US Congress Asks to Investigate Mexico for USMCA Violations

A series of formal complaints from US authorities against President López Obrador's energy reform have arisen as Republican congressmen asked the Biden administration to investigate Mexico for violations against the recently renewed USMCA agreement.

Last week, 40 Republican congressmen signed a letter asking Democrat Carolyn Maloney, Chairwoman, House Committee on Oversight and Reform, to convene a hearing and investigate how Mexico fails to comply with its energy-related commitments under USMCA.

Louisiana’s Republican Congressman Clay Higgins started the initiative. The complaint highlights the threat to US companies created by President López Obrador's energy reform. The president's initiative seeks to reduce private participation in the energy sector to 46 percent and to cancel the contracts that the private sector currently has with state utility CFE. "The Mexican government is escalating efforts to exclude private companies from its energy sector and is effectively nationalizing the energy industry by closing the opportunity to all foreign competition," argued the Congressmen.

Higgins also notes that Mexico’s National Guard has seized energy assets from US companies, closing them “illegally” but offering no course of action to reopen the assets. These issues put US$20 billion worth of energy assets at risk.

The letter criticized the Biden administration for allowing PEMEX to acquire the Deer Park refinery in Texas, which it calls "a stunning embarrassment and another great example of the president's anti-US energy policy."

"The Biden administration cannot continue to allow Mexico to contradict its commitments acquired through USMCA or to seize US oil and gas assets without consequences. The House Committee on Oversight and Reform must fully investigate the oppressive and illegal actions of the Mexican government," concluded the letter.

Republicans have long pressed the Biden administration to defend US companies, amid the Mexican government's efforts to nationalize its energy sector by canceling operating permits and reforming regulation. The Mexican government has already received Secretary of Energy Jennifer Granholm and Special Envoy on Climate John Kerry. During those visits, both high-ranking officials communicated concerns from US investors about the energy reform and the Biden administration's fear of Mexico’s lacking commitment to combat climate change. Ambassador Ken Salazar has also repeatedly shared the US government's position on the risks that the energy reform poses to bilateral integration.