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Mexico exporters urge government to respect foreign investors under new trade deal

Sharay Angulo
·2 min read

By Sharay Angulo

MEXICO CITY (Reuters) - A top Mexican exporters' group on Wednesday urged the government not to spook foreign investors after a number of disputes erupted over major projects in the run-up to the start of a new North American trade deal.

Wednesday marked the entry into force of the United States-Mexico-Canada Agreement (USMCA), which replaces the 26-year-old North American Free Trade Agreement (NAFTA) at a time of growing commercial tension within the continent.

President Andres Manuel Lopez Obrador has pushed for renegotiation of billions of dollars worth of contracts agreed under the last government. He also helped stop construction of a brewery in the border city of Mexicali by U.S. firm Constellation Brands, saying it jeopardized water supply.

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The National Board of the Maquiladora and Export Manufacturing Industry (Index) warned that Mexico could be damaged by the Constellation Brands row and contractual disputes between the government and private energy providers.

"As Mexico we have to watch the messages we send abroad. The Constellation Brands issue and the changes to the rules of the game in the energy sector, among others, cause uncertainty and mistrust, and there must be trust for there to be investment," Index president Luis Aguirre told a videoconference. The $1.4 billion Constellation Brands <STZ.N> brewery was nearing completion when the project was halted by a March referendum against the plant which the president had encouraged.

The company and the government say they aim to reach an alternative agreement, but the news alarmed economic analysts.

Lopez Obrador has also argued that corruption skewed energy sector contracts in favor of private companies.

Aguirre said foreign direct investment into the export sector should increase "significantly" in the wake of USMCA's start provided authorities follow the group's recommendations.

(Reporting by Sharay Angulo; Editing by Dave Graham and David Gregorio)