© Reuters. U.S. Treasury Secretary Janet Yellen offers an announcement to the press throughout her go to in Mexico Metropolis, Mexico December 6, 2023. REUTERS/Daniel Becerril
By David Lawder
MEXICO CITY (Reuters) -The U.S. Treasury on Thursday stated it signed an settlement with Mexico’s finance ministry to cooperate on strengthening screening of overseas investments to reinforce nationwide safety, together with commonly sharing info on greatest practices.
The Biden administration is selling Mexico as a premier funding vacation spot for U.S. provide chains and needs to make sure that the nation has a sturdy screening regime in place to deal with the inflow.
The hassle is geared toward serving to Mexico develop a screening physique much like the Treasury-run Committee on International Funding the U.S. (CFIUS), which opinions purchases of American firms by foreign-owned entities and different inbound investments.
“Like our own investment screening regime, CFIUS, increased engagement with Mexico will help maintain an open investment climate while monitoring and addressing security risks, making both our countries safer,” Yellen stated in asserting the memorandum of intent with Mexican Finance Minister Rogelio Ramirez de la O.
Yellen was wrapping up a three-day go to to Mexico Metropolis to reinforce financial ties and increase cooperation to stem the move of the lethal opioid fentanyl to the US by way of Mexico, the place precursor chemical substances from China are sometimes blended.
Ramirez requested for assist in preventing the move of weapons from the US into the arms of Mexican legal gangs.
“On this side of the border we’re doing everything we can to detect and prevent (fentanyl from being sent to the United States),” he stated. “So we have also asked for the same level of cooperation from the U.S. with these (arms) shipments.”
Among the organized crime teams working in Mexico had been higher armed than native police, and typically as nicely armed because the nation’s personal army, Ramirez added.
“It’s not easy to take on these groups when they have access to arms which come from the United States.”
“NEAR-SHORING” BOOM
Mexico is attracting a serious inflow of producing investments to provide the U.S. market, elevating considerations that China or different nations might use it as a again door to get round restrictions on U.S. export controls for delicate applied sciences comparable to semiconductors.
The near-shoring growth introduced Mexico $32.2 billion in overseas direct funding within the first three quarters of 2023, near the full-year 2022 complete of $36 billion.
Excessive-profile tasks embrace an estimated $5 billion Tesla (NASDAQ:) electrical car manufacturing facility that has prompted Chinese language suppliers to announce plans to take a position over $1 billion close by.
Whereas CFIUS’ elevated scrutiny lately has sharply lowered Chinese language funding in the US, Yellen informed reporters she doesn’t wish to preclude China from injecting funds into Mexico or the US when there aren’t any nationwide safety considerations.
CHINESE INVESTMENT WELCOMED
If Chinese language companies wish to produce in Mexico for the U.S. electrical car battery market, they must adjust to the Treasury’s new “foreign entity of concern” guidelines that restrict Chinese language management of a producing subsidiary to 25%.
“If Chinese involvement triggered those rules, which are meant to avoid undue dependence on China, then that’s a no,” Yellen stated.
Non-public Chinese language companies are additionally investing within the U.S. manufacturing of different clear power items to make the most of home tax credit, and “they can play a role” in creating a various provide base within the sector, she stated.
The Treasury and different members of CFIUS, which embrace the U.S. departments of State, Protection, Homeland Safety, and Commerce, commonly work with governments to enhance their funding screening. Greater than 20 nations, together with Mexico, have applied or enhanced their regimes over the previous decade.
PAYMENTS COOPERATION
Yellen stated that Treasury and Mexican Finance Ministry officers on Thursday additionally mentioned cross-border cost methods, together with presumably integrating them extra deeply, which might improve commerce and funding advantages.
Attainable deeper integration of the cost methods between the 2 nations was not about China, Yellen stated.
Monetary cooperation with the U.S. enabled Mexico to have a look at problems with curiosity to the nation “in particular digital payments and reducing costs to send remittances,” Ramirez stated.
