Korea and Mexico will strengthen investment protection for the two countries’ corporations and expand financial support. Following the conclusion of amendment talks on the investment protection agreement that had continued for seven years, The Export-Import Bank of Korea will also pursue $100 million (about 135.8 billion won) in financial cooperation with Mexico’s policy finance institution.
The Ministry of Foreign Affairs said on the 25th that the governments of Korea and Mexico concluded amendment talks on the “agreement on the promotion and mutual protection of investment” on the 23rd.
The two countries began amendment talks in 2019 to revise the existing investment protection agreement, which took effect in 2002, to fit the changing international investment environment. An investment protection agreement is a treaty that sets standards to protect the property and rights of foreign investors and procedures for resolving investment-related disputes.
The amendment clarifies the legitimate regulatory authority that the host government can exercise for the public interest while strengthening protection of investors’ substantive rights, such as the repatriation of investment funds and compensation for losses.
The dispute resolution procedure was also overhauled. A mechanism was established to prevent so-called “paper companies” without substantive business activities from indiscriminately filing lawsuits by using investor protection systems. Even if a currency crisis occurs, the transfer of investment funds is guaranteed, and a remedy procedure was newly put in place to respond to excessive taxes.
The Ministry of Foreign Affairs said, “Mexico is Korea’s largest trade and investment partner in Latin America, with many of our corporations operating there,” adding, “With the conclusion of the amendment text, the legal foundation for investment protection between the two countries will be further strengthened.”
Policy finance support will also be expanded. The Export-Import Bank of Korea said it signed a memorandum of understanding (MOU) on financial cooperation with Mexico’s National Bank of Foreign Trade for $100 million in two-step loans.
In two-step loans, Eximbank supplies funds to a local bank overseas, and that bank then lends them to local corporations seeking to purchase products or services from Korean corporations.
The two institutions will pursue financial cooperation focused on automobiles; bio and medical; mineral resources and energy; and the aerospace industry. As Mexico holds key minerals such as fluorspar, copper and zinc, Eximbank expects this cooperation to also help build key supply chains and strengthen economic security.
It is the first time in eight years that Eximbank has resumed two-step loans in Mexico. The plan is to provide financial support for the local expansion of domestic corporations responding to changes in the North American trade environment and supply chain reorganization.
Eximbank President Hwang Ki-yeon said, “We will open the policy finance spigot in the Mexican market, which had been a blind spot for two-step loans, and broaden the horizon of financial support.”
The countries’ areas of cooperation will also broaden to artificial intelligence (AI). The Ministry of Foreign Affairs said it issued a “joint declaration on cooperation in artificial intelligence” with the Mexican foreign ministry on the occasion of President Lee Jae-myung’s state visit to Mexico. The two countries confirmed their commitment to AI cooperation for the prosperity and welfare of their people and agreed to expand cooperation in line with the “APEC AI Initiative” adopted at last year’s Asia-Pacific Economic Cooperation (APEC) summit in Gyeongju.
Source: bizchosun