Mexico May Face USMCA Dispute Panel

The US government has called for measures that could lead it to form a dispute panel under the US-Mexico-Canada Agreement (USMCA) due to Mexico’s alleged violations of the trade deal if a consultation period proves to be unfruitful, El Economista reported.

Due to Mexico’s alleged violations of the USMCA in the energy sector, the US administration opened a consultation period with Mexico under the Dispute Settlement Chapter in July. According to US officials, Mexican energy policies violate the agreement by favoring PEMEX and CFE over private companies, thereby affecting US companies operating in Mexico. After 75 days, the consultation period ended in early October without yielding a solution, but since neither party wished to escalate the dispute, many believed the consultation period would be extended. Nonetheless, if the US government does not see a favorable outcome, it may well request a dispute panel against Mexico. 

Tatiana Clouthier, Mexico’s former Minister of Economy, revealed in an interview with La Jornada, that Rocio Nahle, the country’s Minister of Energy, complicated the negotiations to avoid a dispute settlement panel. "The position of the Minister of Energy, Rocio Nahle, is not to compromise, which makes it difficult to come to an agreement. She does not want to give in to anything,” Clouthier said.

Several US companies operating in Mexico that saw themselves affected by Mexico’s regulatory changes, of which the reform to the Electricity Industry (LIE) stood out, have filed for amparos. The US Department of Commerce indicated that at least two of these injunctions have resulted in general suspensions. With the reforms, President López Obrador hoped to modify the electricity dispatch system in order to favor the CFE’s power plants, grant permits according to criteria established by the energy ministry and grant Clean Energy Certificates (CELs) to CFE’s older power plants. The government furthermore aimed to remove CFE’s obligation to purchase clean electricity developed by private companies at auctions and to review contracts signed with private players in the past.