Following the decisive electoral victory by Claudia Sheinbaum and the Morena party on June 2, 2024, her mentor, President Andrés Manuel López Obrador (AMLO) and allies are likely to secure a two-thirds majority in Congress, providing him the power to unilaterally amend Mexico’s constitution.
Before leaving office on Oct. 1, AMLO’s supermajority is planning to implement 18 constitutional reforms that would weaken Mexico’s economic regulatory landscape, degrade its investment climate, dissolve checks and balances, and undermine the country’s ability to fulfill international commitments, including the US-Mexico-Canada Agreement (USMCA).
If approved, these legal shifts could seriously challenge North America’s long-term competitiveness and nearshoring potential, jeopardize billions in US and Canadian investments in Mexico, and complicate the 2026 review of USMCA.
Constitutional amendments
Judicial reform
Mexico’s Supreme Court has found several of AMLO’s actions unconstitutional, including efforts to undermine private investment in the energy sector and place civilian public security forces under military control. If approved, the judicial reform would gradually remove all Supreme Court justices and federal judges, replacing them through popular elections without clear professional qualifications. As presented, this reform would severely weaken the judiciary’s role as an independent check on presidential power, leaving judicial decisions vulnerable to political influence and donor interests.
Rather than addressing long-standing issues of corruption and impunity within Mexico’s judiciary, this overhaul could lead to significant delays, pauses, or even retrials in cases involving human rights and private investments in sectors not covered by the USMCA. Under the USMCA, U.S. and Canadian investors in Mexico can only pursue claims in the oil and gas, power generation, infrastructure and telecommunications sectors. Disputes in other sectors require investors to go through Mexico’s domestic court system before seeking arbitration under the USMCA.
Elimination of oversight and regulatory agencies
Other proposed reform would dismantle Mexico’s antitrust agency, along with the Federal Economic Competition Commission (Cofece), the Federal Telecommunications Institute (IFT), and the Energy Regulatory Commission (CRE), transferring their functions to Executive Branch agencies like the Economy Ministry and the Energy Ministry.
These changes would remove critical checks on presidential power and directly conflict with Mexico’s commitments under the USMCA regarding market access, competition policy, and state-owned enterprises (see table below).
By eroding legal certainty, the reform would severely hamper Mexico’s nearshoring potential, driving investment elsewhere and weakening North America’s position in the global supply chain.
State energy industries
One proposal would restrict Mexico’s state-owned utility, the Federal Electricity Commission (CFE), from partnering with private companies for electrical transmission and distribution, while prioritizing CFE market dominance over private firms. By imposing additional restrictions on private investment, this reform conflicts with the USMCA’s ratchet clause, which prevents countries from rolling back market liberalization measures once they’ve been implemented (see table below).
This policy would undermine U.S. and Canadian economic interests and any energy they produce in favor of Mexico’s CFE and its state-owned oil and gas company, Pemex. Canadian and U.S. firms have invested a combined US $34 billion in Mexico’s energy sector, including significant investments in renewable energy projects.
Ban on GM corn and restrictions on water concessions
This proposed reform aims to ban genetically modified (GM) corn for both harvest and human consumption. By introducing trade restrictions without scientific evidence, this reform conflicts with the USMCA market access and sanitary and phytosanitary provisions (see table above). Mexico, the U.S.’s second-largest agricultural export market, imports over $5 billion worth of corn annually. Such a ban could lead to the loss of thousands of US agricultural jobs and threaten food security in Mexico, as domestic production would likely be unable to meet the country’s corn demand.
Another proposed amendment seeks to limit water concessions to firms in regions with scarce water resources, reserving allocations to public entities exclusively for personal and domestic use. By favoring Mexican entities over U.S. and Canadian firms, this proposal would appear to violate USMCA’s National Treatment and Most-Favored Nation provisions (see table above).
Ban of fracking and open-pit mining concessions
Constitutional reform proposals to end concessions for open-pit mining and permanently ban oil extraction through fracking conflicts with Mexico’s commitment under USMCA to maintain agreed-upon market openness in these sectors, potentially affecting the operations and ownership of US and Canadian firms (see table above). This could lead to millions of dollars in losses, arbitration claims, or trade sanctions from Canada or the United States. Canadian companies, representing 70% of all foreign mining firms in Mexico, are the largest foreign investors in the country’s mining sector.
Risks
If approved, these changes would appear to severely limit Mexico’s growth prospects and its ability to create well-paying jobs in the medium and long-term. The resulting legal issues and business uncertainty could trigger billions of dollars in tariffs if U.S. and Canadian authorities or firms request formal dispute settlement under USMCA, as well as significant economic losses for consumers and workers across North America.
In other words, Mexico risks undermining the very conditions that foster job creation and investment growth. Additionally, the potential for trade disputes and economic disruptions could deter new investors and negatively impact nearshoring opportunities.
Furthermore, these reforms pose a serious risk to the USMCA’s upcoming review, potentially stalling negotiations with Canadian and U.S. authorities and triggering demands for changes from stakeholders in 2026.
This heightened scrutiny could complicate negotiations and result in unsuccessful outcomes in subsequent years. Ultimately, the reforms could jeopardize the agreement’s renewal and increase the risk of its expiration in 2026, undermining the long-term stability and benefits of the USMCA.
Conclusion
AMLO’s reforms represent a turning point that undermines Mexico’s trade and investment commitments under the USMCA, making Mexico a less reliable partner for the U.S. and Canada.
The proposed legal and institutional overhaul threatens to undermine Mexico’s investment climate for decades, disrupt regional economic integration, and weaken supply chain resiliency at a crucial moment of global economic realignment.
This article was originally published by the Mexico Institute at the Wilson Center.
Diego Marroquín Bitar is the Inaugural Bersin-Foster North America Scholar at the Woodrow Wilson Center and the driving force behind their North America research agenda. He co-founded the North America Project at the US-Mexico Foundation and the non-profit North America 3.0. His insights are frequently featured in publications such as The Hill, The New York Times, Foreign Affairs, Letras Libres, and El Universal. Before joining the Wilson Center, Diego worked as a Senior Researcher at the Brookings Institution, a Fellow at the US-Mexico Foundation, and a Consultant at The Economist Intelligence Unit.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the views of Mexico News Daily, its owner or its employees.
Thank you for this article. It has made clear the pros and cons of AMLO’S constitutional changes and how they would affect Mexico’s standing in the US CA.
“reserving allocations to public entities exclusively for personal and domestic use. By favoring Mexican entities over U.S. and Canadian firms” So the President favors water for the Mexican people over water for foreign firms, sounds like a good thing.
I agree. Thank you for saying so. AMLO and Sheinbaum want to protect the sovereignty and people ot Mexicao unlike previous administrations, the most egregious la Porfiriata.
I found the article quite interesting in how the argument was presented. First, it makes the point that these judicial reforms will harm business investment in Mexico. It goes on to say that the harmed businesses include GMO corn being imported to Mexico, limiting strip mining, limiting fracking, limiting the use of water by corporations of the needs of people and even claims that Mexico would not be able to grow sufficient corn to replace GMO corn. Wow, the article did a great job of convincing me that these reforms are clearly in the best interests of Mexican citizens as tracking has been shown to be very profitable for the corporate owners but terrible for the environment, mining in Mexico needs to be more regulated, the unregulated use of well water to grow exports to the US, and the harm caused by having to compete with corn production in the US independent of GMO products are all issues that make me want to support these reforms because the referenced business practices are harmful to Mexicans but benefit corporate interests. I can see that the judiciary not being independent of the president is a problem but in US states, judges are elected and appointing US Supreme Court judges has not worked well at all when an authoritarian president and a complicit congress go off the rails. So, maybe the US corporate interests need to explain their case a little better, otherwise, they list me in their argument as being only interested in corporate profit with cheap mexican labor and lack of environmental regulation. GMO corn not a solution.
This point of article is not argued at all, rather it is an opportunity to see the worst possibility within AMLO’s reforms. The author uses locutions like “likely”, “could appear to”, “threatens”, etc — which allow him to claim he only postulates harms, he is not predicting them, and he certainly did not move beyond cliches. AMLO could be called a nationalist in the sense of being determined to support the needs of the whole population and not just the business interests of Mexico’s trading partners, as does this analyst.
Fred Ryan, Gatineau, Quebec
Agreed. It is about time that the government protects Mexico from being used by corporate interests in Mexico and abroad.
The opinions in the article are very one sided. They are looking at the changes from a business point of view. Some of the reforms could benefit Mexican citizens instead of the business sector, at least in the short run. But that being said, if the reforms result in less foreign investment, the government won’t have the resources to fund it’s social agenda.
At the same time if the companies use up the only water in certain regions do the social programs or anything else matter because everyone will be dead or need to leave Mexico…. Or at least those over exploited regions. I agree it should hopefully benefit business in some way to entice more investment but not at the same of people having water. Same thing with GMO corn “no scientific evidence” was essentially the slogan for having forever chemicals. Guess what the forever chemicals are also in our testies and brains… So i guess as long as there is no evidence today then all’s good? If the harm is “unexpected” and “unpredictable” can you really blame large corpo? They just wanted the money isn’t that what life in capitalism is all about?
The article is an accurate representation of the reforms and their risks. The risks are high impact and their probability surely over 50% likely
My opportunity assessment is this: The President-Elect will have the same super majority and six years to realize solutions to the problems these reforms may bring. At first, she is unlikely to do more than monitor and observe the situation so as not to make AMLO look bad, be she is a very capable individual and so I hope she will address each in their own time or, given enough time, ask her supermajority to rescind or at least re-write the reforms so that those that are good can remain and those discussed in the article can be improved or ended.
I agree with the majority of the comments. For too long, corrupt greedy corporate interests have been in control in the United States and in Mexico and throughout the world for that matter. I am hoping that Claudia can find a good middle ground in the next six years to protect the interests of the people of Mexico as well as appropriate sustainable investments from foreign entities. I wish we had politicians brave enough to ban GMO corn, fracking and destructive mining practices in the US.
Viva Mexico!!
Hard not to recall the old adage “the road to hell is paved with good intentions”
It’s very obvious that AMLO and cronies are incapable of other than silo thinking, that is ; unable to see the big picture. Sure there are minor wins from the reforms but the potential (probability in Mexico) of harms (unqualified “judges” bought and paid for by criminals and or corrupt business) the law of contract etc tossed casually aside
Interesting that the article has provoked comments completely opposed to the corporate-friendly arguments the author asserts. Fracking, open-pit mining, GMO corn, and using scarce water resources for industry are things that should be banned or at least controlled. I am dismayed by MND’s extreme business bias.
Wilson center wrote this…. I find after the new owners bought it i have noticed different outside writers. Some good some like this article feel like reading from the agenda of big corpo. Suck all the water dry, keep garbage quality laws in place, allow energy companies to use CFE resources without paying, keeping a well known corrupt legal system. Please if the owners are reading ensure they co-author with someone who writes here on the regular. Just to keep them in line when they shoot off opinions that seem like propaganda from those who like the existing messed up system in Mexico.
The elimination of open-pit mining, by itself, will put Mexico into recession in 2025. Massive revenue loss for the federal government, massive job losses in key mining states, and the social unrest that follows. We are about to find out if they really care about the country.
Corn has always been an issue to protect small farmers and votes in Mexico and other Latin countries. Science and some left wing type ideological are just fantasy talk. What’s real is 21 pesos per kilo tortillas.
AMLO and Trump are two sides of the same coin. That’s why they got along in 2017-2021. Which killed more by covid policies.
The international companies are the ones who pay the best wages, follow the laws, and pay benefits. The worst have been among the Mexicans for centuries-the its own nationalistic plutocrats.
Wars of every sort between the USA and Mexico be they by arms or economic , have not gone well for Mexico. Mexico’s economic policies have lead to one devaluation of the peso to another, such devaluations always leading to lower standards of living. Always leading to stability by going north to earn dollars.