The US and Canada are seeking trade dispute talks with Mexico over the country’s nationalist energy policies, which they argue have undermined international companies investing in clean energy.
Washington accused Mexico of failing to meet its obligations under the US-Mexico-Canada Agreement (USMCA) by favouring state-run utility Federal Electricity Commission (CFE) and oil company Petróleos Mexicanos (Pemex). This came at the expense of US and other private firms that have poured billions of dollars over the past decade into the clean energy sector in Mexico, it said.
“Mexico’s policies have largely cut off US and other investment in the country’s clean energy infrastructure,” US trade representative Katherine Tai said in a statement on Wednesday.
Canada followed the US’s lead and requested its own consultations under the USMCA trade pact. “Canada has consistently raised its concerns regarding Mexico’s change in energy policy. We agree with the United States that these policies are inconsistent with Mexico’s USMCA obligations,” a spokeswoman for Mary Ng, Canada’s international trade minister, said in a statement.
Mexico president Andrés Manuel López Obrador made light of the US’s complaint at his morning press conference by saying “nothing is going to happen”. He then played a song from Mexican artist Chico Che with the title: “Oh, how scary!”
“It seems like the United States government is revealing itself to us and we are answering: they are supporting corruption,” López Obrador said.
Mexico’s economy ministry said the country wanted to reach a “mutually satisfactory solution” during the consultation stage.
If no agreement is reached within that 75-day period, USMCA rules allow the US to request the formation of a dispute settlement panel.
The complaint brought by the US accuses Mexico of restricting market access, failing to protect investment and pushing policy changes that curb the use of clean energy from private producers.
The US statement takes aim at, among other things, a 2021 change in Mexico’s electricity law that gives priority to power generated by the CFE — including from its coal-fired plants — over renewables such as wind and solar, which are produced by private companies.
The letter adds to tensions between the countries following US complaints that Mexico is failing to live up to its USMCA obligations on energy issues and putting little importance on climate change.
López Obrador has pledged to promote “energy sovereignty” in Mexico in a reversal of a reform approved in 2013 that opened the electricity and petroleum sectors to private investment. A leftwing populist and nationalist, the president has been hostile towards investors in the sector and questioned the value of clean energy.
Arturo Sarukhán, a former Mexican ambassador to Washington, said “There is real concern that Mexico is the odd man out in efforts to truly build a paradigm of North American energy efficiency, security, resilience and independence — on renewables, on hydrocarbons, on the green economy and on climate change.”
Mexico could face retaliatory tariffs under the USMCA if the complaint remains unresolved, but Sarukhan said “we still have a long process ahead of us”.
The request for the dispute settlement consultation also follows a White House meeting between López Obrador and US president Joe Biden on June 12. A joint declaration after that meeting stated the two countries’ acknowledgment of “the importance of investing in and promoting renewable sources of energy.”
López Obrador subsequently said private investment would be permitted in solar projects so long as it was partnered with the CFE.
Source: Economy - ft.com
