The countries of the Treaty between Mexico, the United States and Canada (T-MEC) will discuss adjustments on how to regulate Chinese investment, estimated Sergio Gómez Lora, director of the Index USA Office.
“I believe that the possibility of having common rules in North America for all countries on how to deal with trade and investment with China, the three countries as a region, will be discussed,” he commented within the framework of the 50th National Convention of the National Council of the Maquiladora and Export Manufacturing Industry (Index), in Mexico City.
In recent years, the governments of Mexico and the United States have agreed on certain criteria to regulate the arrivals of Foreign Direct Investment (FDI) related to national security.
In December 2023, the United States Department of the Treasury and the Mexican Ministry of Finance signed a Memorandum of Intent, which affirms the importance of foreign investment control to protect national security and establishes a bilateral working group to exchange best practices on investment control for national security.
In this regard, the United States Department of the Treasury has provided extensive technical guidance to the SHCP on the establishment of an investment control mechanism similar to that of the Committee on Foreign Investment in the United States (CFIUS).
The CFIUS reviews transactions that could involve foreign investment to determine whether they affect national security, and may recommend to the President to block, modify or undo transactions that pose risks to the United States.
“It is recognizing the new reality, that this has become an issue,” added Gómez Lora, regarding the new rules for investment from China, interviewed by El Economista.
Approximately 95% of all foreign investment transactions in Mexico do not require government approval. Foreign investments that require government authorization and do not exceed 3,000 million pesos are automatically approved, unless the proposed investment is in a legally reserved sector.
The National Foreign Investment Commission (CNIE), attached to the Ministry of Economy, is the government authority that determines whether an investment in restricted sectors can prosper.
The CNIE has 45 business days to decide, after submitting an investment application. Approval criteria include employment and training considerations, as well as contributions to technology, productivity and competitiveness.
The Commission can reject acquisition requests from Mexican companies for reasons of national security. The Ministry of Foreign Affairs must issue a permit for foreigners to establish or modify the nature of Mexican companies.
Sectorally, Humberto Martínez Cantú, president of Index, highlighted that the federal government is accelerating the approval of permits to expand or open new manufacturing plants. “Because of the commitment we made with the doctor (President Claudia Sheinbaum) for more investment (…), as we need the certification and approval of the Secretary of Economy, they are approving it very quickly, it is a formal commitment that I made with the doctor of Plan Mexico, for more investment and more employment,” he said.
The 2020 USMCA, like its predecessor, NAFTA, grants U.S. and Canadian investors national and most-favored-nation treatment. Only the United States and Mexico are parties to the USMCA’s investor-state dispute settlement provisions, although this access is restricted based on whether the investor has a covered government contract.
Most U.S. companies that invest in Mexico have access to fewer resources under the USMCA than under NAFTA, since they will have to meet criteria to qualify for arbitration.
