Mexico Extension of CFIUS Envisioned

Treasury Secretary Janet Yellen, and Mexico’s Secretary of Finance and Public Credit Rogelio Ramírez de la O signed a Memorandum of Intent Thursday to affirm the importance of foreign investment screening in protecting national security and express their desire to establish a bilateral working group for regular exchanges of information about how investment screening can best protect national security.

The MOI recognizes the importance of the US-Mexico economic relationship, the benefits of maintaining an open investment climate, and the critical role of effective investment review mechanisms in addressing national security risks that can arise from certain foreign investment, particularly in certain technologies, critical infrastructure and sensitive data.

“I am pleased to announce our intention to establish a bilateral working group between the United States and Mexico on foreign investment review,” Ms. Yellen said. “Both countries benefit when they work together to guard against foreign investments that pose national security risks. This engagement is further evidence of the close partnership between our two countries, not only on matters of trade but also on critical issues of national security.”

North America faced significant supply chain challenges during the COVID-19 pandemic, and the United States and Mexico responded with new policy initiatives and approaches to bring jobs and investment in essential sectors back to the region. As this effort continues, cooperation between the United States and Mexico on investment security is one way to support shared national security objectives while promoting an open investment climate in the region, according to Treasury.

More than 20 countries implemented or enhanced their investment screening regimes in the past decade, and many more are in the process of developing regimes.

A CFIUS-like arrangement with Mexico would aim to scrutinize foreign investments within Mexico, particularly those that might pose security risks. 

Key aspects of such a proposal might include:

1. Joint Review Mechanism: Establishing a body that jointly reviews significant foreign investments in Mexico, possibly with U.S. collaboration or consultation.

2. Focus Areas: Prioritizing sectors that are crucial for national security, such as telecommunications, energy, and defense.

3. Investment Thresholds: Setting thresholds for the size or type of investments that warrant scrutiny.

4. National Security Definition: Defining what constitutes a national security threat within the Mexican context.

5. Compliance and Enforcement: Developing a legal and regulatory framework for enforcement and ensuring compliance with the established guidelines.

6. International Relations: Balancing the need for security with the potential impact on foreign relations and investment climate.

7. Transparency and Due Process: Ensuring that the review process is transparent and offers due process to investors.

Such a proposal would need to address the unique economic and security landscape of Mexico, considering its close economic ties with the U.S. and other nations. The challenge lies in striking a balance between safeguarding national security and maintaining a favorable investment environment.