THE FIRST TEST

Mexico’s President-elect, Claudia Sheinbaum, is not scheduled to be inaugurated until October 1, 2024. However, the first test of her administration will be before she even takes the oath of office. At issue is the judicial reform package that Mexico’s current president- Andres Manuel Lopez Obrador, has sent to the Mexican Congress for review and a vote.

The judicial reform package, according to Barrons, includes the following elements:

? “The Supreme Court and other judges and magistrates to be elected by popular vote.

? Candidates would be proposed by the executive, legislative and judicial branches of government.”

Barrons’ article explains, “The reforms change how judges and magistrates are appointed. Under the current system, Supreme Court justices are nominated by the president and ratified by the Senate. The Federal Judicial Council, an administrative body, appoints judges and magistrates."

Although these reforms appear harmless, some concerns exist, mainly from human rights groups and judiciary members. Human rights activists point out that an elected judiciary will be exposed to the corrupting pressure of the drug cartels. Additionally, critics have pointed out Mexico’s history of cover-ups. The argument is that electing members of the judiciary would deepen the corruption.

President-elect Sheinbaum campaigned and expressed support for these reforms. However, the United States and Canada are another source of concern for these reforms. Both countries have expressed concerns from an international trade perspective. For instance, the U.S. Senate Foreign Relations Committee issued a press release , which states,

“An independent and transparent judiciary is a hallmark of any democratic country. We are deeply concerned that the proposed judicial reforms in Mexico would undermine the independence and transparency of the country’s judiciary, jeopardizing critical economic and security interests shared by our two nations. We are also alarmed that several other constitutional reforms currently under discussion may contradict commitments made in the U.S.-Mexico-Canada Trade Agreement, which is scheduled for review in 2026.”

The Committee’s statement is essential because an impartial judiciary is an important factor in whether or not a country should invest in a foreign country. Consider this statement from the Atlantic Council when discussing foreign direct investment, “Investors are drawn to these nations due to their strong legal frameworks, well-defined property rights, and transparent governance structures, which provide a stable and welcoming environment for foreign capital.” (Emphasis in italics.)

In other words, the U.S. and Canada are concerned that the judicial reforms will weaken Mexico’s judiciary. A weak judiciary creates a lack of trust from those who want to invest in Mexico. Weaken trust leads companies to think twice before investing in Mexico.

Here is the test. How would President-elect Sheinbaum address this concern? On the one hand, the judicial reform was part of her platform. Not only that, but it was also part of her political party’s platform. On the other hand, if she takes her predecessor’s view that such criticism from both the U.S. and Canada is unwarranted and interferes with local matters, she risks seeing companies leave Mexico and a future decrease in foreign investment because of concerns about the judiciary. There is no doubt that both NAFTA and the USMCA have helped Mexico grow economically.

From the United States perspective, this is also a test for either a Harris or a Trump administration. As the Senate Foreign Affairs Committee points out, the United States-Mexico-Canada Agreement (USMCA) is up for renewal in 2026. How much push is the U.S. willing to put into this matter? Please remember that Mexico is our number one trading partner and home to many American businesses. The U.S. needs to consider its response prudently.

The U.S. response ranges from only voicing concern about the judiciary reforms without further action to terminating the USMCA. Between those actions, there are other options to consider. To paraphrase Doshi, solving a problem only means exchanging one set of issues that we are willing to tolerate with another set of issues that we are willing to tolerate. The question for the United States and Mexico is what issues they will tolerate.