17吃瓜在线

Policy and Legal

Policy and Legal

17吃瓜在线: Don鈥檛 Rush Proposed Reforms in Mexico

By 17吃瓜在线 News Room

Mexican President Andr茅s Manuel L贸pez Obrador proposed a sweeping package of amendments to Mexico鈥檚 constitution back in February. Now, with President-elect Claudia Sheinbaum set to take office in less than two months, manufacturers want to know whether and how the changes will happen.

What鈥檚 going on: 鈥淥ver the last 10 years, manufacturers in the U.S. have dramatically expanded facilities and operations in Mexico, totaling over $25 billion, according to the U.S. Commerce Department,鈥 said 17吃瓜在线 Director of International Policy Dylan Clement at the recent Wilson Center event 鈥.鈥

  • 鈥淲hen manufacturers invest, they sink large amounts of capital鈥攍iterally鈥攊nto the ground, which is costly to relocate once built,鈥 he continued. 鈥淲e do not pretend to know how the judicial reform will play out 鈥 [but] manufacturers are fearful of the risk associated with enacting sweeping changes to the judicial system in Mexico on such a short timeline.鈥
  • Sheinbaum, who will be Mexico鈥檚 first female president, and her Morena party won a landslide election in June.

What鈥檚 been proposed: The constitutional amendments set forth include eliminating government oversight and regulatory agencies, including Mexico鈥檚 freedom-of-information body, INAI, and its anti-trust agency, COFECE, and requiring all Mexican judges鈥攊ncluding Supreme Court judges鈥攖o be elected by popular vote, according to the 听补苍诲听.

  • Several of the amendments appear to violate Mexico鈥檚 obligations under the U.S.鈥揗exico鈥揅anada Agreement.

Why it鈥檚 important: Mexico is America鈥檚 largest trading partner, and 鈥淸a]t the end of the day, manufacturers want to partner with Mexico to help it prosper economically, grow its industrial capacity and enhance its self-sufficiency,鈥 Clement said鈥攂ut the broad revisions set forth by L贸pez Obrador and other worrying developments in Mexico have the potential to damage the critical relationship and undo important recent gains.

  • The proposed changes to Mexico鈥檚 judicial system could erode the checks and balances within Mexico鈥檚 government, politicize judicial outcomes, undermine the rule of law and result in higher levels of corruption throughout Mexico.
  • For investors, these challenges would be compounded by the USMCA鈥檚 weakened investor state dispute-settlement mechanism, which requires foreign investors to聽go through Mexico鈥檚 domestic court system before seeking a neutral arbitration panel via the USMCA.

In sum, the constitutional amendments carry the risk of greatly complicating the upcoming review of the USMCA, which the U.S., Canada and Mexico will conduct in 2026.

  • Ultimately, any erosion of the business climate in Mexico will harm the attractiveness of Mexico as a destination for manufacturers seeking to 鈥渘ear-shore鈥 their supply chains closer to the U.S.

What should be done: 鈥淔or these reasons, the 17吃瓜在线 would caution against rushing the judicial reform through in September, given that it will have an impact on Mexico鈥檚 investment climate for decades to come and many questions about it remain unanswered,鈥 Clement concluded. 鈥淚t is better to get this right than done quickly.鈥

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