Fernando Ruiz, director general of the Mexican Business Council for Foreign Trade, Investment and Technology (Comce), added that the agency in charge of Tatiana Clouthier knows the details of T-MEC and these types of disputes.

“We are very calm because it is a very well prepared team, moreover we are not going to have any problem”, he declared.

However, Mexico does not have everything in its favor in this case.

What is it about?

Both Canada and the United States consider that the changes promoted by the federal government give unequal treatment to private competitors compared to productive state enterprises.

Analysts consulted agreed that the federal government’s energy policy is not in line with the T-MEC, since there is a commitment not to affect partner country investment with domestic legislation. In other words, the same treatment must be accorded to domestic and foreign companies. The agreement also provides that state-owned enterprises must not affect free trade and the supply of services.

“There are a series of provisions that seem very difficult to reconcile, such as the clear preference that they want to give to the CFE and to Pemex, the procedures, the permits, the licenses, which the government has not given private companies,” said Baker, currently a professor at Pan American University.

What if the United States and Canada were right? “Mexico should change its legislation so that the things that have been requested comply with the T-MEC,” he explained.

If the Mexican government fails to do so, he added, tariffs could be imposed on domestic exports to compensate for the damage.

“If that happens, the truth is that all of Mexico’s exports would be at risk,” Baker said.

The countervailing duties or tariffs would be imposed for a period of time to cover the damages that, in the opinion of Mexico’s trading partners, have been generated, commented Ruiz, the director of Comce.

President López Obrador said last week during his morning conference that Mexico is not violating T-MEC and that they have already spoken with 19 companies, of which agreements have already been reached with 17. The president does not did not reveal the names of the companies.

In this regard, Ruiz said he will continue the negotiation “company by company” and hopes that the energy dispute will be resolved during the consultation phase.

The process

Consultations are the first step in the dispute settlement mechanism set out in the trade agreement. Once Mexico receives the formal request from its two T-MEC partners on July 20, it has 30 days (until August 20) to begin dialogue with the two.

The consultation phase will last 75 days and, failing agreement, a panel of experts will be formed, the duration of which varies from six to seven months.

However, there are no fatal deadlines and, if the parties agree, they can extend the deadlines, recently told Expansión the Undersecretary for Foreign Trade of the Ministry of Economy, Luz María de la More.