Money vs Ideology US M C A
United Stares Mexico Canada Agreement 01 Jul 2020 (modern NAFTA agreement) good for 16 years 01 Jul 2036.
AMLO proposed open pit mining ban 10 Feb 2024
(Article)
With USMCA approaching its first review in 2026, the Mexican Institute for Competitiveness (IMCO) has warned of potential trilateral issues due to the Mexican government’s constitutional reform initiatives set to be introduced to the new legislature in September 2024.
Among the government’s 18 proposed initiatives, IMCOhas identified five that could potentially violate USMCA's provisions:
- Banning concessions for open-pit mining activities
Regarding the ban on open-pit mining, while it has been established that it will not affect existing concessions, IMCO stressed that there could be conflicts arising from Chapter 14. The chapter prohibits preferential treatment toward public companies over private investors from other countries. "The Minimum Standard of Treatment clause in USMCA protects investors against measures that could affect their operations and property," states the institute. (Article on Mexico Business site)
Since this proposal happened after the agreement USMCA has (which was well emphasized in a recent case) the authority to enforce the agreement on things that have happened after the agreement.
So my take is this WILL have to be resolved before the 2026 USMCA parties meet. A violation has yet to be filed as US and Canada are in my opinion giving Claudia time to resolve the matter.
CRE and other regulatory changes in administrative / judicial issues may perhaps be changed or amended in 2026. I do not think that any loop hole changes will be applied to accept the open pit ban as it was not in effect at start of contract or it will need to be compensated like oil was when it was nationalized in 1938. It is my opinion that as silver and copper rise in value mexico will consider raising taxes from 5 to 10 % vs a nationalization of the minerals. Why? Because you still need the private companies for their resources, knowledge and expertise. That action would shelf a lot of investment and nearshoring as well. One usually doesn’t go cold turkey on money generation, and then have pay a fine on top of that. MONEY is (again my opinion) ultimately more powerful than ideological policies when it comes to running a government.