The author is a Consultant in Public Policies and Foreign Trade.
Among the measures announced last week by the White House that will have a significant international economic impact, the enactment of the law that gives the Chinese company ByteDance 270 days to get rid of TikTok and avoid its ban in the United States stands out. The proponents of this law argue that TikTok represents a threat to the country’s national security, because the application offers the Chinese government access to the information of the more than 102 million users it has in the United States. This same argument was cited by President Biden in February, as another reason to stop the import of Chinese electric vehicles in that country.
Although the approval of this law was the result of a political compromise with Republicans to achieve authorization of the $95 billion package of aid to Ukraine, Taiwan and Israel, it is also part of the measures that the Biden government is taking to distance itself from China and channel American capital investments toward those countries that are considered reliable partners (friendshoring). The North American government prepared a list of 63 Chinese companies, in which it prohibits its citizens and companies from investing, due to their participation in the Chinese military sector or their support for human rights abuses.
For its part, the Chinese government has prohibited the export of strategic minerals that it has in its territory and that are used for the production of high-tech instruments, and to help retain foreign companies that produce high value-added products. In turn, the European Union published in January the proposal that will lead its members to review foreign direct investment (FDI) schemes, forcing the review of each of the new investors who do not belong to one of its 27 members.
All of this should lead the next Mexican government to consider as a priority the type of FDI it wants to attract and establish a policy, as its main trading partner and investor has done. What elements are needed to attract such projects? Do you count on them? Are they projects that can generate any threat or imbalance to the market or the country? To date, FDI has been considered a mechanism that generates jobs and promotes competitiveness, although it has not been legislated to help relocate those who lost their jobs or closed their companies, as happened in other countries that have trade agreements with Mexico. such as Japan, Canada and the United States.
Mexico captured 36,058 million dollars in FDI last year, according to figures provided by the Ministry of Economy. Of them, 26,631 (73.86%) correspond to the reinvestment of profits from companies that already operated in our territory, 4,610 (12.78%) to payments received from abroad from companies that have plants operating in other countries and 4,817 (13.36%) from firms that began operations in this country. The reinvestment of profits does not necessarily imply the expansion of production facilities, being used for operating expenses, payment of suppliers or as a substitute for domestic credit.
Although the total represents a historical record for Mexico, its composition is very atypical and is far from the historical trend, where new projects and the reinvestment of profits each represent approximately 40% of the total and payments between companies the other 20%. %. Of the 35,292 million dollars raised in 2022, 48% were new projects; reinvested profits, 45%, and payments between companies, the remaining 7%.
Now that Washington is analyzing possible restrictions on imports of electric cars and auto parts from Chinese companies located in Mexico, and that such investments are not always registered, it is time to realistically evaluate our FDI regime. For some time now, trade agreements have not been a guarantee of attracting new investments, especially if they are not implemented properly. It must be considered that the review of the USMCA in 2026 will be carried out in a protectionist environment that will represent several obstacles to its continuity, that we cannot establish how long it will last (no one has defined the concept “revision” to date), nor the cost. political for the United States Congress to ratify it. If we continue moving away from the United States and with a little USMCA, what would be the alternative?
