US, Mexico to Cooperate on Investment Screening to Counter China

Emel Akan
By Emel Akan
December 7, 2023International
US, Mexico to Cooperate on Investment Screening to Counter China
U.S. Treasury Secretary Janet Yellen (L) participates in a bilateral meeting with Mexico's Secretary of Finance and Public Credit Rogelio Ramirez de la O at the Palacio Nacional in Mexico City on Dec. 7, 2023. (Rodrigo Oropeza/AFP via Getty Images)

The Biden administration announced on Dec. 7 an agreement with Mexico to prevent countries such as China from investing in Mexican companies as a way to circumvent U.S. sanctions and tariffs.

Treasury Secretary Janet Yellen announced the signing of a “Memorandum of Intent” between the two countries to form a bilateral working group to share technical information and best practices on foreign investment screening.

The agreement aims to strengthen supply chains and ensure national security in critical industries.

“Both countries benefit when they work together to guard against foreign investments that pose national security risks,” Ms. Yellen said in a statement. “This engagement is further evidence of the close partnership between our two countries, not only on matters of trade but also on critical issues of national security.”

The Biden administration’s objective is to assist Mexico in enhancing its foreign investment screening process by sharing insights and best practices derived from the U.S. Committee on Foreign Investment in the United States.

In recent years, the U.S. government has intensified its foreign direct investment regulations to protect national security and economic interests against potential acquisition by foreign entities, notably Chinese entities.

Ms. Yellen stated during a news conference in Mexico that increased engagement with Mexico will help sustain an open investment climate and address security threats.

Ms. Yellen concluded her three-day visit to Mexico City, during which she met with her counterparts to discuss a wide variety of bilateral economic issues as well as address challenges linked to combating illicit drug trafficking.

According to Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation, the new agreement will help in the crackdown on Chinese efforts to circumvent U.S. tariffs and sanctions.

“What the Chinese companies are trying to do is to relocate their manufacturing to Mexico so that they can circumvent tariffs that the U.S. has imposed on Chinese imports,” he told The Epoch Times.

In recent years, Chinese companies have been flocking into Mexico, especially since 2018 when then-President Donald Trump initiated a trade war with China by raising tariffs on Chinese imports. President Joe Biden has maintained these tariffs, and the enactment of the Inflation Reduction Act is further motivating companies to decouple from China and consider “nearshoring” in North America.

The initiative announced by Ms. Yellen aligns with “the longer-term objective of ensuring that it’s North American companies that are maximally taking advantage of the North American production environment,” Mr. Ezell said.

The White House declined to clarify when asked by The Epoch Times whether the new pact targets Chinese investments in Mexico.

“We don’t ask countries to choose between the United States and China when it comes to economic opportunities or investment. Sovereign nations get to decide for themselves,” White House spokesperson John Kirby said at the press briefing on Dec. 7.

“What we’re focused on is the president’s global program for investment in infrastructure,” he added, referring to the Partnership for Global Infrastructure and Investment (PGI), which is aimed at competing with China’s controversial Belt and Road Initiative.

Mr. Kirby noted that PGI is providing an alternative to “the less transparent, less reliable, high-interest loans that other nations around the world seem to be willing to proffer.”

From The Epoch Times

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