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News Article

Canada Joins the US with Claim Against Mexican Energy Policy

By Anamary Olivas | Thu, 07/21/2022 - 18:49

Canada’s government said it would be joining the US in starting consultations regarding Mexico's energy policies, amid trade dispute talks over the latter country’s nationalist energy policies. They argue that Mexico’s restrictions have undermined international companies investing in clean energy and that they are inconsistent with the USMCA trade agreement.


The US was the first to launch its complaints and requested consultations within the framework of the USMCA on the energy policies, which it considered to be discriminatory and harmful for its companies investing in Mexico. Now, Canada is following suit. "We are joining the US in taking action by launching our own consultations under the USMCA to address these concerns, while supporting the United States in its defiance," Alice Hansen, a spokesperson for Canada's International Trade Minister Mary Ng, said in a statement sent to Reuters.


Billions of dollars’ worth of US and Canadian investments in Mexico's energy infrastructure are at stake in the disputes. Canada's trade ministry sets the investment figure for Canadian firms at US$10.1 billion, including more than US$3.9 billion in renewable energy. This has led the Canadian government to formally express its discontent with Mexico’s decision-making regarding the private energy sector.


Despite the mounting pressure, President López Obrador, who recently met with his counterpart Joe Biden in Washington, downplayed the situation and reassured that Mexico was not violating the USMCA. He stated that his administration would defend its policies rigorously during his daily morning press conference.


The USMCA-based grievances originate from López Obrador’s effort to promote energy sovereignty and overturn the 2014 Energy Reform approved by his predecessor, which opened the market to private investment. The government’s regulatory changes and its spending of billions on support to state-owned enterprises such as PEMEX and CFE have given, in the eyes of Mexico’s northern neighbors, an unfair advantage to public companies, leading to an unbalanced market.


“There is real concern that Mexico is the only country not on board to truly build a paradigm of North American energy efficiency, security, resilience and independence on renewables, on hydrocarbons, on the green economy and on climate change,” said Arturo Sarukhan, former Mexican Ambassador to the US. If the dispute is not settled, Mexico could face retaliatory measures under the USMCA, including payments for damages. If the claim is not resolved in 75 days, the countries can request a dispute panel to review the claims.


Photo by:   David Mark
Anamary Olivas Anamary Olivas Journalist & Industry Analyst