USMCA-based Energy Policy Concern is Premature, Clouthier Says

Following a letter from US legislators to president Joe Biden, requesting him to address trade barriers to US companies in Mexico’s energy sector, Minister of Economy Tatiana Clouthier issued a response. Clouthier said the sector’s reorientation is more an industry issue than a foreign relations problem and that the government is ready for dialogue.

The letter which was sent on July 20, referenced a previous communication sent to the Trump administration. The main concerns outlined are “preferential treatment” for PEMEX and CFE, as well as delays or cancellation of permits in the energy sectors. Members of Congress considered these barriers as damaging for US-based companies in the Mexican energy sector and therefore clashing with the USMCA. Biden, who drives a green energy-based agenda in his own country, could use the trade agenda to push Mexico in a different reaction.  “Many industry participants were hoping that the election of Biden and the USMCA would be enough for the Mexican government to modify its position,” said Luis Vera, Managing Partner at Vera & Asociados to MBN. Nevertheless, by arguing the controversy in the energy sector as an industry matter within a sovereign country, many hoped that López Obrador would aim to make a U-turn. Nevertheless, several industry insiders, Vera included, think that the US could influence  Mexico as its main commercial partner. “Despite what the president says, we do depend on US cooperation. Energy is becoming a key topic, so I do have hope that it will eventually shift Mexican policy to avoid USMCA penalties,” he said.

In regards to the petition sent by members of US Congress, Clouthier said their anxiety is somewhat premature in an exclusive interview with Inside US Trade. The minister highlights that the USMCA does not include direct provisions for the energy sector, affirming that this will stay a sovereign matter for Mexico: “[USMCA] achieves full recognition of its sovereignty and capacity to change its legal framework, including the Constitution,” said Clouthier. What is more, many of the issues the US legislators see have not run their legal course yet and are therefore not a reality. “There are things that are happening in Mexico legally at this moment that are not clear yet [as to] what’s going to happen,” she stressed.

The table is being set for dialogue so that the industry can raise its concerns, explained Clouthier. If this does not work out, there are many other routes that can be taken before an appeal to the USMCA or a direct intervention from Biden becomes a reality