Canada Aims to Solve Energy Dispute During Leaders’ Summit

This week, political leaders from Canada, Mexico and the US will meet in Mexico City for the North American Leaders’ Summit (NALS). Canada’s Prime Minister Justin Trudeau said that he aims to solve the dispute regarding energy policy measures that prioritize Mexican companies during the summit.

In July 2022, the US and Canada requested to open consultations with Mexico under the USMCA Dispute Settlement Chapter. Both countries claimed that Mexican energy policies were discriminatory and undermined foreign companies. An initial 75-day period to resolve the dispute was extended. Most experts believe that Mexico would lose in the ruling issued by a panel that will be established if no agreement is reached.

Trudeau said he was confident that progress on this issue would be made during the NALS. "President Biden and I are going to be fairly clear with President López Obrador. This needs to be understood as a way to help Mexico develop, a way to continue to draw in investments from companies in Canada and the US," Trudeau told Reuters.

Moreover, the prime minister stressed he understood President López Obrador’s efforts to strengthen state-owned energy companies, however, “he has to do it in a responsible way and abide by the rules,” Trudeau said.  

Mexico’s Northern neighbors have criticized President López Obrador's controversial decision to keep favoring energy production through hydrocarbons instead of using cleaner energy sources. "Canadian companies invested about CA$13 billion (US$9.7 billion) in energy infrastructure. In Mexico, CA$5 billion (US$3.7 billion) of that is specifically around renewables," Trudeau pointed out. 

According to José María Ramos, Researcher, North Frontier College of Mexico (COLIEF), President Biden and Prime Minister Trudeau have so far tolerated Mexico’s stance in the dispute to avoid a USMCA panel that could lead to far-reaching economic measures. "I hope we see something with a little more substance in the summit because while it is important to have these meetings, they are not the forum to propose unrealistic things, but really to get serious about competitiveness and investment in North America," Ramos told the San Diego Union-Tribune.

President Biden arrived in Mexico City on Jan. 8, 2023, at the Felipe Angeles International Airport (AIFA). There, President López Obrador welcomed him along with Foreign Minister Marcelo Ebrad. Prime Minister Trudeau is expected to arrive on Jan. 9, 2023. President Biden and Prime Minister Trudeau will remain in Mexico City for a three-day visit.