Energy: Washington begins operations against Mexico

Posted July 20, 2022, 6:36 pm

After investors, the Mexican president has alienated the US government. The United States announced on Wednesday that it would initiate measures against Mexico over a disagreement over energy policy that replaces their free trade agreement under the TMEC agreement.

Washington takes a dim view of the fact that Mexico has taken protectionist measures in its public sector, particularly in the energy sector. The White House says it penalizes companies that have already invested in Mexico.

Tens of billions of dollars in investments are at stake

The US practice is part of the United States-Mexico-Canada Agreement (USMCA), which will replace the 1994 North American Free Trade Agreement (NAFTA) in effect from July 2021. The parties are now required to hold consultations within 30 days. Without a resolution within 75 days, Washington could seek the intervention of a dispute settlement panel, which could lead to punitive tariffs against Mexico. However, the goal is to find a way to avoid it, senior US Commerce Department officials told reporters. Within the framework of the USMCA, only one subject has been subject to a process so far: dairy products. The United States has initiated two actions against Canada.

Tens of billions of dollars in investments from clean energy providers could be threatened by the Mexican practice, according to announcements from Washington. The case is not without consequences for the economic future and environmental change, as it “discourages investors from clean energy providers and companies,” says U.S. Trade Representative Catherine Toye.

A wave of cancellations of energy projects

The Mexican electricity sector was liberalized in 2013 under the mandate of Enrique Peña Nieto. Subsequently, American companies rushed to invest in the country. Upon his arrival, President Andrés Manuel López Obrador broke with the policies of his predecessors.

This has led to waves of project cancellations, violations of concession contracts and actions favoring public companies CFE (electricity) and Pemex (oil and gas). This is despite the promises of 2019. However, Mexican representatives rejected a constitutional reform plan in April, a flagship move by the nationalist leftist president, that had planned to further strengthen the role of the CFE institution. Foreign companies.

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