Amid the US’s presidential elections this year, President Joe Biden has referred to the role and importance of the Committee on Foreign Investment in the United States (the “CFIUS”), especially when referring to the growing risks to national security to which the US and the North American region, in general, shall and will face in the remaining years of this decade.
In essence, the CFIUS is an interagency committee that has broad powers to review foreign investments, purchases of goods and transactions to determine their potential risks on US national security. Thanks to the CFIUS’s effectiveness to shelter and foster successful FDI, Mexico is now in the process of creating a similar body inside its federal administration, to cooperate with the US on investment security screening and to integrate a cross-border payment system, which is critical to sectors that involve technology, infrastructure, clean energies, sensitive personal data and in general, high-tech products. For such purposes, in December 2023, the U.S. Treasury and the Mexican Finance Ministry signed a memorandum of intent to create a bilateral working group to exchange information with regards to the best practices in both countries, in connection to investment regimes and payments systems. “Like our own investment screening regime, CFIUS, increased engagement with Mexico will help maintain an open investment climate while monitoring and addressing security risks, making both our countries safer,” U.S. Treasury Secretary Janet Yellen said in announcing the memorandum of intent with Mexican Finance Minister Rogelio Ramirez de la O.
Furthermore, strategic alliances like the one forged by the US-Mexico-Canada Free Trade Agreement (or T-MEC) makes it imperative to harmonize the existent procedures aiming to protect cross-border operations and investments. Today, the US remains as Mexico’s main commercial partner and a premier destination for U.S. supply chains; it only follows that being partners will allow them to share both vital information and their common experiences to ensure that such investments have a robust screening mechanism in place.
We are of the opinion that, by procuring a higher national security threshold on investments in top-priority sectors, more foreign capitals and markets will consider Mexico as a safe and secure location to allocate their capital or to relocate their production centers. Since we are still navigating through campaigns season, it will become essential to keep a close eye on the upcoming steps that the next administrations in the US and Mexico will take in this regard, and how our country can benefit from it.
In case of any questions about the contents of this Alert, please contact:
Partner
lgonzalez@pcga.mx
Associate
jizaza@pcga.mx
