Canada joins US in advocating Mexico’s energy policies

(Reuters) – The United States and Canada on Wednesday called for dispute settlement consultations with Mexico under the North American trade agreement over the Latin American nation’s energy policies which they consider discriminatory and which, they say are “harming” international businesses and cross-border supplies.

The request, announced first by the Office of the United States Trade Representative (USTR, for its acronym in English), represents the most serious dispute between Washington and Mexico since the entry into force of the treaty between Mexico, the United States United and Mexico. Canada (known as T-MEC or USMCA). If left unresolved, it could result in punitive tariffs from the United States.

Canada’s Commerce Department later told Reuters it would launch its own energy consultations with Mexico and that it “stands with the United States in its challenge.”

“We agree with the United States that these policies are inconsistent with Mexico’s (USMCA) obligations,” Department of International Trade spokeswoman Alice Hansen said in a mailed statement. electronic.

Mexico’s economy ministry said in a statement Wednesday that it had received the Canadian request, which had some similarities to the US request.

The ministry also said it would seek to coordinate with the two governments to discuss the scope of their demands, and that the Mexican government was willing to reach a “mutually satisfactory solution” to the energy dispute.

The USTR explained that the requested consultations refer to measures that it claims harm US companies in favor of the Mexican state’s Federal Electricity Commission (CFE) and Petróleos Mexicanos (Pemex).

Mexican President Andrés Manuel López Obrador promised to reactivate Pemex and CFE.

The United States is now arguing that its efforts to bolster state-owned enterprises appear to contravene Mexico’s commitments in the T-MEC.

“We have repeatedly expressed serious concerns about a series of changes in Mexico’s energy policies and their consistency with Mexico’s commitments under the USMCA,” said U.S. Trade Representative Katherine Tai.

The US measure is a blow to Mexico and comes just a week after López Obrador met his counterpart from the neighboring country, Joe Biden, in Washington and announced that US companies planned to invest billions of dollars in the Mexican energy sector.

Will the United States invest US$40 billion in Mexico? 2:46

Later, López Obrador assured that there were no problems since his country was acting according to the law.

“We will receive the proposal, it will be analyzed (…) and we will respond to it quickly,” said the Mexican president. “There is no violation of the treaty (T-MEC). There is no problem, everything we do in energy is in accordance with the constitution, with our laws.”

“Unfair treatment”

Tai, the U.S. Trade Representative, argued that the policy changes being undertaken by Mexico affect U.S. economic interests across multiple sectors and are “deterring investment” from renewable energy providers and companies looking to buy. clean and reliable energy.

In April, Mexico’s Supreme Court upheld controversial electricity legislation passed in 2021, which establishes that the CFE must take precedence over private electricity providers when shipping or commissioning plants.

López Obrador says his measures will benefit consumers and make Mexico more self-sufficient. The opposition says they will raise electricity costs, undermine investor confidence and violate Mexico’s clean energy commitments.

The USTR explained that it is challenging amendments to Mexican law that prioritize the distribution of electricity produced by the CFE over cleaner energy sources supplied by private sector suppliers, such as the wind and solar.

The USTR noted that Mexico has also “delayed, refused or failed to act” on permit applications for renewable energy facilities and to store, transship or sell fuels, making it difficult for companies to participate. private, echoing the complaints of Mexican lobbyists.

“We have tried to work constructively with the Mexican government to address these concerns, but unfortunately American companies continue to experience unfair treatment in Mexico,” Tai said.

However, the Ministry of Economy, the agency responsible for coordinating the defense of the Mexican state, said in a statement that it hopes the dispute will be resolved.

“The Mexican government expresses its willingness to reach a mutually satisfactory solution during the consultation phase,” he said in a statement.

In June, Ken Salazar, US ambassador to Mexico, said the Latin American country’s energy policies had put some $30 billion in US investment projects at risk.

Under USMCA rules, if the complaint is not resolved within 75 days, the USTR may request a panel to review the claims.

Alvin Nguyen

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