Mexico| Foreign Investment: Beyond the USMCA Review

Summary

Although the USMCA remains in force until 2036, its annual reviews and its lower level of investment protection compared with other treaties reinforce the importance of a stable regulatory framework, reliable institutions, and the rule of law to provide long-term certainty required to attract investment to Mexico.

Key points

• Key points:
• The USMCA will remain in force until 2036, but the decision not to extend it until 2042 opens a period of annual reviews that generates political and commercial uncertainty.
• The agreement's investment dispute settlement mechanism provides investors with less protection than the former NAFTA and many of Mexico's other investment treaties, reflecting the Trump administration's reshoring strategy.
• Investor-State dispute settlement (ISDS) remains relevant for Mexico because the United States is its largest source of foreign investment. In addition, investment disputes persist, most of them arising from NAFTA legacy claims.
• There are no indications that Washington seeks to expand protections for US investors abroad. Instead, its priority appears to be tightening investment screening to restrict access by non-market economies—particularly China—to the North American market.
• Mexico's treaty network continues to provide legal certainty, but its ability to attract foreign direct investment will increasingly depend on regulatory stability, strong institutions, and the rule of law.

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