Key points:

• • • USMCA at risk 鈥� Rising tariffs, political friction, and the potential 2026 review are creating uncertainty around rules of origin, market access, labor obligations, and dispute鈥憆esolution mechanisms 鈥� areas that are central to legal and tax planning.

    • Economic impact 鈥� Mexico depends on USMCA for exports, investment, and employment; and any disruption would be problematic.

    • Water as a strategic resource 鈥� The conflict over the 1944 Treaty and the new law reflect the critical importance of water usage and water rights in the bilateral agenda.

For almost 25 years before the United State-Mexico-Canada Agreement听(USMCA), it was the North American Free Trade Agreement (NAFTA) that defined the region鈥檚 economic relationship. Enacted in 1994, NAFTA removed most tariffs, encouraged foreign investment, and integrated supply chains across North America, especially in manufacturing, automotive production, and agriculture. This integration helped transform Mexico into a major export platform and contributed to North America鈥檚 emergence as a competitive economic bloc.

Over time, however, NAFTA drew criticism, particularly in the US, where concerns grew about trade imbalances, worsening labor conditions, and the agreement鈥檚 ability to address modern challenges such as . These political pressures set the stage for renegotiation and ultimately produced the USMCA, a more modern but also more politically sensitive framework.

The current chaotic environment around tariffs and trade suggests that these rules in North America may again be subject to revision. Understanding how tariffs, political dynamics, and resource鈥憆elated tensions interact is essential for organizations and corporations as they try to plan for the legal and tax implications that may arise as the 2026 review approaches.

A year of trade tensions

From the beginnings of Donald Trump鈥檚 second administration in January 2025, , marking the start of a more protectionist trade policy.

In March, some of those tariffs were exempted for products that comply with USMCA provisions. However, in December, President Trump declared that the US would allow the treaty to expire or seek to renegotiate it in 2026, alleging that Canada and Mexico have gained advantages to the detriment of US interests.

Not surprisingly, throughout 2025 and saw President Trump accuse Mexico of failing to comply with the 1944 Water Treaty, a historic agreement that regulates the distribution of water resources from the Bravo, Colorado, and Tijuana rivers. According to the US government, Mexico had not delivered the agreed-upon volumes, generating friction amid a political context already marked by trade disputes.

Mexico argued that prolonged droughts between 2020 and 2025 made compliance with the treaty difficult, affecting water availability in its own agricultural and urban regions. However, President Trump warned that if water flow to the US did not increase, he would impose a 5% tariff on Mexican exports, adding pressure to the bilateral relationship. Finally, after negotiations, an agreement was reached: Mexico must supply the remaining amount before 2030, which represents a significant challenge for the country鈥檚 water management.

In this context, the Mexican government promoted a structural reform to ensure compliance with the treaty and guarantee efficient resource management. On December 11, 2025, the and came into force the following day. This regulation establishes a new legal framework with three fundamental pillars:

• • • comprehensive state responsibility for water management;
    • exclusive powers for Conagua in the allocation, supervision, modification, and revocation of concessions; and
    • prohibition of concession transfers between private parties, preventing speculation and resource hoarding.

The law directly impacts strategic sectors such as agriculture, livestock, industry, and rural communities, as well as domestic services. Beyond its internal scope, this reform is interpreted as a mechanism to guarantee compliance with the Water Treaty, reduce the risk of trade sanctions, and strengthen 惭别虫颈肠辞鈥檚 position in future international negotiations.

Economic impacts and projections

For Mexico, the USMCA is not merely a trade agreement; it represents a strategic pillar for the country鈥檚 economic stability and sustained growth. Since its entry into the USMCA, Mexico has become a reliable partner in the North American region, guaranteeing its preferential access to two of the largest markets in the world. This advantage has driven foreign direct investment into the country, especially in sectors such as automotive, advanced manufacturing, agribusiness, and emerging technologies.

The importance of USMCA lies in the fact that . Without this legal framework, Mexico would face an adverse scenario because the imposition of significant tariffs would reduce the competitiveness of national products, increase supply chain costs, and directly affect job creation. The automotive sector, for example 鈥� and about 30% of manufacturing GDP in Q3 of 2025 alone and employs more than 1 million people 鈥� would be one of the hardest hit by the loss of these preferential conditions.

In addition, USMCA offers legal certainty for investors. Clear rules on intellectual property, digital trade, and dispute resolution reduce risks and encourage the arrival of foreign capital. Without this treaty, Mexico could experience an outflow of investments to other countries with more stable agreements, which would negatively impact job creation and projected economic growth.

The coming USMCA review

The possible renegotiation of USMCA, scheduled for later this year, generates uncertainty. This review process presents several possible paths for Mexico, each with distinct economic, political, and diplomatic implications. If the USMCA is successfully extended without substantial modifications, Mexico would preserve its preferential access to the US and Canadian markets, maintaining the commercial stability that supports most of its exports. This continuity would reinforce investor confidence, support job creation and stabilize diplomatic relations.

However, if no agreement is reached to extend the treaty, this absence of clarity would create uncertainty for businesses operating throughout North America. Investment decisions could be delayed, expansion plans postponed, and operating costs could rise due to increased scrutiny and customs enforcement. Further, diplomatic tensions could begin again, particularly if unilateral measures such as large tariffs are threatened again. In this environment, Mexico would need to adopt a cautious strategy focused on strengthening legal frameworks and offering targeted economic incentives to maintain its own competitiveness.

Another scenario in which the parties fail to reach consensus would activate the formal pathway toward the treaty鈥檚 expiration in 2030. While trade flows would continue in the short term, markets would begin adjusting to the anticipated end of the USMCA. This expectation could trigger a gradual relocation of investments and restructuring of supply chains, particularly in industries heavily integrated with US production networks, such as automotive manufacturing and advanced industrial sectors. Pressure on the peso, slower GDP growth, rising import costs, and early job losses would likely follow; and even if diplomatic efforts emerge to prevent severe disruption, the economic effects for Mexico would become progressively more adverse.

However, the most severe scenario involves one country withdrawing from the USMCA, which would cause the agreement to collapse for all three members. For example, if the US were to withdraw, Mexico would immediately face World Trade Organization tariffs, dramatically increasing export costs for manufactured goods and agricultural products and severely disrupting supply chains.

Clearly, any of these scenarios highlight how critical this year will be for Mexico. While a successful extension of the USMCA would support stability, attract investment, and sustain long鈥憈erm growth, a failure to reach agreements 鈥� or the withdrawal of a partner country 鈥� could reshape 惭别虫颈肠辞鈥檚 economic landscape for years to come.

You can find more of our here

Key takeaways:

• • • Real-time oversight and strict compliance 鈥� 惭别虫颈肠辞鈥檚 SAT now requires digital platforms to provide real-time access to transaction data and withhold taxes at the source, with severe penalties, including service blocking, for non-compliance.

    • Major technological and operational demands 鈥� Platforms must invest in secure, scalable systems for data sharing, billing, and cybersecurity, and small businesses likely will face extra challenges adapting to these requirements.

    • New roles for legal and tax professionals 鈥� Lawyers and accountants will be essential in guiding businesses through compliance, privacy, and operational risks, as well as supporting technology integration and adapting to the demands of 惭别虫颈肠辞鈥檚 digital tax environment.

惭别虫颈肠辞鈥檚 digital tax overhaul is more than a regulatory update 鈥� it鈥檚 a fundamental shift that will reshape how businesses in that country operate online. By granting the Tax Administration System (SAT) real-time access to platform data, the government aims to curb tax evasion and strengthen collection in the digital economy. This means platforms like Amazon, Uber, Netflix, TikTok, DiDi, and Mercado Libre must now share transaction details as they happen, which will mean unprecedented compliance, technology, and operational challenges for companies and professionals alike.

Platforms must also 鈥� 2.5% for income tax (ISR) and 8% for value added tax (IVA). If a seller does not give a tax ID number (RFC), the platform will keep up to 20% of the payment; and, if the platform does not comply, SAT can block the service in Mexico until the problem is fixed. That means users will not be able to access the platform until it follows the law.

The goal of all this is to make tax collection fair and stop fake invoices and false transactions. The law also adds ; now, selling fake tax documents online can lead to two to nine years in prison.

These new tax measures also raise questions about with the United State-Mexico-Canada Agreement (USMCA or T-MEC), because some proposals 鈥� such as increased data access and stricter penalties for digital platforms 鈥� could conflict with the treaty鈥檚 provisions on cross-border data flows and platform liability.

Indeed, this shift is part of a wider digital transformation in Mexico, as seen not only with the new biometric CURP for identity verification, but also with SAT鈥檚 adoption of AI-driven smart auditing 鈥� both of which bring new opportunities and challenges for compliance, security, and public trust.

Technological impact on companies

These latest rules mean big changes for tech systems. Platforms must create secure connections for SAT to access their data, although they may use APIs or that send transaction details in real time.

Companies will need stronger cybersecurity policies because opening a permanent link to SAT creates risks, especially considering the high value of data that will be flowing through the system en masse. At a minimum, businesses will need to invest in heightened encryption to protect data, authentication systems to control access, and monitoring tools to detect unusual activity

Platforms also need to update their . Every sale must include correct tax retention and generate a digital invoice (CFDI). For larger platforms that process millions of transactions daily, this means building high-capacity systems to avoid delays or errors. These platforms will also need data pipelines to handle the huge volumes of information and, in turn, send that to SAT without slowing down the services of SAT or themselves.

Small companies and startups may face extra challenges. They might not have the money or staff to make these changes quickly; and they likely will require the assistance of technology providers or consultants to implement new solutions such as compliance-as-a-service and automated tax reporting software.

Challenges and opportunities for tax and legal professionals

For lawyers, these rule changes will create new work areas. Companies will need legal advice to comply with the new rules and protect user privacy. Lawyers, for example, can help draft policies, negotiate limits on data sharing, and design compliance programs.

There will also be litigation opportunities. Many that real-time accesses could violate privacy rights and even the Mexican Constitution, with legal challenges likely by companies as a result. However, due to the recent amendments to the Amparo Law, many of these lawsuits could be frustrated at the outset, because the new Amparo requirements demand the claim of direct and personal harm and impose stricter limits on judicial suspensions, making it harder for platforms to obtain effective protection against real-time monitoring.

For accountants and tax advisors, the challenge is operational. They must help businesses manage new tax retentions and keep accurate records. Many smaller businesses, especially in retail, will need help registering with SAT, issuing invoices, and recovering taxes withheld. Accountants will also need to plan for their clients鈥� as a result of the retentions potentially reducing liquidity.

Both professions are likely to see more demand for their respective services. Lawyers will focus on compliance and defense matters, while accountants will handle routine tax activities; however, both will be involved in technology integration. Professionals who combine legal or tax knowledge with these needed tech skills will have a big advantage.

Adapting to 惭别虫颈肠辞鈥檚 real-time tax landscape

Real-time tax monitoring is a major shift for 惭别虫颈肠辞鈥檚 digital economy, and it aims to increase tax collection and reduce fraud, but it also brings big risks and costs. And the success of this big fiscal change depends on balance. Authorities must ensure strong security and clear limits on data access, and they should also offer support to small businesses, either in educational or instructional fashion, to help those enterprises that may have fewer resources at their disposal to navigate this turbulence.

If implemented well, however, this system could make 惭别虫颈肠辞鈥檚 tax collection more efficient and fairer. If not, these changes could lead to privacy violations, higher costs, and even less participation in the digital economy by smaller entities.

Indeed, Mexico is entering new territory with these rule changes, and the world will be watching carefully as this could become a model for other countries鈥� digital tax compliance 鈥� or it could become a cautionary tale of what happens when technology and regulation collide without enough safeguards.

You can find out more about the听regulatory and legal issues impacting Mexico听here

Key takeaways:

• • • Legal professionals face tighter procedural constraints 鈥� The shift to legitimate interest and stricter suspension rules limit the scope of litigation, requiring claims of more precise harm and reducing early judicial intervention.

    • Stricter judicial suspension powers 鈥� Judges now face tighter rules when granting suspensions and need to prioritize public interest and order over individual or corporate requests.

    • Compliance and financial counsel must prepare for UIF scrutiny 鈥� Expanded authority for 惭别虫颈肠辞鈥檚 Financial Intelligence Unit (UIF) means frozen assets may remain inaccessible despite amparo filings, necessitating stronger defense strategies and deeper expertise in financial legality.

In Mexico, the Amparo Law is one of the most important legal tools for protecting individual rights. For legal professionals, amparo has long been a key tool to challenge government actions that impact clients鈥� operations or compliance. This legal action acts as a mechanism to enforce constitutional protections, preventing public authorities from being unfair or abusing their power.

In September, Mexico sought reform in many areas of this action, including seeking changes to . The update in Article 5 of the Amparo Law refines the definition of 鈥渓egitimate interest鈥� (inter茅s leg铆timo) while maintaining the concept of 鈥渓egal interest鈥� (inter茅s jur铆dico). Under the previous standard, which was introduced in the 2011 reform and formalized in 2013, practitioners could initiate amparo proceedings on behalf of clients who were affected in a general way 鈥� for example, by pollution, lack of access to public information, or harm to indigenous communities. Now, the law only allows a filing of an amparo when individuals are .

Judicial limits and augmented authority for UIF

Another important change in the 2025 reform relates to suspensions. In 惭别虫颈肠辞鈥檚 Amparo Law, a suspension is a temporary court order that stops administrative measures while the judge reviews the case. Before the current reform, judges had , even in cases that affected the public or large groups using their evolving jurisprudence.

Now, judges must follow stricter rules; for example, they cannot allow suspensions if these affect. This shift has direct implications for law firms because legal teams will need to reassess the likelihood of obtaining suspensions in cases involving administrative actions, especially those tied to public infrastructure or financial enforcement.

In Mexico, the Amparo Law is one of the most important legal tools for protecting individual rights. For legal professionals, amparo has long been a key tool to challenge government actions that impact clients鈥� operations or compliance.

The reform also limits suspensions, including investigations by the Federal Executive Branch, tax credit cases (unless the person pays a financial guarantee), preventive detention, and cases in which the country鈥檚 Financial Intelligence Unit (UIF) is involved. The UIF works on cases in which individuals or entities are suspected of .

Lawyers and legal counsel, particularly those representing clients in financial and criminal matters, face new hurdles because of this reform. Even if an amparo is filed, bank accounts may remain frozen if there is suspicion of links to criminal organizations. This forces legal teams to develop more robust strategies for contesting UIF actions. Similarly, tax professionals must also adjust to the new reality. The reform limits the use of amparo to delay tax payments or challenge tax credit denials. Clients who previously relied on legal maneuvers to postpone payments or other obligations will now need to provide financial guarantees or face immediate enforcement. This increases pressure on tax advisors to ensure compliance and to anticipate UIF scrutiny.

Another consideration is whether UIF鈥檚 legal counsel itself can verify the legality of resources, a process that requires specialized knowledge. In some cases, public interest and public order may be referenced in general terms rather than supported by specific evidence, thus placing additional burdens on legal professionals to challenge such claims effectively.

In contrast to the concerns about qualified personnel and individual rights, the government explains that the reform helps stop powerful groups 鈥� those that can afford to pay a lawyer and other legal expenses, as opposed to common citizens 鈥� from to avoid paying taxes or slowing down legal actions.

Modernizing the amparo process through digital reforms

The September reform is expected to expand and reinforce the digital modernization initiatives introduced in the and other earlier reforms, much of which focused on using technology to improve the amparo process. For example, lawyers must now adapt to mandatory digital procedures; and Article 3 now allows people to send documents either online or on paper. (According to the reform, however, if someone has an account in the Federal Judiciary鈥檚 Online Services Portal, they must use it to send and receive documents.)

While this shift standardizes communication, it may challenge those firms with limited digital infrastructure or clients in rural areas.

The reform also supports using electronic signatures for all legal steps. Previously, digital signatures were not accepted in the same way by all courts. This change simplifies filings and enhances procedural clarity, but it also requires law firms and tax advisors to update their systems and train staff on secure digital authentication.

Lawyers and legal counsel, particularly those representing clients in financial and criminal matters, face new hurdles because of this reform. Even if an amparo is filed, bank accounts may remain frozen if there is suspicion of links to criminal organizations.

In addition to reforms designed to enhance system functionality, further modifications have been introduced to decrease the number of cases and enable judges to reach decisions more efficiently. In the past, judges had flexible timelines, which often resulted in delays. The reform now sets clearer limits; for example, in indirect amparo cases, judges must give a ruling within 90 calendar days. This accelerates case resolution but also increases pressure on judicial teams to manage caseloads efficiently and consistently.

Adapting to 惭别虫颈肠辞鈥檚 amparo reform

The September reform could reshape the legal landscape for judges, attorneys, and tax professionals by reversing the progress made since the 2011 changes, which aimed to protect Constitutional rights more strongly. If this happens, the reform may weaken the procedural tools that legal professionals use to defend their clients 鈥� people and companies alike 鈥� against government actions. As a result, we may see a noticeable shift in litigation demand, with fewer opportunities for constitutional defense and more pressure on legal teams to adapt to narrower procedural options. Contributing to this, the new requirements and streamlined procedures could discourage frivolous claims, reducing the volume of cases that firms must manage.

For judges, the reform introduces a more rigid framework. Previously, collective actions based on the prior definition of legitimate interest delayed major infrastructure projects. By requiring direct harm under the new standard, judicial discretion is curtailed, and courts are expected to prioritize administrative efficiency over broad social concerns. In addition, the UIF is now better positioned to freeze illicit funds, which helps lower the chances of situations such as the release of the 27 billion pesos frozen between 2018 and 2025. Legal teams must now prepare for more aggressive enforcement and fewer procedural safeguards.

Finally, the reform has introduced significant elements to enhance transparency and accountability in the amparo process. By introducing requirements for digital submissions and establishing clear deadlines, the changes aim to reduce corruption and confusion, but courts and professionals may struggle with the new digital tools because of their own limited access to technology. Successful adoption of this reform will depend on training judges, UIF staff, and legal teams to ensure procedural compliance and maintain the public trust.

You can find more on the legal and regulatory issues facing Mexico here

Key points:

• • • Technological transformation 鈥� SAT is modernizing its auditing with machine learning and graph analytics to detect fiscal risks and tax evasion networks.

    • Greater operational demands 鈥� Taxpayers and accounting firms must adapt to faster, more precise reviews that will be driven by AI.

    • Efficient and preventive auditing 鈥� AI enables SAT to anticipate irregularities, promote self-correction, and maintain effective tax collection at low cost.

In 2024, 惭别虫颈肠辞鈥檚 tax authority, the Tax Administration Service (SAT), introduced its Master Plan, marking a new chapter in tax auditing. This plan includes the integration of technologies such as machine learning to identify high-risk taxpayers who potentially could be involved in illicit activities. The aim of the plan is to detect complex structures of tax evasion and avoidance through the analysis of transactional patterns and relationships among entities.

Additionally, the plan seeks to uncover inconsistencies in Digital Tax Receipts (CFDI) that may indicate simulated operations, smuggling, or the use of shell companies, thereby strengthening fiscal oversight and the prevention of financial crimes.

This approach relies on large-scale data analysis, with AI playing a central role. Through algorithms that learn from historical patterns, SAT aims to anticipate irregular behavior and act proactively. Indeed, this represents a profound shift in how tax auditing is understood and executed.

Although AI is a major innovation in the field, it鈥檚 not the starting point. Since 2020, SAT has been consolidating its four-pronged strategy, aimed at i) increasing collection efficiency; ii) reducing tax evasion; iii) combating corruption; and iv) improving taxpayer service. This strategy has supported the development of programs such as Compliance Monitoring, Deep Surveillance, and Coercive Collection, which have enabled the authority to act with greater precision and speed.

To better understand the scope of this transformation, certified public accountant Roberto Iv谩n Col铆n Mosqueda, a member of the Mexican Institute of Public Accountants, shares his expert insights on how these tools are redefining tax auditing and what they mean for taxpayers and professionals in the field.

The role of advanced analytics

SAT鈥檚 2024 Master Plan places special emphasis on machine learning to strengthen auditing. This approach is divided into two main models:

1. 1. 1. Analytical techniques, which allow the review of large volumes of data from CFDIs, tax returns, and audit reports. The goal of this is to detect irregularities in real time, especially in sensitive sectors like fuel distribution, where illegal trade and irregular commercialization are targeted.
      2. Statistical learning models, which enable AI to identify previously detected tax evasion patterns and apply them to uncover new networks or similar schemes. This model is particularly useful for identifying operations linked to fake invoicing companies or importers engaged in irregular practices.

The combination of these models allows SAT not only to react to non-compliance but to anticipate it, resulting in smarter, less invasive, and more resource-efficient auditing.

鈥淭he authority has been closing gaps and tightening controls, and the reality is that electronic invoicing now provides highly reliable information,鈥� explains Col铆n. 鈥淏ased on this, along with tax returns and other data it receives, SAT can implement artificial intelligence to develop analytical and statistical learning models that will undoubtedly continue to deliver strong results.鈥�

Direct impact on taxpayers & accounting firms

SAT鈥檚 technological transformation doesn鈥檛 only affect large taxpayers or strategic sectors. It also has direct implications for ordinary taxpayers and the accounting firms that support them.

Indeed, Col铆n warns that this new auditing will be more dynamic and demanding. 鈥淚n the daily life of a regular taxpayer, this will mean increased auditing,鈥� he says. 鈥淭he authority will detect non-compliance and omissions more quickly, which will generate more work for both taxpayers and accountants, who will need to constantly review and correct.鈥�

Additionally, accounting firms must adapt to a more sophisticated auditing process that goes beyond numbers to better analyze relationships between data, behavioral patterns, and connections among taxpayers. This implies greater responsibility in validating transactions, ensuring consistency in reported information, and maintaining traceability of digital tax receipts.

鈥淭hese analytical techniques will allow the authority to detect irregularities more quickly. Today we already see reminders before a tax declaration is due, and invitation letters requesting explanations. With artificial intelligence, this pace will intensify,鈥� Col铆n adds.

Efficient collection and preventive auditing

One of SAT鈥檚 most notable achievements is its operational efficiency. Currently, for every 100 pesos collected, the authority spends only 28 cents, compared with the United States鈥� Internal Revenue Service (IRS) which . This figure reflects a modern fiscal management model based on the strategic use of technology to maximize results with limited resources.

Preventive auditing, supported by AI, allows SAT to expand its coverage without significantly increasing its operational structure. By detecting irregularities before they become serious omissions, it encourages taxpayer self-correction, reducing the need for formal audits and improving voluntary compliance.

This proactive approach not only optimizes government resources but also fosters a more transparent and collaborative relationship between the authority and taxpayers.

Preparing for the future of tax compliance

SAT鈥檚 technological evolution presents new challenges for all actors in the tax system. For taxpayers, it means maintaining more rigorous accounting, staying alert to messages in the tax mailbox, and responding quickly to any requests. For accounting firms, it鈥檚 an opportunity to strengthen their services, adopt analytical tools, and provide more strategic advice to their clients.

Smart auditing works to move revenue services beyond enforcement, enhancing the ability of auditors to prevent, educate, and collaborate. In this new environment, transparency, traceability, and cooperation will be key to building a fairer, more modern, and efficient tax system in Mexico.

You can find out more about the regulatory and legal issues impacting Mexico here

Key takeaways:

• • • Legal promise, operational gaps 鈥� The biometric CURP could streamline identity verification in legal and notary contexts but lacks training programs and designated data capture sites.

    • Balancing security and civil liberties 鈥� While intended to help locate missing persons, the CURP raises concerns over government surveillance due to broad access by security agencies.

    • Digital readiness under scrutiny 鈥� Mexico currently lacks the systems and regulatory framework to securely manage biometric data, risking identity fraud and misuse if not properly addressed.

Last July, key reforms to 惭别虫颈肠辞鈥檚 General Population Law and the General Law on Forced Disappearance were approved, marking the beginning of a transformation in the way people are officially identified in the country.

With these reforms, the biometric Unique Population Registry Code (CURP) becomes an official identification document, which is now mandatory and available in both physical and digital formats that will integrate biometric information such as fingerprints, iris scans, and photographs.

The biometric CURP will be used mainly for identity validation on digital platforms, immigration procedures, access to health services, legal processes, and to support the search for missing persons. With little time left before its implementation, doubts linger regarding how this new system will be implemented and the impact it may have, especially in the judicial and notarial areas.

To provide a professional perspective on the possible impacts, Jos茅 Ra煤l Gonz谩lez Ram铆rez, Master in Notarial Law and aspirant assigned to Notary 1 in Cuernavaca, Morelos, shared his personal perspective on what this mandate will mean for Mexico and its citizens.

Challenges and benefits in the legal and notary fields

In Mexico, there is currently no single official identification document. In the legal and notary field, the passport and voter ID card are mainly used, as they are documents issued by federal institutions that generally use greater security measures. The biometric CURP could represent a solution to this lack of a single document, offering a more reliable tool to validate people’s identity.

However, key parts of the system are still lacking that could have significant consequences. For example, there is no implementation program to train notaries on this document; and while the College of Mexican Notaries is hoping to disseminate training mechanisms in the coming months, so many areas of the system remain undefined that training at this stage could prove difficult.

Further, no designated sites have been reported for the population to go for the official capture of the biometric data that is at the heart of the system鈥檚 methodology. Finally, no official date has been defined for the mandatory use of this new CURP.

Hope or surveillance?

The biometric CURP was approved with the main objective of strengthening the search, location, and identification of missing persons in Mexico. Not surprisingly, this has raised significant government surveillance issues. And while the access to CURP is stipulated to be exclusively for search purposes, access on a consultation basis will be allowed to prosecutors, investigative bodies, and the National Intelligence Center.

This measure has generated divided opinions among Mexicans. On one hand, there is fear that it could become a tool for government surveillance as the National Guard (GN) and the Secretariat of Security and Citizen Protection (SSPC) can access individuals鈥� delicate information that will include bank and telecommunications data. On the other, it represents hope for thousands of families who have been searching for their loved ones in a country in which 42 people disappear daily on average according to the National Registry of Missing and Unlocated Persons (RNPDNO).

Master Jos茅 Ra煤l says he considers the implementation is positive, since its initial purpose is the search for missing persons. The rest of the population鈥檚 concerns, in that sense, would be 鈥渃ollateral damage,鈥� he adds.

“It is going to be an identification that, if done correctly and if the registration is adequate, will strengthen the notary鈥檚 ability to identify the person in front of them and avoid, as much as possible, a false declaration or impersonation at the moment of identification,” Jos茅 Ra煤l explains.

Is Mexico ready?

One of the greatest challenges will be 惭别虫颈肠辞鈥檚 ability to securely store and manage the vast amount of confidential data required for the biometric CURP. According to Jos茅 Ra煤l, the country currently lacks the necessary systems, infrastructure, and regulatory framework to handle this information effectively.

鈥淚f implemented correctly, this system could provide stronger safeguards against identity fraud,鈥� he explains. 鈥淗owever, without a reliable database and proper data management, it could become a serious problem.鈥�

In addition, there is uncertainty about how the data will be captured, with which population the process will begin (those over 18 years of age, or also minors), and how often the database should be cleaned. The population aged 0 to 18 poses a particularly complex challenge due to its size, which current resources and infrastructure are not equipped to handle effectively.

In the coming months, it will be crucial for the Mexican government to define the implementation mechanisms, the initial target population, and the data cleansing processes, as this will be one of the most important aspects for the success or failure of the biometric CURP.

The road ahead

Although a pilot program is currently underway in Mexico City, it is essential to establish a robust action plan for collecting population data. Likewise, a clear framework must be defined for the management, maintenance, and protection of this data, especially considering the sensitive nature of the information and the critical need to prevent misuse. Further, it is crucial to assess whether the government has the technological infrastructure required to securely store this data, or if investment in such storage capabilities will be necessary.

You can learn more about the challenges of identity verification here

Key takeaways:

• • • Historic election with low turnout 鈥� Mexican citizens elected judicial authorities for the first time, but low voter participation shows limited civic engagement.

    • Controversial process 鈥� Candidate accusations and high campaign spending raised concerns about transparency and accountability.

    • Responsibility lies with elected ministers 鈥� Citizens pushed for change, and now it’s up to the new officials to build a fair and independent justice system.

On June 1, Mexico experienced an unprecedented event 鈥�听the country鈥檚 first-ever elections for the Judicial Branch, in which 881 judicial positions were filled, including ministers, judges, and magistrates. This historic process is a direct result of the judicial reform enacted in September 2024, aimed at transforming the Mexican judicial system into one that is more efficient, humane, austere, and free from corruption.

Campaigns began on March 30, 2025, 鈥� no public or private funding was allowed, and promotion was limited to forums and organic social media. To encourage informed voting, the National Electoral Institute (INE) launched (Get to Know Them), a digital platform that allowed citizens to review candidate profiles in a transparent and accessible way.

Rising controversies and low turnout

Throughout the electoral process, several controversies emerged that cast doubt on the legitimacy of certain candidates. against some candidates for alleged ties to drug cartels and cases of sexual abuse. Nevertheless, their candidacies were approved by committees composed of members from all three branches of government, a decision that raises serious questions about the rigor and transparency of the selection process itself.

There were also , particularly by candidates for ministerial positions, which drew criticism from observers and citizens. Another controversial issue was the increase in the campaign spending cap for national positions, such as ministers on the Supreme Court of Justice of the Nation (SCJN).

Despite the by the Chamber of Deputies in December 2024, the INE carried out the elections normally. Voters received six ballots of different colors, each corresponding to a judicial category. However, voter turnout was low, ranging between just 12.57% and 13.32% of the eligible population.

Even so, Claudia Sheinbaum, President of Mexico, emphasized that 鈥渘early 13 million Mexican men and women participated in the Judicial Branch election, more than double the turnout in the vote on the trial of former presidents.鈥�

Who will shape the future of Mexican law?

The SCJN, the nation鈥檚 highest authority in the Judicial Branch, will be composed of the following ministers, who will take office on September 1:

• • • Hugo Aguilar Ortiz 鈥� A Mixtec lawyer and indigenous rights advocate; elected president of the Supreme Court
    • Lenia Batres 鈥� Promotes social justice and austerity
    • Yasm铆n Esquivel 鈥� Supreme Court justice since 2019; faced plagiarism allegations
    • Loretta Ortiz 鈥� Supports decentralized justice and socially focused rulings
    • Mar铆a Estela R铆os 鈥� Labor law expert
    • Giovanni Figueroa 鈥� International academic and human rights defender
    • Irving Espinosa 鈥� Magistrate with experience in Mexico City鈥檚 government
    • Ar铆stides Guerrero 鈥� Proposes a Mobile Court and rulings in indigenous languages
    • Sara Herrer铆as 鈥� Human rights prosecutor

This group will be responsible for interpreting the Mexican Constitution and ensuring respect for human rights in the country, within a context of institutional transformation.

What鈥檚 next for 惭别虫颈肠辞鈥檚 legal landscape?

Despite this democratic milestone, access to justice in Mexico remains limited. In fact, a National Survey on Victimization and Perception of Public Safety showed that , according to 惭别虫颈肠辞鈥檚 National Institute of Statistics and Geography (INEGI), the country鈥檚 main government institution in charge of statistics and census data.

Further, , reflecting a deep mistrust of the judicial system鈥檚 ability to address and resolve cases affecting citizens. In budgetary terms, Mexico is among the countries that spend the least on justice, , according to the Organisation for Economic Co-operation and Development (OECD).

Overall, the judicial reform being undertaken includes a series of proposals aimed at strengthening the country鈥檚 justice system and ensuring its independence, efficiency, and proximity to citizens. Key measures include:

• • • Budget allocation 鈥� At least 2% of federal and state budgets are earmarked for judicial branches
    • Collective justice access 鈥� Stronger mechanisms will be developed for group lawsuits and shared rights
    • Ruling enforcement 鈥� Clear frameworks for executing judicial decisions will be established
    • Feminicide classification 鈥� Standardized recognition and investigation protocols nationwide will be enacted

These proposals are outlined in the document , prepared by the SCJN and aim to address the main challenges facing 惭别虫颈肠辞鈥檚 judicial system.

Although the electoral process was framed as a democratic step forward, critics warn it may politicize the Judicial Branch. Some argue the reform could enable one party to control all three branches of government, risking legal uncertainty and weakening transparency. Indeed, the election鈥檚 low turnout, candidate allegations, and rising campaign costs raised concerns about the legitimacy and effectiveness of this new judicial election model.

Still, the 2025 judicial election marks a milestone in 惭别虫颈肠辞鈥檚 democratic history, but it also presents profound challenges. The key will be to monitor the implementation of the reform, strengthen judicial independence, and ensure that new ministers and judges act with ethics, professionalism, and social commitment.

Critically, Mexico needs a justice system that is not only accessible but also effective, empathetic, and trustworthy. Despite limited civic participation, the first step toward judicial transformation has been taken. Now, the true responsibility lies with those elected to lead and deliver meaningful change.

You can find out more about听the challenges faced by courts here

Key insights:

• • The North American economic bloc facing significant challenges 鈥� Due to escalating trade tensions and policy uncertainties, the trading bloc comprised of the US, Canada, and Mexico is currently facing significant challenges that have the potential to undermine economic growth and stability across the region.

  • Customized trading strategies needed 鈥� Given each country鈥檚 unique economic outlook, policymakers will need to work on tailored strategies to address each nation鈥檚 specific issues.

  • Communication & collaboration are key 鈥� The future of North American economic cooperation hinges on sustained dialogue and cooperation among the member countries. For continued and shared economic prosperity in the region, the three nations must work together.

For many years, the North American economic landscape has been defined by robust collaboration among the United States, Canada, and Mexico. Policymakers strategically leveraged the region’s unique geographical advantages and opportunities to foster prosperity, leading to the creation of one of the world’s most powerful trading blocs. After the North American Free Trade Agreement (NAFTA) was supplanted by the United States-Mexico-Canada Agreement (USMCA) in 2020, it became the world’s , with the combined imports among the three nations amounting to .

Despite this success, the bloc鈥檚 partnership is now precarious. Escalating trade tensions now pose considerable challenges not only for the three participating nations but for the global economy as a whole now and in the future.

The United States

The Trump administration activities around tariffsand ensuing policy uncertainty has led to significant concerns among businesses throughout North America. These concerns are expected to , while consumer spending may also decelerate due to higher unemployment and persistent inflation.

In fact, economists foresee weaker growth in the US economy. Even though real US GDP grew 2.8% in 2024, shows that it may decelerate to 1.8% in 2025. According to the IMF, unemployment will stand at 4.2% this year, further signaling a soft labor market.

Tariffs also will result in price increases for consumers on imported goods, likely leading to additional pressure on overall price levels. Indeed, consumer prices rose 2.7% in June compared to the previous year, potentially indicating the beginning effects of Trump鈥檚 tariff policy on inflation.

This likely will contribute to inflation remaining persistent, with estimates 听throughout 2025 of 3.0%, one percentage point above the Fed鈥檚 2.0% target. At the same time, retaliatory tariffs from other countries are expected to lessen demand for US exports. In addition to trade and policy instability, Trump鈥檚 immigration agenda could continue to impact various sectors of the economy, such as construction and agriculture, where labor supply and demand may be affected.

In this environment, a slowing US economy is likely to lead to reduced tax collection, subsequently decreasing government revenue even further. An increase in government debt is anticipated, with general government gross debt as a percentage of GDP projected to rise to 122.5% in 2025.

As for 2026, real GDP growth is expected to slow further to 1.7%. Economists also project that inflation will continue to ease, reaching 2.5%, while unemployment is likely to remain stable at 4.2%. Although these figures suggest a relatively steady outlook, there are more notable downside risks than upside ones. Persistent, or even worse, increasing trade, policy, and geopolitical uncertainties could undermine economic performance and threaten the country鈥檚 stability.

Canada

In 2024, Canada鈥檚 , with real GDP increasing by 1.5%; however, the country鈥檚 economic outlook for 2025 has weakened. Rising trade tensions with the US have contributed to a deterioration in both business and consumer sentiment, while policy uncertainty has increased. As a result, the growing 1.4%, and the unemployment rate rising to 6.6% in 2025.

Unlike the two other countries in the region, inflation in Canada is expected to ease to its 2% target in 2025. However, the Bank of Canada will likely face a challenging environment in the coming months, as upward pressure from higher import prices due to tariffs and downward pressure from falling demand could infringe upon price stability.

Looking ahead, economists project a modest recovery in macroeconomic conditions for Canada in 2026. With projected real GDP growth of 1.6%, inflation at 2.1%, and unemployment at 6.5%, the economy is expected to demonstrate enhanced resilience.

Further, the Organisation for Economic Co-operation and Development (OECD) made some recommendations for the Canadian economy to help it weather these uncertain times, including seeking diversification of trading partners, strengthening innovation to boost productivity and competition, and increasing government investment in infrastructure.

Mexico

As of the midway point of 2025, 惭别虫颈肠辞鈥檚 economy is facing a challenging outlook. In 2024, the country’s real GDP grew by 1.5%; however, , with an anticipated contraction of 0.3%. to weakened exports resulting from tariffs, as well as restrained public consumption and investment.

The IMF鈥檚 forecasts also suggest that private consumption may be supported by moderate unemployment (3.8%) and declining inflation (3.5%) in 2025. Still, while unemployment is anticipated to remain at relatively low levels, this figure represents an increase from last year鈥檚 level. Also, while investment is aided by lower interest rates it is expected to recover only gradually amid persistent concerns that include geopolitical tensions and domestic uncertainty from policy changes and reforms.

Further out, a recovery for the Mexican economy is anticipated in 2026, with real GDP projected to grow by 1.4% after the previous year鈥檚 contraction. The labor market is forecasted to hold stable, with the unemployment rate standing at 3.8% in the same period. However, inflation is likely to persist at 3.2%, remaining above its target level.

The OECD has outlined several recommendations for Mexico as well, including improving property tax collection and digitalizing tax administration to grow government revenue. Conducting cost-benefit analyses could improve the efficiency of public spending; and creating regulations that encourage private investment in renewable energy could allow the country to leverage its natural resources and gain competitive advantage.

The future of the North America trading bloc

The economic performance of North America in 2025 is increasingly clouded by rising policy uncertainty and commercial tensions between the three member countries. is projected to slow to 1.6% in 2025 鈥� a percentage point lower than in 2024 鈥� as each country contends with unique challenges and the broader consequences of escalating trade disputes.

The imposition of new tariffs by the Trump administration has reverberated across the North American region, straining longstanding trade relationships and introducing additional volatility for businesses and individuals. These developments risk undermining the progress achieved under trade agreements such as NAFTA and its successor, the USMCA, which were designed to foster regional integration and collective growth. With the coming renegotiation of the USMCA in July 2026, the future of North American economic cooperation hangs in the balance.

By 2026, for the entire North American region. However, this outlook is contingent upon the resolution of the ongoing tariff disputes and successful renegotiation of the USMCA. Achieving agreements that address the United States鈥� trade deficit with each respective country remains a key priority for President Trump, as does advancing other significant agenda items, such as enhancing collaboration on immigration 鈥� particularly along the US/Mexican border 鈥� and increasing efforts to combat drug cartels in Mexico.

While it is very hard to predict what will happen in the coming months (let alone the next year) for North America, what is certain is that sustained dialogue and cooperation among the three countries will be essential to preserving the benefits of regional integration, restoring investor confidence, and promoting shared prosperity in the months and years ahead.

For more on the current trading environment, check out the 成人VR视频 Institute鈥檚听2025 Tariff Survey here

Key Insights:

• • • Confidence in automation 鈥� A majority organizations in Mexico that are involved in trade activities with the U.S. are confident in using technology to enhance compliance automation, though there is room for growth in automating classification workflows for imports and exports.

    • Qualified employees are crucial 鈥� Mexican trade professionals recognize qualified employees as the most crucial factor for sustained industry growth, alongside the implementation of technology and automation of processes.

    • Assessing risks to trade routes 鈥� Mexican companies are actively using technology to assess risks and opportunities in trade routes, while also relying on manual processes and specific information purchases. Many companies have also implemented production, risk, and financial protocols to navigate current trade volatility.

So far this year, tariffs have become a major hurdle for companies engaged in international trade, regardless of size, sector, or home base. Indeed, today鈥檚 trading environment is highly volatile, driven by new tariffs imposed by the United States and subsequent countermeasures coming from other nations. This shifting landscape is disrupting supply chains, raising costs, and compelling businesses to overhaul their global trading strategies.

For Mexico, the new actions imposed by the Trump Administration are particularly impactful. , with a robust exchange of goods and services that supports millions of jobs and fosters economic growth on both sides of the border. In that sense, Trump鈥檚 tariffs have the potential to affect multiple industries and businesses in the country that export or import goods to or from the U.S.

Recent reports by the 成人VR视频 Institute on the impact of tariffs 鈥� one offering a global perspective and one 鈥� have shed light on how companies are responding, providing relevant insights on the rising importance of technology and strategic adaptation in the present unstable context.

The Mexican perspective

The provides a focused view of how Mexican companies are managing the rising costs, supply chain disruptions, and price volatility brought by the changes. The report is based on a survey of 50 Mexican trade professionals, and the results underscore their strong emphasis on technology adoption and risk management.

• • • Technology integration 鈥� In the realm of compliance automation, a significant 90% of respondents expressed confidence in the role of technology to streamline their compliance processes. A notable 86% said their organizations have already harnessed predictive technology to screen customers, suppliers, and partners, effectively mitigating risks associated with import and export operations. Moreover, 68% of respondents said their organizations were leveraging predictive technology to identify opportunities for qualifying goods under Free Trade Agreements. However, there remains a substantial opportunity for growth in the automation of classification workflows for imports and exports, with only 28% saying their organization is currently utilizing technology in this area.
    • Drivers of sustained growth 鈥� Mexican trade professionals have identified several key drivers that are crucial for sustaining industry growth. Foremost among these is the presence of qualified employees, with 74% of respondents considering them the most essential element for success. In addition, 58% highlighted the importance of technology implementation, and 38% cited the automation of processes both as necessary components for achieving long-term growth.
    • Adapting to volatility 鈥� Mexican companies are proactively identifying risks and opportunities for cost optimization in trade routes, as well as establishing robust protocols to navigate volatility. While 72% of respondents said their organizations use technology for risk-opportunity assessment, 66% said they still undergo manual and operative processes, and 28% said they buy specific information. To adapt to the constant changes, organizations in Mexico have implemented production (72%), risk (58%) and financial (44%) protocols, according to these trade professionals.

How Mexican companies can thrive amid tariffs

Worldwide respondents from the global 2025 Tariffs Survey suggested diverse strategies to mitigate the impact of these tariffs, such as expanding to multiple production venues, examining the best trade lanes, and seeking more regionally based suppliers.

In addition to these valid methods, companies in Mexico must focus on flexibility, especially in their supply chain, which can be achieved through partnerships with technology and service experts. Trade professionals also need to stay current on any tariff trends or developments, so monitoring trusted media and government sources for updates and regulatory changes is vital in order to remain informed. Professionals in Mexico also need to evaluate their trade routes, production areas, and supply partners to identify potential impacts from any ongoing developments.

Further, investing in business intelligence tools could allow companies to analyze real-time data, ensuring that their decisions are based on current and accurate information. Regular cross-departmental meetings with other corporate teams 鈥� such as those in tax and legal 鈥� are crucial for aligning a company鈥檚 strategies cohesively.

By implementing these actions, businesses involved in U.S.-Mexico trade activities can better manage the commercial challenges.

A disrupted future

Companies around the globe are grappling with increasing costs, disrupted supply chains, and regulatory uncertainty. However, those embracing the actions outlined above will be better positioned to weather the tariff storm. Automation, predictive analytics, and robust risk management are becoming essential tools, alongside strategic initiatives like supply chain diversification and leveraging trade agreements.

Mexico, with its close ties in trade with the U.S., could suffer greatly from these changes. Therefore, trade professionals in Mexico should keep in mind that timely planning, technology, and flexibility will be crucial aspects for successfully guiding their companies through the current complex environment.

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As this reform is still in its early phases, there is a level of uncertainty surrounding its potential impact on the practice of law in Mexico. Until the new judges assume their roles in August 2025, the direction in which the Mexican judiciary is heading remains largely speculative.

Challenges and opportunities ahead

, President of the Mexican Lawyers Council, highlights a series of potential challenges posed by the recent judicial reform. One significant obstacle is the anticipated learning curve for newly elected judges, many of whom may lack substantial experience in the judiciary. This inexperience could lead to delays in case resolutions, which could pose a risk to the efficiency of the judicial process.

Another challenge stems from the creation of a Court of Judicial Discipline. This body is tasked with overseeing judges’ conduct, and its broad mandate to evaluate decisions based on public interest could have far-reaching implications. However, there also is a concern that this could lead to reversals of judgments, particularly those that stop public projects or go against government interests. Such actions might affect the balance between judicial independence and public accountability, raising questions about the Court of Judicial Discipline鈥檚 influence on the justice system.

On the opportunity front, R铆os Ferrer says he envisions a significant rise in arbitration as an alternative to traditional court litigation, potentially offering a more expedient and effective resolution process. This shift towards arbitration could benefit domestic and international institutions offering these services, as parties may seek quicker and more practical alternatives to resolve disputes outside the conventional courtroom setting.

Other options outside of courts and arbitration would include alternative dispute resolution methods, such as mediation and collaborative agreements. Settlements achieved through these methods will have the force of res judicata by law.

The broad scope of the reform

Most of the discussion around the reform of the judicial power in Mexico has focused mainly on the democratic process for appointing Supreme Court justices and federal judges. However, it is important to emphasize that the reform’s impact extends beyond the federal level to include local or state judges, who are responsible for administering everyday justice throughout the country.

According to the National Census of and Law Enforcement, which is conducted by INEGI, a Mexican government agency that gathers the country鈥檚 statistical information, federal courts received 950,184 cases in 2023, while state courts handled almost 2.2 million cases.

Although federal courts deal with fewer cases, the reform of the judicial power is expected to have the most significant impact on everyday legal matters. The technical capability and experience of the new judges will be crucial in addressing everyday justice cases in civil, family, commercial, and criminal disputes that directly affect Mexican citizens’ daily lives.

How lawyers can confront the new reality

The reform has created uncertainty among law students and professors, says R铆os Ferrer, adding that he expects a larger number of lawyers to lean more towards advisory services for organizations rather than litigation for their future career paths.

R铆os Ferrer says he believes that mediation and negotiation are important skills for lawyers to work on and develop. And by enhancing these abilities, lawyers can prevent potential conflicts or resolve existing ones as an alternative to court litigation.

For lawyers who choose to specialize in civil, family, labor, or criminal law, R铆os Ferrer recommends that they keep attending everyday justice or federal courts. This will help them react to how the elected judges administer justice and assess their performance. Having a fluent dialogue with members of the judiciary through memorandums will be a key aspect of lawyers鈥� practice as well.

Initially, dispute resolution in courts might need to be more pedagogical so that trials are conducted more thoroughly under the new reform. Litigators may want to be vigilant about who the candidates of the judiciary are and, once they are elected, investigate each one’s profile. By doing so, lawyers will be able to anticipate how instructive the lawyers will need to be with some of the new judges 鈥� and whether lawyers can be less so with others.

R铆os Ferrer also emphasizes the importance for litigators to maintain strong technical and ethical professional preparation, because it will be imperative to ensure that these new changes do not lead to corruption or the appearance of impropriety.

Conclusion

Mexico is embarking on an unprecedented historical transformation that will reshape the country in various ways. With the changes now outlined in the Mexican Constitution, the legal community remains hopeful that the judicial reform will benefit society and the country as a whole.

You can find out more about here.

This is especially important when business seek to expand into other geographic areas or markets. At the early stages of a site selection process, such as taxes, costs, labor and community characteristics, utilities, logistics and transportation, and facility-specific requirements, among others, to choose their best option. Nevertheless, the heightened scrutiny from investors, consumers, and regulatory bodies for sustainable and ethical practices makes it crucial now to factor ESG into the equation. In this sense, companies should take into consideration how their operations in a specific location might impact the local environment, biodiversity, or communities and look for ways to mitigate any adverse effects.

The escalating demand for ESG compliance in the United States and Europe is compelling companies around the world to map their supply chains to ensure a responsible business environment. As part of a broader ESG landscape review, companies should do comprehensive mapping of the supply chains for any new site under consideration, tracing the origins of their raw materials, identifying potential risks, and assessing the environmental and social impacts of their operations.

Relevance of ESG in site selection in Latin America

Latin America, with its rich biodiversity, abundance of natural resources, and diverse social groups, presents a unique opportunity for companies looking to set up a project. Latin America鈥檚 comparatively lower labor costs make it an attractive destination for manufacturing and service industries seeking cost-efficient operations without compromising quality. Additionally, the region鈥檚 increasing infrastructure developments, trade agreements, and strategic geography greatly contribute to a conducive business environment, making the region a promising option for investors.

Further, Latin America has made strides to address ESG concerns, with notable advancements. For example, , and most recently have adopted green taxonomies, while other countries, like Brazil, are expected to follow in the near future. Indeed, Brazil has made under the International Sustainability Standards Board鈥檚 International Financial Reporting Standards 1 and 2 for all publicly traded companies starting in 2026.

Several other countries in the region have also enacted domestic laws that, although not explicitly labeled as ESG, involve environmental, social, or corporate governance aspects. These regulations carry substantial implications that investors need to acknowledge, some of which should be considered in the early stages of choosing the geographical location for a new project.

Differing laws throughout the region

Interestingly, countries in Latin America have different environment-related tax laws that won鈥檛 have an equal impact on a company鈥檚 financial performance. With the election of Colombian President Gustavo Petro in 2022 and his green agenda, the country on the oil and gas sectors. And addresses the reduction of atmospheric pollution and greenhouse gases; while in Mexico, , each with different fees and targets.

According to each project鈥檚 profile and needs, companies and firms can also benefit more in certain places than others. Brazil鈥檚 ongoing efforts to 鈥� thanks to a cleaner energy grid and emerging green hydrogen 鈥� present a unique opportunity for procurement of materials with low embodied carbon. While some countries are working to develop carbon markets, in the region that has an active regulated market.

Moreover, companies鈥� carbon footprints and emissions can be reduced if supply chains are brought closer together or located strategically. This information is not only commonly disclosed in ESG reporting but need also required to be reported in and Pollutant Release and Transfer Registry (PRTR).

Due to the growing efforts to promote a sustainable business environment, the European Union requires companies intending to supply the European markets to comply with specific regulations, some involving land use change. The , for example, requires companies that sell seven commodities 鈥� soy, cattle, palm oil, wood, cocoa, coffee, and rubber, most of which are extensively produced in Latin America 鈥� to prove that their production does not come from or result in deforestation or forest degradation.

Regarding social responsibility and community engagement, foreign companies or firms coming into Latin America need to bear in mind the legally binding international treaties and agreements of the region. Latin America is home to numerous indigenous communities, many of which have suffered from marginalization and displacement. For this, was designed to protect their rights and territories. Further, , signed and ratified by many countries in the region, requires not only a certain level of protection of the environment, but also promotes public participation, transparency, and access to justice in environmental matters.

Going beyond traditional procedure to ensure success

Because of the uniqueness of each country鈥檚 legal framework and the advancing dynamics of ESG, today鈥檚 companies should undertake new and effective methods to map and address as many of the ESG aspects of a new project as possible, says , a legal expert with an extensive background on ESG matters. Based on her experience and perspective, Owens says that lawyers should conduct a thorough landscape assessment of the legal ESG parameters that apply to the site selected, looking at rules and requirements related to the environment (including biodiversity), social communities, and governance. As part of the analysis, Owen advises lawyers to ideally look at:

• • • The national, state, and local or municipal regulations around ESG, such as 惭别虫颈肠辞鈥檚 state-level greenhouse gas emission taxes
    • The environmental classification for the area to determine whether it falls within any environmental special zoning
    • The proximity to indigenous communities and whether engagement strategies are required
    • The title to the land to ensure clear title and ownership
    • The projections for carbon emissions, whenever possible, to better understand whether the project would fit within stated corporate targets
    • The local regulations on water, land use, waste management, emissions, and biodiversity

The lawyer on the site selection team can be an integral link between corporate subject matter experts and the new local regulatory requirements, Owens says, adding that companies having professionals who know the laws on their teams would then be in a better position to determine if the proposed location would advance a company鈥檚 sustainability goals as well as its bottom line 鈥� or not.

Considerations for the future

Countries in Latin America not only have their own legal structures that pose relevance for investors, but their ESG-related regulations must be taken into account. The region is rich in biodiversity, but also in regulatory diversity 鈥� and a comprehensive analysis of the different incentives, benefits, and legal obligations will be key for any planned project to thrive.

Countries across the region are not waiting for the US or Europe to lead the way on ESG. They are taking action on their own and will continue to do so, each with their distinct agenda and goals. Discrepancies between laws and enforcement levels across countries will raise further challenges.

Indeed, the resulting compliance patchwork may not necessarily advance ESG goals, but it is a reality that legal practitioners and businesses in the Americas need to be aware of 鈥� and learn how to navigate.