Approving the electricity reform as it was presented to Congress would put the T-MEC at risk: BBVA Research

Approve the electrical reform in the terms in which it was presented to the Union Congresswould imply putting at risk one of the most effective instruments that the country has to attract investment and promote growth, which is the Trade Agreement between Mexico, the United States and Canada (T-MEC), he considered BBVA Research.

In one analysis, the area of economic studies of the bank explained that the Mexican government can modify the rules of the game of the electricity sector as it intends, but stressed that these actions clearly violate the provisions of trade agreements, so the costs will be high and not only in terms of expensive and polluting energy , compensation and retaliation, but also in the damage, both to the country’s reputation as a reliable partner, as well as to the morale of national and foreign investors.

BBVA Research pointed out that the proposed changes to the law and the initiative to reform the Constitution violate the institutional framework that today provides legal certainty to the parties involved in the generation, distribution and sale of electricity, by substantially increasing State control in the sector, at the expense of the interests of private investors and economic activity as a whole.

Similarly, he added, these reforms violate the rights established by Mexico in favor of foreign investors in various investment and free trade treaties, to the extent that they make access to the electricity market more restrictive, in addition to representing a setback. to the guarantees granted by the country.

Open the door to retaliation

The document of BBVA highlighted, in this sense, that the foregoing opens the door to commercial retaliation and compensation payments, under solid arguments regarding National Treatment, Minimum Level of Treatment and State Companies.

“Likewise, it weakens in the future the capacity for negotiation and defense of Mexican interests against the different commercial partners,” he added.

In its analysis, the bank stated that, derived from the violations of the commitments of the treaties, investors have the power to go before international panels that, due to the nature of the initiative, will have a high probability of resulting in unfavorable awards for Mexico, and result in the payment of considerable compensation.

“Likewise, our business partners, being affected by these reforms, may request the establishment of dispute resolution panels, with which they would acquire the right to impose commercial reprisals,” he stated.


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