Global Companies Urge Mexico to Protect the Rule of Law

The Council of Global Companies (CEG), an association of over 60 multinational companies operating in Mexico, urged the Mexican Government to be aware of the consequences of decisions that may violate the rule of law, affecting investor confidence and Mexico's reputation worldwide. 

After the events that took place at Ferrosur’s facilities, the CEG expressed its concern about the growing deterioration of the legal certainty necessary for these and other investments to come to the country. The association added that Mexico could receive close to US$30 billion derived from nearshoring and create up to 4 million formal jobs.

The council represents global companies that bring 40% of foreign direct investment (FDI) to the country. The group says that Mexico's reputation is in doubt due to the growing deterioration of legal certainty caused by the occupation of Ferrosur's railroad tracks by the government of Andrés Manuel López Obrador. The companies said that the occupation of Grupo Mexico's facilities sends a "wrong message because it calls into question the respect for constitutional guarantees and legal frameworks that protect the investment. It is crucial that every government abides by the law and avoids taking actions that could be perceived as arbitrary," says CEG. 

To generate trust and promote investment, the state needs to provide "a stable and predictable environment" for the operation of the companies, says CEG. The National Chamber of the Transformation Industry (CANACINTRA) also warned that the federal government's temporary occupation of the concessioned railroad lines and Ferrosur's facilities in the Medias Aguas-Coatzacoalcos would have adverse effects in the region, since it sends a "terrible message" for economic impulse in the south of the country.

The CEG’s call comes as the country continues reporting advances in nearshoring and investment. The Ministry of Economy (SE) estimated that 117 investment announcements had been made by the private sector this year. "This demonstrates Mexico's competitive advantages: stability in its public finances and the strength of its currency; social and political stability; a robust air, rail, maritime and land infrastructure that connects us with the entire world; a young and specialized workforce; important tax incentives; and the development of micro, small and medium-sized companies with an even floor," the Ministry of Economy writes on Twitter.

However, groups such as CEG warn that to generate confidence and promote investment, it is essential for the state to provide a stable environment in which all companies can operate safely and comply with their obligations.