Associations Look to US Trade Representative in USMCA Spat

The National Association of Manufacturers and the American Clean Power Association, led by the American Petroleum Institute (API), are urging The Office of the US Trade Representative government to hold Mexico accountable for creating discriminatory energy policies that may have breached the USMCA agreement.

Concerns have been growing among the US oil and energy sectors as President López Obrador´s energy policies have curbed the ability of private companies to participate within the country´s energy sector, especially when the government ensured to provide fair and equitable treatment to foreign investors and avoid discriminatory practices by signing the USMCA. 

As a result, the trio wrote a letter to the US Trade Representative, Katherine Tai, to ask her to help navigate the problem. According to Natural gas Intelligence (NGI), the letter urged that “[there should be] continued action to hold Mexico accountable for its discriminatory energy policy by using every tool available under the USMCA agreement.”

Aindriv Colgan, Director of Tax and Trade Policy, API, told NGI that the companies are facing issues with government permits. He stated, “I think the biggest issue for our members…is around permitting. There has been a systematic move by AMLO’s administration to deny, to delay the approval of even routine permits to private investors in Mexico.” Furthermore, he specified that API does not presume to intrude on Mexico’s Sovereignty, it is solely asking for the country to abide by the laws regarding the permission procedures. 

The hurdles created on the back of the government’s shift to a more state-controlled energy industry have caused a slew of problems for the private sector. It caused unrest and distrust within the sector and caused a loss in invested capital. Similarly, the sluggish development within the exploration production and distribution is noticeable.

Sean McCoy, Director, Edison Energy, told Mexico Business in 2021, that “the decline in foreign investment in Mexico’s power sector of more than 75 percent of its energy capacity could lead to increased unreliability of the national grid and the power sector as a whole.”

It is not the first time that the companies have raised this concern, as in 2022, the US requested a consultation with Mexico. This move appeared to not reap many results, as API told NGI “In our view, the government of Mexico has not engaged constructively in the consultation process with the US, nor has Mexico taken meaningful steps to address the issues raised by the US.”