Diego Ore’s

MEXICO CITY (Reuters) – Mexico’s ruling party is considering changes to a proposed judicial reform that could peaceful market fears. One solution would be to stagger the election of judges over several years, reducing fears of a political takeover of the judiciary, sources familiar with the discussions said.

The initial proposal by outgoing President Andres Manuel Lopez Obrador had investors worried because the changes would have weakened Mexico’s system of checks and balances by requiring nearly 1,600 judges – including Supreme Court justices – to be elected by popular vote.

Newly elected President Claudia Sheinbaum, who will take office in October, also from the ruling Morena party, defended the proposal, saying she believed judges should be elected.

Morena, however, intends to adapt the reform so that the selection of judges takes place in stages, with participants chosen by a technical committee after passing qualifying tests, said four party sources with knowledge of the discussions.

In addition, lucrative trust funds for judicial employees will be protected, the sources said. Last year, Mexico’s Senate voted to end 13 judicial trusts, exacerbating tensions between the government and the judiciary, although the Supreme Court later overturned the decision.

The Mexican peso fell 8% in the week following the June 2 election that gave Morena a supermajority in the lower house of Congress.

Lopez Obrador denied that market volatility was linked to judicial reform.

The outgoing president has pushed the reform, which also involves reducing the number of Supreme Court judges from 11 to nine, as a necessary transformation of a justice system that he said “does not serve the people.”

Critics said electing judges by popular vote would politicize the justice system to the benefit of Morena and her allies.

Spokespeople for Lopez Obrador, Sheinbaum and Morena did not immediately respond to a request for comment.

CONCERNS ABOUT TRADE PACTS

Four sources in Morena said the modern changes also take into account a planned 2026 review of the trade agreement between the United States, Mexico and Canada, which entered into force in 2020.

Initially, it was proposed to popularly elect judges without meeting strict conditions. Sources saw this as a potential obstacle to the functioning of Mexican labor courts, which were established to allow for the rapid resolution of conflicts between employees and employers under the USMCA.

Lawmakers decided to adjust Lopez Obrador’s reform so that it does not violate the “clear, transparent and predictable” legal and trade framework set out in the USMCA.

Senator Ricardo Monreal, who is likely to lead Morena in the lower house when the modern Congress begins operating in September, said the role of lawmakers is to include “issues that can improve, enrich or modify the presidential proposal.”

“We will respect all statements, points of view; we will oppose internal and external pressures, and we will respect our principles and commitments,” Monreal said in an interview.