Mexico | Electric reform and international treaties

Summary

The electric counterreform and the constitutional reform that seeks to make it viable, are at odds with Mexico's commitments in trade and investment agreements.

Key points

• Key points:
• The electric counterreform infringes on the institutional framework by increasing state control in the sector at the expense of private investors’ interests, opening the door to trade reprisals and compensation, under strong arguments around National Treatment, Non Discriminatory Treatment and State-Owned Enterprises.
• The Mexican government can modify the rules of the electric sector as it sees fit, nevertheless these actions run against the contents of international treaties, for which high costs will be payed, not only due to costly and dirty energy, compensations and reprisals, but also in terms of damaging the country’s reputation as a trustworthy partner and investors’ goodwill.
• Approving the constitutional reform of the energy sector as presented in Congress will endanger the USMCA, one of the country’s most effective instruments to attract investment and spur growth.

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