Mexico's Constitutional Reforms Series | Elimination of Autonomous Agencies

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MEXICO´S 2024 CONSTITUTIONAL REFORMS

Elimination of Autonomous Agencies

Background: On February 5, 2024, President López Obrador proposed 20 constitutional and legal reforms. The disappearance of autonomous agencies and energy regulators stands out among such proposals. The main arguments for their elimination is that they are expensive and inefficient, they serve to protect oligarchic interests, and lack popular support despite recent studies showing otherwise. If approved, this reform could directly impact US interests and private companies that have invested in Mexico. The reform is expected to be debated by the newly formed Congress in September, one month before Claudia Sheinbaum is sworn into office.

Why are Autonomous Agencies and Energy Regulators relevant? In Mexico, these bodies operate independently from other government branches, providing them the ability to make decisions without political influence and conflicts of interest. These agencies were created to enhance technical expertise, manage budgets, and deliver effective outcomes. By checking political power and preventing political interference, they uphold competitiveness, fairness, transparency, and accountability, playing a vital role in protecting the public interest and ensuring robust governance.

Reform Proposals: Main Intended Changes

INAI: The National Institute of Transparency, Access to Information and Protection of Personal Data (INAI), which oversees transparency and access to information and personal data, would be transferred to the Secretary of Public Function (SFP), the National Electoral Institute (INE) would be responsible for information on political parties, the Federal Center for Conciliation and Labor Registration and Federal Conciliation and Arbitration Court would hold information of unions.
COFECE: The Federal Economic Competition Commission (COFECE), in charge of overseeing and monitoring anti-competitive behaviors and avoiding monopolies and oligopolies, would be transferred to the Secretary of Economy (SE).
IFT: The Federal Telecommunications Institute (IFT), which regulates access to telecommunications, would be transferred to the Secretary of Infrastructure, Communications and Transport (SCT). The elimination of the IFT could violate Chapter 18 (Telecommunications) of the USMCA.
CRE and CNH: The Energy Regulatory Commission (CRE) and the National Hydrocarbons Commission (CNH), which safeguard economic stability, consumer protections, and promoting sustainable energy in Mexico, would be transferred to the Secretary of Energy (SENER).
CONEVAL: The National Council for the Evaluation of Social Development Policy (CONEVAL), which develops independent studies to measure social development and poverty, will be transferred to the National Institute of Statistics and Geography(INEGI).

Will the reform increase investor certainty and grant precise regulations? No. By transferring oversight, regulatory and technical functions from autonomous agencies to federal institutions that directly depend on the executive branch, and such duties and policies would face the risk of becoming arbitrary, politicized, and non-dependent on market access factors and instead be swayed by internal political dynamics of each institution and the presidency.

Consequences for Mexico and the US-MX bilateral relationship

USMCA violations: The reform would directly violate Mexico’s commitments under the United States, Mexico, Canada Agreement (USMCA) regarding market access, competition policy, and state-owned enterprises. North American competitiveness and nearshoring could face serious setbacks.
Inadequate market regulation: Market regulations could become inconsistent and politically driven, causing delays and obstacles in obtaining permits. This could deter foreign direct investment, create market concentrations, and elevate risks of anti-competitive practices and corruption, negatively impacting the quality and prices of goods and services.
Setbacks in access to information: Without tools to protect personal data and information from the government, transparency, bilateral cooperation, and information exchanges would be impacted. Access to accurate and objective information on poverty levels and the performance of the country's education system could be politically manipulated.