US says Mexico Must Allow Fair Competition in Energy Sector
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US says Mexico Must Allow Fair Competition in Energy Sector

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María José Goytia By María José Goytia | Journalist and Industry Analyst - Mon, 01/17/2022 - 16:31

Jayme White, US Deputy Commercial Representative, has highlighted the need for an energy policy in Mexico that promotes fair competition and the production of green energy to fight climate change. These concerns come as the Federal Government continues to favor CFE against the private sector in energy production.  White held a virtual meeting with the Mexican Undersecretary of International Commerce, Luz María de la Mora to discuss these policies.

Through a written statement, the US Commercial Representation shared “Mr. White emphasized [during the call] the importance of priority areas such as effective fishing, conservation of marine wildlife, energy policies which promote fair competition and the production of green energy to fight climate change.” 

White’s statement comes along with the publication of an open letter sent to the US Commercial Representative, Katherine Chi Tai, where the US Senate displays concern with unfair competition in the energy sector in Mexico and further violations of the USMCA. The letter was written by Senator Ron Wyden, President of the Finance Committee at the US Senate, and Senator Mike Crapo.

According to the senators, the current Mexican energy policy gives preference to state-owned companies (CFE and PEMEX) above private companies, which also represents a violation of the USMCA free trade agreement. Wyden pointed “the Mexican government is actively applying policies to benefit their state electricity provider and their oil company at the expense of private competitors who often offer cleaner energy options.”

The letter also highlights the suspension of importation permits to more than 80 energy companies, jeopardizing US investments in Mexico.  These complaints also show concern in regards to the electric reform proposed by President Andrés Manuel López Obrador last October and the effect it has generated in the energy private sector. Wyden also mentioned “Mexico suspended importation permits to more than 80 energy companies, canceled permits for the installation of energy importation, and is moving forward a constitutional reform bill that will dissolve the Mexican electric market, eliminate independent regulators and cancel contracts and permits yield to private companies.”

Other concerns regarding Mexico come from the agriculture sector, e-commerce, the environment, and telecommunications. The letter ends with a declaration stating that “if Mexico and Canada do not comply to commitments acquired in the USMCA, the US should deny all the benefits promised in the treaty”. The declarations from the Senate and the US Deputy Commercial Representative follow previous declarations by the US Ambassador in Mexico, Ken Salazar, as the country is starting to move its diplomatic network more strongly in favor of fair competition and free trade in the face of the potential approval of the electric reform.

Photo by:   Secretaría de Economía on Twitter

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