Mexico Congress Takes First Step to Scrap Regulatory Bodies

Carolina Millan and Alex Vasquez
·3-min read

(Bloomberg) -- Mexican lawmakers took the first step toward eliminating several autonomous watchdogs, including the antitrust regulator and the transparency institute, as part of a broader reform push.

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The lower house of Congress on Wednesday night in a 347-128 vote approved the general text of a constitutional proposal to scrap the oversight bodies. The lawmakers approved individual articles of the bill Thursday, clearing the way for it to advance to the Senate, where the ruling coalition only needs one more vote to reach the two-thirds majority required to pass such legislation.

The proposal seeks to end seven organizations: the transparency institute (INAI), the antitrust regulator (Cofece), the telecommunications watchdog (IFT), the energy regulator (CRE), the hydrocarbon regulator (CNH), the commission for oversight of education (Mejoredu) and the council to evaluate social policies (Coneval).

Mexico’s government is backing the legislation, saying that eliminating the regulators will generate savings for public coffers. The functions of those oversight agencies won’t disappear, but rather they will be taken over by different ministries, according to President Claudia Sheinbaum. Critics of the plan, however, say that it will jeopardize the institutions’ independence.

Among the individual articles approved Thursday is a proposal presented on Wednesday by Ricardo Monreal, leader of the ruling Morena party in the Lower House. His proposal would create decentralized agencies to guarantee that the antitrust regulator and the telecommunications institute maintain technical independence and their own resources, despite some of its functions being absorbed by government offices.

Monreal’s plan looks like a sign of moderation after criticism from opponents, who argue that it could even jeopardize parts of the trade pact known as the United States-Mexico-Canada-Agreement (USMCA) that will be reviewed in 2026.

The new agencies will be responsible for preventing, investigating and combating monopolies in order to eliminate barriers to free competition, newspaper Reforma reported after the individual articles vote Thursday. The new agencies fully comply with the provisions of the USMCA, said Morena lawmaker Alfonso Ramirez Cuellar.

Mexico’s Economy Minister Marcelo Ebrard said on Thursday that the reform did not violate the USMCA, and that the model in Mexico would be similar to the one that exists in the US. He also said that the government would seek to speak with US President Donald Trump about the USMCA starting in February.

The bill was drafted under Sheinbaum’s predecessor, Andres Manuel Lopez Obrador, and forms part of a broader reform blitz. Since the new Congress took office in September, a slew of changes to Mexico’s laws have been approved by lawmakers, including overhauls of the judicial system and energy sector, as well as a plan that guarantees the minimum wage will rise above inflation.

The existing autonomous bodies have not “demonstrated their efficiency,” Sheinbaum said in a morning press conference this month. She also called for lawmakers to bear in mind that the USMCA calls for certain independent bodies to exist and to avoid “contradictions” with the treaty.

“This is another blow by Morena to our rights and democracy,” said lawmaker Veronica Martinez Garcia, from the opposition PRI party, during the debate. “With this supposed administrative simplification, they are doing away with the last remainder of political checks and balances in the Mexican State.”

--With assistance from Maya Averbuch.

(Updates with approval of individual articles in second, fifth, seventh and eight paragraphs.)

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