk of facing a new wave of trade disputes, compensatory sanctions, and loss of credibility among its international partners. The U.S. and Canada have shown they won’t tolerate developments harming their businesses and investors. The outcome of the ongoing energy sector dispute and the telecommunications case’s evolution will likely serve as a barometer for anticipating Canada and the U.S.’s stance when the USMCA review comes in 2026.
Conclusion
The U.S.-Mexico-Canada Agreement is not merely a trade agreement but also an economic governance framework protecting legal certainty, competition, and democratic values in the region. Ignoring its provisions for the sake of national sovereignty, in practice, isolates Mexico from global investment and growth circuits. If past recent errors are repeated, the telecommunications reform won’t be a modernization tool but another chapter in the list of trade conflicts weakening Mexico’s position in the international community.
