Mexico City.- The judicial reform proposal promoted by the Government, which seeks the election of judges, magistrates and ministers by direct vote at the polls, threatens the capture of new flows of Foreign Direct Investment (FDI) to the country, since it affects the legal security of investors, warned Mexico Evalúa.
The think tank said the reform could place inexperienced judges in charge of administering justice in technical sectors such as energy or telecommunications, and would also open the possibility for magistrates running for election to come into contact with interest groups, which would create external pressure and open the door for illegal campaign financing through organized crime.
“The better the quality and independence of the courts’ performance, the more judicial independence, the more FDI there will be. “FDI in Mexico, especially new investment, is losing share in the foreign investment portfolio,” said Mariana Campos, general director of Mexico Evalúa, at a press conference on Tuesday.
He added that in 2022, 46.46 percent of FDI was reinvested profits, but by the second quarter of this year, reinvestment had rebounded to 97.4 percent of the total.
“Even though this investment is growing, new investment is not coming. We are not taking advantage of the opportunity to relocate companies (nearshoring), and this judicial reform will further undermine this possibility of attracting new capital,” Campos said. On August 18, the Ministry of Economy (SE) reported that FDI in Mexico reached a maximum amount of 31.096 billion dollars in the second quarter of the year, however, only 909 million were registered in new investments, which meant a reduction of more than 1.2 billion compared to the same period in 2023. Likewise, Campos noted that the reform proposal violates compliance with the Treaty between Mexico, the United States and Canada (T-MEC). “The reform proposal violates three chapters of the USMCA: Chapter 14, which deals with treating investments equitably; Chapter 23, which refers to labor; and Chapter 27, on anti-corruption policies. “A reform should not be approved in a hurry. The judicial system was built over centuries and they are looking to reform it in a month. Its economic impact and its impact on the pockets of Mexicans have not yet been measured,” said the director. For her part, Ana Lilia Moreno, coordinator of the Regulation and Competition Program at México Evalúa, described the proposal as a “degradation of the judicial system,” since it is oriented toward greater economic control by the Government instead of prioritizing the effective administration of justice. “When the Government intervenes in the economy, the country could be classified as a ‘non-market economy,’ which contravenes the USMCA. “In addition, the reform proposal endangers property rights, which affects the interest of investors. There would be no protections,” said Moreno, who put into context the case of the hydrogen plant of the French company Air Liquide in Hidalgo, which was expropriated through a presidential decree last April. For his part, Jorge Sepúlveda, secretary of the Mexican Bar Association, pointed out that the reform proposal lacks a qualitative and quantitative diagnosis of the distribution of justice in Mexico. “It is a ‘judicial holocaust.’ It is a whim to make the Judicial Branch see that the Legislative and Executive branches have power over it, that they are above it,” said the lawyer.
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