U.S. pauses US$35 billion in investments in Mexico

MEXICO - The Wall Street Journal stated that US companies are delaying their investments in Mexico due to concerns about how the Judicial Power reform, to be discussed and voted on this week in the Mexican Senate, will affect them.

In the text titled “Why Mexico's imminent judicial reform scares US companies”, the US newspaper pointed out that around US$35 billion in investments are delayed.

Company representatives and advisors estimate that foreign firms are holding back some US$35 billion in investment projects in sectors ranging from information technology and automobile manufacturing to gas pipelines and industrial infrastructure because of the uncertainty related to the reform and the US elections

“That figure nearly equals what Mexico, Washington's largest trading partner, attracts in foreign direct investment in an average year. Recently, most of that investment has been from companies reinvesting their profits,” the note pointed out.

The organization pointed out that another US$18 billion of private investment that Mexico needs to cover the growing demand for electricity for industrial use is also at stake.

The Wall Street Journal pointed out that a few months ago the Supreme Court of Justice of the Nation (SCJN) blocked initiatives that could have disrupted the country's electricity sector and, thus, violate the USMCA.

“Costly international arbitrations over investment rights are likely to increase as companies try to avoid Mexican courts. Corporate lending in Mexico would also be affected by the uncertainty, according to bankers,” the bank said.

The united commissions of the Senate of the Republic approved in general the Judicial Power reform bill, which is promoted by President Andrés Manuel López Obrador and seeks to elect judges, magistrates and ministers of the Supreme Court by popular vote.