Enhancing US-Mexico Economic Security through Investment Screening Coordination

Investment Screening Coordination: A New Chapter for the USMCA

The 2026 review of the United States–Mexico–Canada Agreement (USMCA) offers a crucial chance to reevaluate its approach to foreign direct investment (FDI) and consider broadening its scope beyond what was defined under NAFTA. As trade dynamics shift, the gap in investment screening coordination among the three countries highlights potential vulnerabilities in North America's economic security.

Key Considerations in Investment Screening

Despite its comprehensive coverage of trade relationships, the USMCA lacks a standardized mechanism for screening FDI, resulting in a critical oversight in its framework. This gap became evident during the COVID-19 pandemic, which exposed the risks associated with global supply chain dependencies. Efforts by US officials since 2023 aim to address this issue, with proposals such as the "Protecting the USMCA from Harmful Chinese Investment Act" and the "CFIUSMCA Act" being introduced in Congress to strengthen investment review mechanisms.

Mexico's existing framework, guided by economic mandates rather than national security, contrasts with the United States' focus through the Committee on Foreign Investment in the United States (CFIUS). Mexico's consideration of a reform initiative to include national security in its investment review process marks a significant step towards greater alignment with US practices.

Mexico's Progress Towards Functional Convergence

To align more closely with the United States, Mexico could take inspiration from CFIUS's operational structure. This involves creating an interagency body with a national security mandate, defining covered transaction types, and implementing timelines and mitigation agreements. While Mexico's institutional framework differs, a specialized unit within the Secretariat of the Economy, with external support, could lay the groundwork for effective investment screening.

The challenge lies in integrating Mexico's broader sectoral regulations with the US's technology-driven approach. A coordinated platform for transaction reporting between CNIE and CFIUS could facilitate this transition, emphasizing supply chain traceability and risk assessment.

Navigating China’s Investment Influence

China's role in North American trade dynamics presents both opportunities and concerns. US apprehensions about Chinese influence in Mexico underscore the need for a coherent policy approach. Establishing a shared database on Chinese investments and fostering industrial policy dialogues could enhance transparency and compatibility between Mexico and the United States.

Building a Unified Path Forward

The ongoing review of USMCA provides a platform to incorporate investment screening into the agreement, envisioning a future where US–Mexico coordination is strengthened. Recommendations include creating a multiagency investment mechanism in Mexico and establishing a shared US–Mexico database to monitor foreign investments effectively.

Strategic Recommendations from the Task Force

Create a Multiagency Investment Screening Mechanism

Mexico's Secretariats of Economy and Finance should expand CNIE’s role to include comprehensive screening of critical technologies and supply chain security, in collaboration with US agencies.

Develop a US–Mexico Database on Chinese Investments

A joint database could bridge the information gap on Chinese investment activities, facilitating a unified approach to monitoring economic influences in both countries.

Forge a Bilateral Strategy Towards China

Building on existing USMCA committees, a working group dedicated to investment screening could assess Chinese investments’ implications for regional economic security annually.

The US–Mexico Binational Task Force on Economic Security and Competitiveness continues to focus on strengthening supply chains and promoting resilience across North America. As both countries seek functional convergence in investment screening, such initiatives will be pivotal in reinforcing North America's competitive edge.