Canada Will Not Escalate Trade Dispute with Mexico

During a visit to Washington, Mary Ng, Canada’s Trade Minister said that no immediate action will be taken to escalate the ongoing trade dispute with Mexico over the latter's energy policies. The decision followed the steps taken by Mexico to engage with Canadian energy companies.

Ng expressed satisfaction with the efforts of Raquel Buenrostro, Mexico's Minister Economy, to engage in dialogue with Canadian companies regarding Mexico’s controversial energy legislation. "I am satisfied that Buenrostro has been reaching out and starting the dialogue with Canadian companies. I think that is a positive step,” says Ng.

Mexico's decision to limit private companies' involvement in its energy sector sparked a dispute with Canada, which alleged that the move violated the terms of the USMCA trade agreement. Thus, Canada requested dispute settlement consultations.

President López Obrador reportedly met with the representatives of Canada's second-largest pension fund, The Caisse de Dépôt et Placement du Québec, in January, regarding the issue. The US$290 billion fund had US$5 billion in assets in Mexico as of the end of 2021 and partnered with CKD Infraestructura México, a consortium of institutional investors, to invest in infrastructure projects.

“We are going to be keeping a close eye on this situation to make sure that the provisions of our trade agreement are being met,” says Ng. “Ultimately, it is making sure that the investments down there are met with the predictability of the rules that they have got.”

Ng also met with Katherine Tai, US Trade Representative to discuss working together to address Mexico’s energy policy. In March, the National Association of Manufacturers, the American Clean Power Association and the American Petroleum Institute (API) called on the US Trade Office to act against Mexico for allegedly implementing discriminatory energy policies.

In addition to the ongoing trade dispute, the US has been engaged in separate talks with Mexico regarding broader energy policy issues. These talks have reportedly been ongoing for seven months but have yet to yield a resolution. The three countries are seeking to balance the competing interests of trade diplomacy, and national sovereignty. Additionally, tariffs would have a severe impact on the significant US$1.4 trillion in annual trade between the three economies.