Mexico's Regulatory Reform Sparks Investor Interest Amid USMCA Compliance

Mexico's Congress adjusts a reform abolishing regulatory bodies to align with the USMCA trade deal, focusing on merging telecoms and antitrust bodies. The move aims to preserve independence while maintaining compliance, reducing potential disputes with trade partners. Analysts view this cautiously due to past economic concerns.

Mexico's lower house of Congress made notable adjustments on Thursday to a reform abolishing several regulatory bodies, ensuring alignment with the USMCA trade agreement. The MORENA-led ruling majority approved a constitutional amendment to eliminate seven autonomous watchdogs, including telecommunications and antitrust authorities.

The decision to dissolve the telecoms regulator IFT has raised investor concerns over USMCA violations, potentially leading to disputes with the U.S. and Canada. During detailed discussions, MORENA legislators proposed merging IFT with the antitrust agency Cofece under the Economy Ministry, maintaining operational independence.

Deputy Economy Minister Vidal Llerenas suggested the merger aligns with USMCA standards, minimizing trade partner complaints. While analysts cautiously welcomed MORENA's approach to crucial regulators, there remain worries about Mexico's potential credit downgrade risk due to broader constitutional changes.