Mexico’s Proposed FDI Screening Regime: National Security Comes to Latin America

Authors: Andres Bonett (Partner, Cuatrecasas), Alejandra Palacios (Counsel, Cuatrecasas), Daniella Ramirez (Partner, Cuatrecasas)[1]

Introduction

On August 30, 2026, President Sheinbaum sent an initiative to the Mexican Senate to reform the Foreign Investment Law, formally expanding the country’s foreign direct investment (“FDI”) screening regime. National security and economic security concerns will now displace the purely sector-based thresholds as the organizing principle of Mexican FDI policy.

This was foreseeable as the U.S. has used the USMCA renegotiation to press Mexico to tighten restrictions on Chinese products, including higher tariffs and changes to its FDI regime, also reflecting a broader U.S. trend. Last year, U.S. commercial treaties with Malaysia, Thailand, and Vietnam included for the first time new chapters on economic security, committing those countries to investment review processes.

If passed, Mexico would become the first country in Latin America to adopt a foreign investment screening regime built around national security review. No other country in the region currently has one; Chile might be close, having been the subject of U.S.-backed efforts to build such a mechanism, but no legislative process has begun.

What follows is why this matters, what Mexico’s move signals, and what to watch as the initiative moves through Congress.

Mexico’s Current FDI Regime

Before getting into what changes, it helps to see where the Mexican FDI rules stand today.

Mexico’s current regime is comparatively open. Foreign investors can generally take any stake in most Mexican businesses, with four narrow exceptions:

• Activities reserved for Mexicans or Mexican companies with a foreigner exclusion clause: Foreign investment is generally excluded from domestic land transportation (including national passenger, tourism, and freight services, but excluding courier and parcel services), development banks, and certain professional and technical services.
• Activities with specific investment caps: Some sectors cap foreign ownership at set percentages — for example, up to 49% in the manufacture and marketing of explosives, firearms, and ammunition, and in printing and publishing newspapers.
• Activities subject to prior approval by the National Foreign Investment Commission (CNIE): Investments above specified thresholds in restricted sectors — including port and shipping services, aerodrome management, education services, and railway construction and operation, among others — require a CNIE authorization.
• A general, sector-agnostic threshold: CNIE authorization is required whenever foreign investment exceeds 49% of a Mexican company’s capital stock and the company’s total assets exceed a figure the Commission adjusts annually — currently around USD $1.4–1.5 billion. In practice, this threshold is too high for most foreign acquisitions to trigger CNIE review.

 The CNIE is composed of the Ministries of the Interior (Gobernación); Foreign Affairs; Finance and Public Credit; Welfare (Bienestar); Environment and Natural Resources; Energy; Economy; Infrastructure, Communications and Transportation; Labor; and Tourism. CNIE is chaired by a representative of the Ministry of Economy and its operations are conducted through a technical secretary and a committee of representatives.

Under the current law, the CNIE must resolve a request within 45 business days, or the request is deemed approved (afirmativa ficta). When evaluating applications, the Commission considers factors such as employment impact, worker training, technological contribution, compliance with environmental regulations, and overall contribution to national competitiveness.

 That system is clear and predictable, but it leaves a real gap: nothing requires review of a deal that falls outside these four categories other than a merger review under the Antitrust Law, even if it raises genuine national or economic security concerns — as the December 2021 sale of a Mexican lithium concession to a Chinese buyer showed. There, the government had no legal ground to block or even screen that transaction; when the U.S. raised concerns about Mexico’s authorization of the deal, officials blamed COFECE, the antitrust regulator that had cleared the merger on competition grounds alone and had no mandate to weigh national security.

That gap — no authority able to stop a transaction on security grounds alone — is what today’s initiative is designed to close. The initiative’s own statement of purpose (exposición de motivos) acknowledges as much: Article 30 of the current law already authorizes CNIE to block a foreign acquisition on national security grounds, but it provides no criteria, process, or standards for exercising that power — leaving Mexico, in practice, without a genuine national-security screening framework.

We Knew an Update Was Coming

This proposed reform should not come as a surprise. As the lithium case shows, Mexico’s current regime — narrow, sector-specific, and largely blind to transactions outside its defined list — was being tested as trade tensions over Chinese investment in North America intensified.

For some time, the U.S. has publicly pressured Mexico to adopt a more robust screening mechanism ahead of the USMCA review. In December 2023, Mexico signed a Memorandum of Intent with the U.S. to establish a bilateral working group on foreign investment review, potentially modeled after the United States’ FDI screening regime (known as CFIUS, defined below), to address national security risks. Then, in April 2026, following a meeting between Secretary Amador (Mexico) and Secretary Bessent (U.S.), the Treasury Department reaffirmed its commitment to supporting Mexico’s efforts to establish a national security-focused investment screening mechanism.

The U.S. has made clear that foreign investment flowing into North America is a central issue in the USMCA renegotiation. On trade, the Trump administration is focused primarily on two issues: the U.S. trade deficit with countries including Mexico, and China’s role in regional supply chains. In its view, China may be circumventing U.S. trade restrictions through Mexico in three ways:

1. Transshipment: Goods move from China through Mexico and are then re-exported to the U.S. without substantial transformation, disguising their true origin and exploiting rules of origin or preferential agreements.
2. Supply-chain integration: Chinese intermediate goods substantially transformed in Mexico can be exported to the U.S. as Mexican-origin products. This does not violate the USMCA but reflects growing reliance on Chinese inputs in Mexican exports — a dependence that President Sheinbaum’s Plan México and Hecho en México programs aim to reduce.
3. Relocation: Chinese companies moving production to Mexico to benefit from USMCA terms when exporting to the U.S. Like supply-chain integration, this is not illegal per se.

Early in the Sheinbaum administration, Mexican officials courted Chinese investment to boost capital inflows. That tolerance has since narrowed, and the U.S. has pushed Mexico to align its FDI regime with “North America’s shared security and economic interests.”

Recent FDI data illustrate these dynamics. In 2024, international investors spent USD $5.3 billion acquiring Mexican-based firms through M&A. By contrast, greenfield investment by foreign firms totaled USD $45 billion in 2024. The composition of this investment has also shifted substantially. While U.S. greenfield investment in Mexico remains dominant, its relative share has declined in recent years as China has gained ground. Between 2005 and 2009, Chinese firms accounted for less than 1% of Mexico’s inbound greenfield investment; by 2023, that share had risen to 9%. This investment concentrates in strategically sensitive sectors — particularly electric vehicles, energy, and mining. It is important to note that greenfield investments, which are generally not subject to FDI screening internationally, may allow investors to circumvent FDI review by creating new entities rather than acquiring existing ones.

The Initiative and its Policy Implications

As Mexico moves to expand its FDI screening regime to address national security risks, it is worth understanding how other systems are built and what implications they carry for businesses and investment flows.

Not all FDI regimes are alike, and there is no single right way to design one. Each design choice affects how intrusive government scrutiny becomes, with real implications for businesses and investment flows.

The initiative preserves Mexico’s existing FDI rules and adds a new chapter for national security review. In drafting it, the Executive Branch had to decide on several key questions about the new system’s scope and structure, including:

• Scope and focus: The industry sectors and national security considerations that will be prioritized under the new regime.

The initiative defines national security by identifying reviewable sectors: strategic infrastructure (energy, transportation, health, communications, mining, data processing and storage, digital systems, aerospace, defense, and the sensitive facilities, land, and real estate necessary for that infrastructure); critical and dual-use technologies (artificial intelligence, robotics, semiconductors, cybersecurity, aerospace and defense technologies, energy storage, quantum and nuclear technologies, nanotechnology, and biotechnology); the supply of essential inputs, including energy, raw materials, and food security; and access to or control over sensitive information, particularly personal data. The Commission retains open-ended authority to add further sectors or activities by general resolution, so the reviewable universe can expand administratively after enactment without further legislative action.

• Investment thresholds: The level of investment that will trigger a national security filing had to be determined.

The initiative establishes a two-part, cumulative test: (1) foreign investment exceeding 49% of a Mexican company’s capital stock, and (2) that company's total assets exceeding a monetary threshold the Commission will set by general resolution within 180 days after the reform takes effect. Both prongs must be met to trigger mandatory filing.

• Mandatory vs. voluntary filings: Whether filings will be mandatory for certain investments or primarily voluntary.

The initiative takes a hybrid approach: filing is mandatory once both the ownership and asset-value thresholds are met, and voluntary if foreign investment would exceed 49% of a company’s capital stock but its assets fall below the Commission’s threshold, although it is not clear how those non-notified transactions will be treated if they are deemed to pose risks to national security.

• Country-specific considerations: The approach to investments from specific countries, including whether to differentiate between investors based on their nationality.

The initiative sets no country-specific rules: it applies the same ownership and asset thresholds regardless of the investor’s nationality, notwithstanding the Chinese-investment tensions that helped prompt the reform.

• Suspensory effect: Whether pending FDI reviews delay the closing of transactions.

The Commission must resolve within 60 business days of the filing (extendable once by up to 30 days for more information, and once more by up to 30 days for complex cases). Silence means denial, so a transaction requiring approval cannot close without a favorable resolution. For national security reviews, the initiative eliminates the deemed-approval rule in the current law and replaces it with a deemed-denial rule instead, i.e., the authority’s silence could result in a denial without a substantive decision.

• Institutional design: Which entities or bodies within the government will decide on FDI transactions.

The initiative adds the Ministries of National Defense, the Navy, and Public Security as full voting members of the National Commission of Foreign Investments, and makes the Attorney General’s Office, National Intelligence Center, Tax Administration Service, and Financial Intelligence Unit permanent, non-voting participants for national-security sessions. On national security matters, members may not abstain and decisions pass by majority vote.

• Greenfield vs. brownfield investment: Whether the screening distinguishes between new operations built from scratch and the acquisition of existing entities.

This is one of the more actively debated design questions in FDI screening today. Because CFIUS’s jurisdiction turns on acquiring “control” of an existing U.S. business, it generally does not reach greenfield investment — new facilities built from scratch. The EU spent much of the past year debating the same question while overhauling its own Foreign Investment Screening Regulation: an earlier draft would have made greenfield screening mandatory in strategic sectors above €250 million, but the Council ultimately left it optional for Member States in the political agreement reached in December 2025.

Mexico’s initiative sidesteps that debate entirely: its mandatory-filing test (more than 49% ownership plus an asset threshold) apparently applies whether the investment is a new plant built from scratch or the acquisition of an existing company. That is not a small detail. Greenfield investment—new factories and, increasingly, data centers—is the backbone of the nearshoring narrative the government has spent years encouraging. Treating a brand-new plant the same as a share purchase, without carving out the kind of greenfield investment Mexico is actively courting, is worth flagging now, while the bill is still in the Senate, as Mexico would be the first country to adopt this type of FDI screening.

The same applies to whether internal corporate restructurings trigger review when they change the foreign ownership percentage above 49%, and whether purely passive investments with no operational control fall within scope.

• Sanctions: The initiative introduces significant penalties. Completing a transaction subject to national security review without prior CNIE approval, or failing to comply with mitigation measures, would carry fines of up to 200,000 times Mexico’s daily Unit of Measurement and Update (UMA) — approximately MXN $23.5 million (around USD $1.4 million). This represents a substantial increase from the penalty structure in place since 1993.

Beyond the fine, investors face the risk of nullification. Acts, agreements, and corporate resolutions carried out in violation of the law could be declared null and void by the Ministry of Economy, rendering them unenforceable between the parties and against third parties. This mirrors the approach under Mexico’s Federal Economic Competition Law, where mergers closed without required approval can be unwound.

Is this a Mexican CFIUS?

It's fair to call this a “CFIUS-inspired,” not “CFIUS-equivalent,” reform. The U.S. FDI screening regime is governed by the Committee on Foreign Investment in the United States (CFIUS), an inter-agency body with broad authority to review foreign investment for national security risks. Unlike Mexico’s proposed regime, which relies on fixed ownership and asset-value thresholds, CFIUS’s jurisdiction turns on a functional determination of “control,” regardless of stake size.

The discussion below compares the U.S. and Mexico regimes across their key structural features.

Feature	Mexico (Initiative)	United States (CFIUS)
Institutional composition	13 secretariats with a vote, including — for the first time — Defense, Navy, and Public Security	9 voting members, including the Department of Defense, which has held a vote since CFIUS’s creation in 1975
Jurisdictional trigger	Fixed test: more than 49% ownership + an asset-value threshold (still to be set) + a listed sensitive sector	Functional “control” test; no fixed ownership percentage or asset-value threshold
Mandatory vs. voluntary filing	Mandatory once both thresholds are met; voluntary if ownership exceeds 49% but assets fall short	Generally voluntary, except for foreign-government-owned businesses and critical-tech/infrastructure/data targets
Review timing	60 business days, extendable once by up to 30 days (≈ 90 days maximum). The review period may be suspended if additional information is requested within the first 20 business days.	Most transactions can close without prior authorization, but remain subject to retrospective review. A joint voluntary notice that receives clearance provides safe-harbour protection; without one, CFIUS can examine a completed deal years later and order divestment if national security concerns emerge.   Once a case is filed, CFIUS has 45-day initial review + 45-day investigation, extendable 15 more days in extraordinary cases (≈ 90–105 days). Pre-filing preparation adds some months, so the process often extends well beyond the formal review period.
Sensitive sectors	Strategic infrastructure, critical/dual-use technology, essential inputs, sensitive data	Similar categories as those listed in the Mexican initiative, cross-referenced to U.S. export-control lists — but they only trigger mandatory filing, not jurisdiction itself
No decision	Deemed denial	No equivalent; the process runs its statutory course to a decision or presidential referral
Transparency	Declares principles of non-discrimination, transparency, proportionality, and accountability	Confidential by design; no hearing or appeal as a matter of course

 

Worth noting: Unlike CFIUS, where there is no hearing or judicial appeal for a decision as a matter of course, Mexico's deemed-denial rule operates within the country's general administrative law framework. Under that framework, a deemed denial constitutes a presumed administrative act (negativa ficta) that the applicant may challenge before Mexico's Federal Court of Administrative Justice (Tribunal Federal de Justicia Administrativa).

The U.S. Department of Defense has sat on CFIUS with a full vote since the Committee was created in 1975, alongside civilian agencies like Treasury, Commerce, and State. Seen this way, Mexico’s initiative is not inventing a new, security-first model of investment review—it is catching up to one the U.S. has run for half a century. The open question is not whether defense and security agencies belong in the conversation (CFIUS suggests they can), but whether Mexico’s enlarged Commission will develop the institutional capacity to conduct reviews that are predictable and free from politicization.

What to Watch

The initiative is now before the Senate, where its text may still change. If enacted as drafted, several implementation questions will be critical. First, the Commission must set the asset-value threshold within 180 days - the figure that activates the mandatory-filing test. Second, implementing rules will need to address how sub-threshold transactions that were never notified but may pose national security risks will be treated. Third, secondary regulations should clarify the broad concepts the initiative leaves undefined, such as "risks or threats" to national security and "sensitive facilities," which currently give the CNIE wide discretion. Most importantly, the initiative's treatment of greenfield investments, minority stakes, and internal restructurings should also be clarified. Finally, the revamped Commission will need adequate budget and technically capable personnel to carry out its expanded mandate effectively.

There is also a timeline worth sketching out, because the path from here to an operating regime is longer than the headline suggests. The Senate is the “cámara de origen”: it received the initiative just as Congress’s first ordinary session opened on September 1 and can move as quickly as its committees allow. If approved without amendments, the bill goes to the Chamber of Deputies as “cámara revisora” for a separate vote; if the Deputies amend it, it bounces back to the Senate before reaching the President’s desk.

Accelerated timeline: Given the ruling coalition’s majorities in both chambers and the political tailwind from the USMCA renegotiation, the initiative could clear both chambers before the first ordinary session ends on December 15, 2026, be published shortly after, and take effect the next day. Even then, the Commission would have 180 calendar days to publish the asset-value threshold that activates the mandatory-filing test—the single figure on which the entire regime hinges. On that timeline, a fully operative Mexican FDI screening regime would arrive around mid-2027.

Extended timeline: The initiative could stall—whether over pushback on the defense and navy voting seats, business-community concerns about discretionary security criteria, or general congressional congestion—and slip into the second ordinary session (February–April 2027) or beyond. Threshold rule-making in Mexico has a track record of running past statutory deadlines, adding further delay. Under that scenario, a functioning regime could easily slide into 2028 or later, or never come into effect at all.

While many questions remain open, investors should be aware that this law could be a possibility. If enacted, certain transactions involving foreign investment would become subject to a new regulatory condition prior to closing — separate from other approvals that apply in Mexico, including antitrust clearance. For transactions involving Mexican companies in sensitive sectors, it will be important to assess early in the deal process whether CNIE authorization may be required and to factor its timelines into the closing schedule.

The final text of this law, the implementing regulations, and whether Mexico can build the institutional capacity to administer the regime effectively will together determine how much friction this new framework adds to cross-border deals.

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This blog expands on "Some Notes on the Initiative to Reform the Foreign Investment Law in Mexico," a legal development note first published on the Cuatrecasas website on August 31, 2026.

[1] Andrés Bonett is a partner at Cuatrecasas focusing on administrative law, with extensive experience advising on administrative regulation and litigation (andres.bonett@cuatrecasas.com). Alejandra Palacios is Counsel at Cuatrecasas and an expert on market regulation, with a particular focus on economic competition (alejandra.palacios@cuatrecasas.com). Daniella Ramírez is the lead partner for Competition and FDI at Cuatrecasas' Mexico City office (daniella.ramirez@cuatrecasas.com).