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Mexico: Some Quick Takes.

This year marks a little over three decades since White & Case first opened its Mexico City office. As we reflect on this significant milestone, our team is grateful for all the colleagues, clients, and friends who have supported us along the way. 

At White & Case, we not only track local and regional developments but global trends as well. And clearly nothing is more urgent on the international stage right now than the war in Ukraine and its potential to impact many aspects of our lives. You can click here for live updates on the evolving situation in Ukraine.

Closer to home, we’ve been monitoring the latest political developments in Mexico. During his 2018 presidential campaign, Andrés Manuel López Obrador committed to a referendum on his presidency. Last Sunday, Mexican voters headed to the polls to vote in Mexico’s presidential referendumNine of out of ten voters backed the president, though less than 20 percent of voters turned out, far short of the 40 percent needed to make the results binding.

López Obrador likely made good on his promise of the recall in order to demonstrate his widespread political support. The president’s current approval rating is 58 percent, according to the AS/COA approval tracker, although a recent survey showed that less than one-third of voters think their country is on the right track.The upcoming gubernatorial elections in June will offer another chance for López Obrador’s coalition to gauge its support. 

Last week, Mexico’s Supreme Court narrowly upheld the 2021 electricity law giving priority to national power company Comisión Federal de Electricidad (CFE) over private firms. While the decision was one vote short of the supermajority needed to declare the initiative unconstitutional, it did set a crucial precedent for future legal challenges. U.S. Ambassador to Mexico Ken Salazar responded in a statement expressing concern that upholding the law “would likely open the door to endless litigation”.

In the lead up to the vote, the Biden administration stepped up its pressure on the Lopez Obrador administration. Climate Envoy John Kerry visited Mexico three times in five months, and Trade Representative Katherine Tai sent a letter warning that proposed changes to energy sector regulation put $10 billion in U.S. investment “more at risk than ever”.  Yesterday, Mexico’s opposition parties delayed a debate in Mexico’s Congress on López Obrador’s energy reform introducing structural changes to the entire sector. Members are now scheduled to convene in the coming days. 

Due to the pandemic and the war in Ukraine, global supply chain disruptions continue.These ongoing challenges have incentivized U.S. companies to consider moving manufacturing closer to home in order to meet strong consumer demand and supply the recuperating auto industry. Many have already started shifting their investments from China to Mexico’s northern border states, saving in shipping costs and avoiding potential export delays. Last year, Mexico’s exports to the U.S. grew to $385 billion, shrinking the gap with Chinese exports. Yet, this week showed how unexpected disruptions can occur to cross-border trade. Commercial traffic was temporarily halted at a key U.S. port of entry due to protests by Mexican truck drivers over Texas Governor Abbott’s new enhanced security inspections. 

On April 1st, the Centers for Disease Control announced that Title 42, a public health rule implemented in March 2020 to rapidly expel migrants at the U.S. southern border without the chance to request asylum, will be terminated in late May. In response, a bipartisan group of Senators introduced a bill that would prevent Title 42 from being lifted until the Biden administration releases a detailed plan to manage the expected increase in border arrivals. The Biden administration will be keen to continue to work closely with Mexico in coming months on efforts to stop migration to the border ahead of November’s midterm elections.  

Lastly, I’d like to congratulate my colleagues at White & Case who were recently recognized with top rankings by Chambers & Partners along with top Merger and Acquisition and Private Equity rankings by Bloomberg, Mergermarket and Thomson Reuters. 

As always, I hope you will stay in touch and reach out or follow me on FacebookTwitter, or LinkedIn

Sincerely, 

Antonio Garza

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