Mexico will modernize APPRI with South Korea, China, India and Switzerland

The government of Mexico reported that it is carrying out a process to modernize four Investment Promotion and Protection Agreements (APPRI’s)with South Korea, China, India and Switzerland.

Currently, Mexico has a network of 30 APPRI’s in force. However, the vast majority of these agreements were negotiated and signed before the year 2000.

Given that, in the case of 25 of the 30 APPI mentioned, the initial validity of 10 years has come to an end and that one has been denounced (India), Mexico has undertaken a policy of modernization of these agreements, reflecting the evolution of international investment law with cutting-edge disciplines.

Therefore, the Ministry of Economy have focused on the modernization of the APPRIs with the Republic of Korea, China, India and Switzerlandwith a view to ensuring a better balance between the need to provide protection and legal certainty to foreign investors and their investments and the obligation to ensure that the Mexican State has sufficient flexibility to regulate in the public interest.

The purpose of modernization is to include third-generation disciplines in the oldest APPRIs or whose validity period has expired.

In particular, the federal government pointed out that it seeks to take advantage of the development of International Investment Law, the jurisprudence and the experience acquired in the defense of the State before the Arbitral Tribunals to clarify the language of certain provisions and include new provisions on corporate social responsibility and sustainable investments in the oldest APPRIs, as well as improving the investor-State dispute settlement mechanism to avoid claims for lack of merit, promote transparency of procedures, establish prescription periods, regulate third-party financing, ensure independence and impartiality of the arbitrators, among other aspects.

In 2022, Mexico operated 30 APPRI’s; 12 free trade agreements with investment clauses; an Investment Cooperation and Facilitation Agreement (ACFI); and 60 agreements on double taxation.

Mexico participates in the Constitutive Agreement of the Multilateral Investment Guarantee Agency (MIGA) and, since 2018, in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

The APPRIs create a framework of clear and transparent rules that, on the basis of reciprocity, legally protect the capital flows destined for the productive sector.

Among other aspects, they contribute to improving the climate of foreign direct investment (FDI) in the country and strengthen Mexico’s capacity to attract productive foreign capital to any sector by transmitting positive signals and legal certainty to the international business community.

Conditions abroad for Mexican investors are also improving; they promote the diversification of FDI flows that the country receives; they consolidate a more favorable legal framework for investment, and maintain and improve Mexico’s competitive position as a recipient of FDI among developing countries.

roberto.morales@eleconomista.mx