Access Alert: Update on Mexico’s Regulatory Reforms: What You Need to Know

In recent developments, Mexico is moving forward with a constitutional reform aimed at dissolving several key autonomous agencies, including the Federal Telecommunications Institute (IFT) and the Federal Economic Competition Commission (COFECE). This administrative simplification reform is part of President Andrés Manuel López Obrador’s broader agenda and legacy and is sparking considerable concern both domestically and internationally. The new President Claudia Sheinbaum has been supportive of these reforms and will come into office on October 1st.

What it means:

Dissolution of Autonomous Bodies: The proposed reform targets the extinction of multiple autonomous regulatory bodies, including the telecoms watchdog, IFT, and Cofece. The responsibilities of these agencies are planned to be transferred to various federal ministries. For example, the Ministry of Infrastructure, Communications, and Transport will take over IFT’s telecommunications regulation duties, while the Ministry of Economy will absorb Cofece’s and IFT’s competition oversight functions.

Impact on Investment and Trade: These changes could potentially conflict with Mexico’s obligations under the USMCA (United States-Mexico-Canada Agreement), particularly regarding maintaining independent regulatory bodies. Dismantling these agencies might undermine Mexico’s competitiveness and could lead to disputes under USMCA, particularly concerning chapters related to telecommunications and competition policy. The reform, though, asserts that there is no impact on the USMCA.

Political and Economic Implications: The reforms have been met with resistance from opposition parties and civil society groups, who argue that dissolving these bodies could weaken regulatory oversight and reduce transparency. Despite these concerns, the reforms are advancing through the legislative process, with a final vote expected soon in the new Congress, which will be inaugurated on September 1st. The ruling party, Morena, is pushing the reforms as part of a broader strategy to streamline government functions and reduce costs, although critics argue that the long-term economic and legal consequences could be severe. Morena and its allies had a landslide victory in the recent election that may give them the needed majority to implement this reform.

This Constitutional reform establishes that the Legislative Power must issue changes to the related laws within 90 calendar days.

As these reforms continue to progress, it is crucial for stakeholders, particularly in industries related to telecommunications, competition, and foreign investment, to stay informed and consider the potential impacts on their operations and strategies in Mexico.

To learn how your business can navigate the implications of Mexico’s regulatory reforms and leverage opportunities in this evolving landscape, please contact Geusseppe Gonzalez at [email protected] and Fernando Borjón at [email protected].