The US agency published this July 28 its annual report on the investment climate of each country allied to the United States, including Mexico. The US analysis also criticizes President López Obrado’s attacks on the Federal Competition Commission (COFECE), an autonomous regulatory body.
The US Department of State released its annual report on the status of the global investment climate (2022 Investment Climate Statements), in whose chapter dedicated to Mexico, points out that the government of President Andrés Manuel López Obrador has classified important projects as “national security”, in order to start public works without environmental impact studies, which generates “concerns about the commitment of the López Obrador administration with transparency.” The US government’s analysis also criticizes the president’s attacks against the Federal Competition Commission (COFECE), an autonomous regulatory body.
The report was published on July 28 amid the beginning of the consultations announced by the governments of the United States and Canada on the energy policy of the Mexican government within the framework of the trilateral trade agreement, known asthe USMCA.
The document also notes that although the trade agreement between the United States, Canada and Mexico entered into force on July 1, 2020, “the López Obrador administration has delayed the issuance of key regulations throughout the economy, which complicates the operating environment. for the telecommunications, financial services and energy sectors.
The State Department report recalls that in December 2021, the president issued an agreement to determine that all his mega projects should be classified as national security, in order to speed up their procedures and prevent opposition groups from presenting legal resources to stop them.
In December 2021, President López Obrador issued a controversial decree naming these projects as “ national security” priorities, allowing them to proceed before the completion of environmental and other impact studies. Although the courts prohibited the executive decree, it still raised concerns about the López Obrador administration’s commitment to transparency,” the document says.
The same analysis of the Department criticizes that López Obrador’s policy has been to prioritize Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) over private companies that have seen the need to present legal resources to defend themselves from the policies of the Mexican administration.
“The reforms of the last decade in the energy, power generation, telecommunications and fuel retail sectors have liberalized access for foreign investors. Although the reforms have not led to the privatization of state companies such as Pemex or the Federal Electricity Commission (CFE), they have allowed the participation of private companies. Still, the López Obrador administration has made important regulatory and policy changes that favor Pemex and CFE over private participants. The changes have led private companies to file lawsuits in Mexican courts and seek compensation through international arbitration.”
The analysis of the Biden government also criticizes the president’s attacks against the Federal Competition Commission (COFECE) , an autonomous regular body.
“In September 2021, the COFECE commissioner, President Alejandra Palacios, resigned after several months of public disagreements with the statist energy policy of President López Obrador. López Obrador has not appointed substitutes for the COFECE Commissioners since November 2020, leaving the institution without a quorum for resolutions related to barriers to competition or the issuance of provisions,” the report says.
The document adds:
“López Obrador has publicly questioned the value of COFECE and his party unsuccessfully presented a proposal last year that would have drastically reduced its resources and merged COFECE and other regulators into a less independent structure. COFECE currently has the minimum required quorum of at least four commissioners to operate, out of a full board of seven members. However, COFECE lacks the required quorum of five commissioners to issue final resolutions determining barriers to competition and anti-competitive practices. President López Obrador has not appointed the remaining commissioners as required by law.”
According to the document, most of the foreign investment is concentrated in the northern states of Mexico, near the border with the United States, where most of the maquiladoras are located, as well as in Mexico City and the “El Bajío” region, which includes Guanajuato and Querétaro.
“In the past,” says the report, “foreign investors have bypassed Mexico’s southern states, although the administration is focused on attracting investment to the region, including through large infrastructure projects such as the Mayan Train, the Dos Bocas refinery and the transisthmian logistics and industrial corridor”, which is being built to connect the Gulf of Mexico and the Pacific coasts in Oaxaca.