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It is expensive to Mexico to obstruct investment
Frida andrade
Mexico City (March 30, 2020) .-
05:00 hrs
From 2000 to date, Mexico has paid $ 252 million in fines for violating trade agreements by arbitrarily obstructing foreign investment, according to information from the Ministry of the Economy (SE).
That amount will grow if Constellation Brands and the current Mexican Government do not reach an agreement, such as the change of headquarters of the brewery, after its cancellation in Mexicali, Baja California.
In the awards of the accumulated cases, the amounts of compensation are established when a State incurs in actions such as giving discriminatory treatment with respect to other foreign or national investors, or measures equivalent to expropriation and the adoption of arbitrary measures, reported Carlos Vjar, lawyer Holland and Knight office senior.
Pursuant to the Agreements for the Promotion and Reciprocal Protection of Investments (APPRIs) and the Free Trade Agreements (FTA) that Mexico has, when an investor sues a State (country), it can initiate investment arbitration against government measures in any level (state, federal, municipal) before the International Center for Settlement of Investment Disputes (ICSID), institution of the World Bank.
The first compensation Mexico had to pay was to Metalclad for $ 16.6 million in 2000, according to SE.
The highest amount the Mexican government has paid was to Cargill, for $ 79.3 million, due to the 20 percent tax on sweetened beverages, such as high-fructose corn syrup (HFCS); Cargill argued that this was a discriminatory measure, as he was a strong HFCS producer.
The most recent arbitration was with Telefnica, although the Government and the company reached an agreement to modify the telephone rates that were closest to the amounts suggested by the company, so the State no longer paid.
In addition to the fines, attorneys' fees are added to the expenses, Vejar explained.
Currently there are 11 active cases in arbitration and 7 more that could fall into arbitration, that is, they are in the previous stage called notice of intention, according to SE data.
"(Reaching an investment arbitration) It does not make it attractive because no investor seeks to come and fight Mexico to see if they pay him something he has spent and because there is no absolute certainty that he will be compensated for all the expenses he incurred.
" In addition to the time, it can be an average of three years ", concluded Vjar.