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News Article

Trade Conflicts Persist Between Mexico and the US

By María Fernanda Barría | Thu, 04/08/2021 - 08:00

The Office of the US Trade Representative (USTR) presented its report “Foreign Trade Barriers 2021” and suggested that Mexico and the US are having complicated trade relationships, Reuters informs. The report remarks that "The US has raised concerns with Mexico regarding the deteriorating climate for US energy investors in Mexico, emphasizing that the US government is committed to ensuring that US investors are treated fairly and that Mexico adheres to its USMCA commitments." The report also informs that US foreign direct investment in Mexico was nearly US$100.9 billion in 2019, a 5.2 percent increase against 2018.

Andrés Manuel López Obrador has been very supportive of the Electricity Industry Law. As previously reported by MBN, the reform favors power generation through the state utility CFE over private companies to gain national electricity sovereignty. "The reform is to strengthen CFE, to protect consumers from paying more electricity," declared López Obrador, BBC informs.

Since 2013, the Mexican government has allowed private companies to explore and extract hydrocarbons and participate in downstream operations. USTR highlights that the suspensions of oil auctions have raised disconformity among investors. In addition, the Mexican hydrocarbons law restricts foreign investors' ability to seek international commercial arbitration with the government. Instead, parties must resolve the dispute through the Mexican court system. "Investors are increasingly concerned that Mexico is also weakening the political autonomy of independent regulators," the report emphasizes. Some issues persist as US energy companies have protested due to unsatisfactory practices such as unnotified regulatory policy changes, delays and discriminatory enforcement of regulations.

In 2020, the Federal Economic Competition Commission (COFECE) filed a constitutional controversy before the Nation's Supreme Court of Justice. The institute remarks that the economic structure of the electricity sector is seriously affected. The new electricity law initiative eliminates companies' possibility of operating under competition and efficiency conditions and under the regulatory framework's terms. Juan Pablo Gómez Fierro, judge of the Second District Court in administrative matters, who is specialized in economic competition, granted a definitive suspension to the first companies that filed an amparo to invalidate the latest modifications to the energy initiative, Expansión informs.

"Damage has already been done to the renewable energy investment environment in recent years with national policy reforms such as this bill. It represents a threat to investment by the local and foreign private sector," declares The Global Wind Energy Council and the Global Solar Council, who represent companies from the US, Canada and other countries, BBC informs.

The data used in this article was sourced from:  
Reuters, MBN, BBC, Expansión, USTR, COFECE
María Fernanda Barría María Fernanda Barría Junior Journalist and Industry Analyst