Mexico’s Energy Sector Drawing Concerns from US and Canada

One year after the ratification of the United States-Mexico-Canada Trade Agreement (USMCA), Mexico’s Secretary of Economy Tatiana Clouthier, US Trade Representative (USTR) Katherine Tai, and Canadian Minister of Small Business, Export Promotion, and International Trade Mary Ng met in Mexico City to discuss trade agreement achievements and long-term growth opportunities. During their meetings, both Tai and Ng expressed concerns regarding Mexico’s energy sector policies.

Tai told reporters that the US is closely monitoring Mexican President Andres Manuel Lopez Obrador’s administration energy policies stating that “we are raising our concerns. We are here to engage” without specifying.   

This comes after the Mexican government chose its state-owned PEMEX to run the potentially lucrative Zama oil field, estimated to hold 700 MMOBE after its discovery in 2017 by Talos Energy, a US offshore energy company. The US company expressed great disappointment with the Ministry of Energy’s decision, especially since the company has invested over US$350 million  and has expressed a willingness to explore legal options.

However, when Tai was asked if SENER´s decision was a violation to the USMCA agreement she skirted past the question saying she “has been a commercial lawyer for 20 years, and the number one rule is to never declare a violation, and much less as commercial representatives.”

Ng emphasized “ongoing concern [about] the investment climate in Mexico Specifically in energy” which totals to nearly CAD$13 billion. In addition, she underlined the importance of a stable, predictable market in order for North America to make a full transition to sustainable energy.

Ultimately, both the US and Canada have vested interests in ensuring that their domestic business’ investments are protected abroad so bilateral cooperation with the Mexican government is essential. A difficult task considering AMLO´s clear preference for domestic enterprises. However, considering the country’s GDP has shrunk by almost nine percent in 2020, AMLO might be open to negotiation, so as to jump start economic activity.

USTR closed by saying that the “visit served to highlight the important ongoing work to implement the USMCA and noted the importance of collaboration and cooperation in key areas.”