USMCA’s Energy Disputes Could Impact Automotive Industry
Home > Automotive > Article

USMCA’s Energy Disputes Could Impact Automotive Industry

Share it!
Sofía Garduño By Sofía Garduño | Journalist & Industry Analyst - Thu, 08/25/2022 - 17:31

The Mexican Association of the Automotive Industry (AMIA) warned that if the consultations requested by the US and Canada about Mexico’s policy to favor state-owned energy companies under the USMCA turns out against Mexico, its economic repercussions could affect the supply chain of the automotive industry. This situation could also hamper Mexico’s transition towards electromobility. Nonetheless, authorities urge society to remain calm.

 

“[The consultations] are a mechanism that should not give rise to panic or fear, there are no catastrophic scenarios where I open the door and fall to the floor. This is a tool to solve differences where capable adults that are partners understand that they have a trade mechanism that benefits everybody,” said Tatiana Clouthier, Mexico’s Minister of Economy, as reported by Milenio.

 

The consultations over energy started yesterday and the three countries will have 45 days to exchange points of view. If no agreement is reached, a panel of dispute resolution will have to be established, according to IMCO. The US initiated the request to open the consultations as it claims that the Mexican policy is affecting US companies in the energy sector. Canada backed this decision but it is representing its own perspective and interests. “We agree with the US that these policies are inconsistent with Mexico’s USMCA obligations,” said Alice Hansen, Spokeswoman for Mary Ng, to Reuters.

  

The AMIA is concerned about the outcome of this dispute because, according to the organization, if both countries do not align with Mexico’s posture, the manufacturing of vehicles could be hampered and the delivery of goods could be delayed, reported La Jornada. It also puts at risk the investment of US and Canadian companies. In 2021, 53 percent of the Foreign Direct Investment (FDI) came form US and Canada and 20 percent of the total FDI was destined to the automotive industry, as reported by Forbes.

 

“USMCA has provided certainty in the relationship between the US, Canada and Mexico. It also offers trade facilities that have attracted investments to produce in Mexico and later export to the US. This has mainly boosted investment in the auto parts industry,” said José Zozoaya, Executive President, AMIA, to MBN.

 

Despite the controversies, Marcelo Ebrard, Mexico’s Minister of Foreign Affairs, has said that the relationship with the US is not at risk. “The fact that we have a variance with the US regarding one topic does not mean that the bilateral relationship will collapse nor that we will withdraw from the agreement,” he said.

 

Tags:

You May Like

Most popular

Newsletter