US Energy Associations Urge Biden to Pressure Mexico
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US Energy Associations Urge Biden to Pressure Mexico

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Eliza Galeana By Eliza Galeana | Junior Journalist & Industry Analyst - Mon, 03/13/2023 - 12:55

On March 10, 2023, the American Petroleum Institute (API), the American Clean Power Association (ACP) and the National Association of Manufacturers (NAM) urged US President Joe Biden to pressure Mexico to address complaints about its purported nationalist energy policy. 

The US associations issued a letter to Katherine Tai, the US Trade Representative, alleging that Mexico failed to engage constructively in consultations that started in mid-2022, nor has it taken meaningful steps to address the issues the US raised in the past months. “Our organizations respectfully urge the Biden administration to continue to hold Mexico accountable by using all available tools to enforce the USMCA treaty,” the letter reads. 

According to API, ACP and NAM, Mexico’s discriminatory policies favor state-owned electricity and oil and gas companies CFE and PEMEX over the private sector, threatening companies in the US and therefore their workers. Moreover, they stated that these actions undermine North America’s energy integration as well as constrain regional competitiveness compared to China and other countries. “It appears that the administration of Mexican President Andres Manuel López Obrador will not change the course of his country’s energy policy without continued, direct and forceful pressure from the US government,” they wrote. 

In January 2023, Raquel Buenrostro, Mexico’s Minister of Economy, assured that the Mexican government was making progress over talks with its counterparts in the US and Canada. Likewise, she claimed in an interview with El Economista that it was a misperception that the Mexican government was favoring state utilities over private companies since regulatory changes had been nullified as they were put on hold due to a series of amparos: “The truth is that the law applied in Mexico right now is that of the 2014 Energy Reform. So, the question is, why do they feel that priority is being given to CFE?” she said.

In addition, Buenrostro stated that the solution to the energy dispute would be solved by strengthening the national electricity transmission system and by speeding up permit procedures that had been lagging due to the COVID-19 pandemic. 

In early March 2023, Representative Tai said her office is working with Mexico to address US concerns. In October 2022, Tai stressed that she would not rule out requesting the formation of a panel to resolve the conflict and that the US will only remain in talks for as long as those consultations are “meaningful.” The dispute sees more than US$10 billion in US investment at risk due to the arbitrary treatment of firms, especially in the renewable energy sector. 

In July 2022, around the time the first complaints by the US and Canada were filed, former officials who negotiated the agreement told Bloomberg that, If the problem were to scale up to the establishment of a dispute panel against Mexico, the country could face tariffs for as much as US$30 billion in exports.

Photo by:   Envato Elements

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