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MEXICO´S 2024 CONSTITUTIONAL REFORMS

Elimination of Autonomous AgenciesÌý

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Background:ÌýOn February 5, 2024, President López Obrador proposed 20 constitutional and legal reforms. The disappearance of autonomous agencies and energy regulators stands out among suchÌý. The main arguments for their elimination is that they are expensive and inefficient, they serve to protect oligarchic interests, and lack popular support despite recentÌý showing otherwise. If approved, this reform could directlyÌýimpactÌýUS interests and private companies that have invested in Mexico.ÌýThe reform is expected to be debated by the newly formed Congress in September,Ìýone month before Claudia Sheinbaum is sworn into office.

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Why are Autonomous Agencies and Energy Regulators relevant? In Mexico, these bodies operate independently from other government branches, providing them the ability to make decisions without political influence and conflicts of interest. These agencies were created to enhance technical expertise, manage budgets, and deliver effective outcomes. By checking political power and preventing political interference, they uphold competitiveness, fairness, transparency, and accountability, playing a vital role in protecting the public interest and ensuring robust governance.

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Reform Proposals: Main Intended ChangesÌý

1. INAI:ÌýTheÌýNational Institute of Transparency, Access to Information and Protection of Personal Data (INAI), which oversees transparency and access to information and personal data, would be transferred to the Secretary of Public Function (SFP), the National Electoral Institute (INE) would be responsible for information on political parties, the Federal Center for Conciliation andÌýLabor Registration and Federal Conciliation and Arbitration Court would hold information of unions.
2. COFECE:ÌýThe Federal Economic Competition Commission (COFECE), in charge of overseeing and monitoring anti-competitive behaviors and avoidingÌýmonopolies and oligopolies, would be transferred to the Secretary of Economy (SE).
3. IFT:ÌýThe Federal Telecommunications Institute (IFT),Ìýwhich regulates access to telecommunications, would be transferred to the Secretary of Infrastructure, Communications and Transport (SCT). The elimination of the IFT could violate Chapter 18 (Telecommunications) of the USMCA.Ìý
4. CRE and CNH:ÌýThe Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH), which safeguard economic stability, consumer protections, and promoting sustainable energy in Mexico, would be transferred to the Secretary of Energy (SENER).
5. CONEVAL:ÌýThe National Council for the Evaluation of Social Development Policy (CONEVAL), which develops independent studies to measureÌýsocial development and poverty,Ìýwill be transferred to theÌýNational Institute of Statistics and Geography(INEGI).

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Will the reform increase investor certainty and grant precise regulations?ÌýNo. By transferring oversight, regulatory and technical functions from autonomous agencies to federal institutions that directly depend on the executive branch, and such duties and policies would face the risk of becoming arbitrary, politicized, and non-dependent on market access factors and instead be swayed by internal political dynamics of each institution and the presidency.

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Consequences for Mexico and the US-MX bilateral relationship

• USMCA violations:ÌýThe reform would directly violate Mexico’s commitments under the United States, Mexico, Canada Agreement (USMCA) regarding market access, competition policy, and state-owned enterprises. North American competitiveness and nearshoring could face serious setbacks.
• Inadequate market regulation:ÌýMarket regulations could become inconsistent and politically driven, causing delays and obstacles in obtaining permits. This could deter foreign direct investment, create market concentrations, and elevate risks of anti-competitive practices and corruption, negatively impacting the quality and prices of goods and services.
• Setbacks in access to information:Ìý Without tools to protect personal data and information from the government, transparency, bilateral cooperation, andÌýinformation exchanges would be impacted.ÌýAccess to accurate and objective information on poverty levels and the performance of the country's education system could be politically manipulated.

The content discussed is based on the original proposals presented by President López Obrador in February of this year.

The reforms will be discussed by the newly elected Congress starting September 1, so the proposals' contents may change.

For more information, please visitÌý/collection/constitutional-reforms-mexico