Canada Emphasizes Concerns Regarding Energy Dispute
Canada’s Minister of International Trade, Mary Ng, met with Mexico’s Minister of Economy, Raquel Buenrostro, at the Pacific Alliance Summit. The US and Canada began a consultation process under the USMCA’s Dispute Settlement Chapter due to Mexico’s alleged violations of the trade agreement because of a shift in energy policy. The two ministers therefore discussed the issues regarding the agreement.
A couple of weeks ago, the US posed four questions regarding Mexico’s energy policy, regarding which Buenrostro announced that a team was already preparing the answers. Canada’s concerns revolve around the same issues. The Canadian government also highlighted how much Canadian companies invest in Mexico.
Canada’s concerns regarding its commercial relationship with Mexico include problems in the investment and regulatory environment in Mexico’s energy and mining sectors. Ng also raised concerns over the energy sector reform measures, stating that Canada could explore other resources to solve the dispute. In addition, she highlighted the importance of following science-based regulatory approaches when approving biotech.
Minister Ng underlined the importance of Canada and Mexico’s commercial ties and Canada’s commitment to strengthening their bilateral relationship. She discussed the importance of North American competitiveness for the maintenance of resilient supply chains, rules-based trade, and ensuring mutual economic growth.
Canada furthermore published that the trade between the two countries was valued at US$41.7 billion in 2021 and its direct investment in Mexico was valued at US$25 billion. Mexico is therefore Canada's ninth-largest direct investment destination. What is more, Canadian companies represent two-thirds of all the foreign investment in Mexico’s mining sector. Mexico is Canada's third-largest single-country merchandise trading partner, after the US and China. Lastly, Mexico has been identified as a priority market for Export Development Canada, which has operated a regional office in Mexico since 2000, providing extensive financial services related to Canadian exports and investments in the country, according to the Canadian government.
According to BloombergNEF, a defeat in the panel could mean a loss of at least US$22 billion in private investment for Mexico. In addition, the subsequent sanctions in energy could permeate other economic sectors such as agribusiness, automotive and manufacturing due to tariffs on Mexican export products.