Mexico negotiates investment agreements with China and Switzerland

Mexico is holding negotiations to enter into investment agreements with China and Switzerland separately, according to the Mexican Ministry of Economy.

In general, Mexico competes for foreign investment with many other countries, including China and the nations of Central and Eastern Europe.

In 2021, Mexico began the modernization processes of its Agreement for the Reciprocal Protection and Promotion of Investments (APPRI) with China and Switzerland.

Until now, the APPRI signed by Mexico and Hong Kong on June 16, 2021 is the last of the 30 reciprocal investment agreements between Mexico and other countries and seeks to promote economic cooperation by granting non-discriminatory treatment to its investors, allowing the free transfer of capital, providing access to international arbitration to resolve disputes and granting compensation in case of expropriation.

In this regard, the Mexican government believes that it will be able to maintain continued access to foreign investment due to the greater competitiveness and productivity of the Mexican economy.

Investment agreements

The Mexican Foreign Investment Law establishes a legal framework designed to encourage foreign investment in the country and to impose certain limited restrictions on foreign investment in Mexico.

For example, the Foreign Investment Law allows foreign investors to own 100% of the capital stock of a Mexican company if certain conditions are met.

The Foreign Investment Law also details which economic activities are reserved exclusively for the Mexican government or investors.

At the same time, it outlines certain activities in which foreign investment cannot exceed 10, 25, 30 or 49% of the total investment without the approval of the Foreign Investment Commission.

In addition, the Foreign Investment Law allows foreign investors to purchase securities, known as ordinary participation certificates, based on variable income securities issued by Mexican companies and traded on the Mexican Stock Exchange that would otherwise be restricted to Mexican investors. provided certain conditions are met.

With the authorization of the Ministry of Economy, Mexican banks may set up investment trusts, with the banks acting as trustees to purchase these restricted capital securities on behalf of foreign investors.

These trusts, in turn, issue ordinary certificates of participation, which only grant economic rights to their holders, which can be acquired by foreign investors. Each and every one of the voting rights are exercisable only by the trustee.