Several American companies have put a pause on announcing planned investments in Mexico due to uncertainties surrounding the reform of the Judicial Branch currently under consideration by the Mexican Congress, according to Larry Rubín, president of the American Society of Mexico (Amsoc). The reform proposes electing judges by popular vote and dismantling autonomous regulatory bodies, sparking concerns about legal stability and economic impact.
Rubín disclosed in an interview with EFE that American investors are reassessing their commitments in light of the reform’s potential repercussions on legal certainty. “Given the current circumstances, we have decided not to announce the huge planned American investment because we are analyzing the impact on legal certainty regarding judicial reform,” he said during the ‘Third Bilateral Convention: A New Shared Future’ held in Mexico City.
Impact on Bilateral Relations and Trade
The American Society of Mexico represents the interests of U.S. private capital in the country, and according to Rubín, these investment plans are under review with the assistance of American legal experts. While specific investment figures were not disclosed, Rubín emphasized that the reforms could have far-reaching implications for the bilateral relationship between Mexico and the United States, its most significant trading partner.
At the event, Rubín urged Mexican lawmakers not to rush the legislative process. “It is essential that any reform of this magnitude be carried out with great care, be studied in depth, not be rushed into legislation, and truly involve all stakeholders,” he stated.
The U.S. business community’s concerns also coincide with the ongoing revision of the Mexico-United States-Canada Agreement (T-MEC), further complicating the economic landscape between the two nations. Rubín underscored that U.S. investment is the most critical foreign investment in Mexico and asked Congress to consider this before proceeding with the reforms.
U.S. Presidential Campaign Concerns
Rubín also mentioned that one of the two leading U.S. presidential candidates had approached Amsoc with concerns over the potential impact of Mexico’s judicial reforms on both U.S. and Mexican internal politics. “One of the two presidential campaigns in the United States has expressed great concern to us about the impact of such an important reform as the judicial reform and that of autonomous bodies,” Rubín revealed, without naming the candidate.
Support for Judicial Reform with Caveats
While the U.S. private sector acknowledges the need for judicial reform in Mexico, Rubín expressed reservations about electing judges by popular vote. According to him, this approach may fail to address existing corruption and might not foster institutional strengthening. Echoing U.S. Ambassador to Mexico Ken Salazar’s position, Rubín supports the general idea of judicial reform but cautioned against steps that might destabilize the legal framework American companies rely on.
Rubín also voiced concern over proposals to eliminate autonomous regulators, warning that such moves could lead to trade disputes and negatively affect the business climate between the two nations. He stressed that changes that compromise the independence of regulatory bodies could erode the trust that has been built between Mexico and its international partners, including the United States.
Business and Diplomatic Warnings
Rubín’s comments echo concerns raised by other influential organizations. The International Chamber of Commerce (ICC) and its Mexican chapter have already urged Congress to exercise caution in discussing these reforms, warning that they could violate international law and potentially expose Mexico to economic penalties. The ICC emphasized that these penalties would ultimately be paid by Mexican taxpayers.
Several multilateral organizations, including the United Nations, have expressed their reservations regarding the judicial reform. In addition, rating agencies such as Fitch and financial institutions like Citibanamex, Morgan Stanley, and UBS have all issued warnings about the risks associated with these proposed changes.
Diplomatic circles have also weighed in on the issue. The embassies of the United States and Canada have both expressed their concerns, noting that the reforms could undermine private investment, impact trade agreements, and even trigger economic sanctions.
Call for a Thoughtful Legislative Process
Rubín urged Mexican lawmakers to extend the timeframe for discussing the reforms, suggesting that Congress take up to six months to fully analyze the implications, rather than rushing the process in two or four days. He reiterated the importance of giving these reforms the “seriousness and reflection they deserve” and emphasized the need for a careful legislative process that ensures a stable and transparent legal environment for American businesses in Mexico.
As Mexico navigates these pivotal judicial reforms, the outcome will significantly impact the country’s economic relationship with the U.S., the trust of foreign investors, and the future of legal certainty for both American and Mexican businesses operating within the nation. The international business community will be closely monitoring how Mexico handles this critical moment.
