Eric Martin, Bloomberg News
WASHINGTON
EnergiesNet.com 06 28 2022
On the eve of the two-year anniversary of the US-Mexico-Canada Agreement, Washington is preparing to escalate its complaints that Mexico’s state-favoring energy policies violate the pact, people familiar with the matter said.
The move would risk exacerbating tensions between the countries’ governments just as Mexican President Andres Manuel Lopez Obrador plans a visit to Washington in the coming weeks, after he snubbed President Joe Biden’s invitation to the regional Summit of the Americas in Los Angeles earlier this month. (To view Eric Martin’s full story, click here.)
Since taking office in late 2018, Lopez Obrador has worked to return the state-owned oil and gas producer Petroleos Mexicanos, known as Pemex, and power company CFE to their former glory by adopting policies that hurt private-sector participants in the industry.
The USMCA trade deal, mostly negotiated by the previous Mexican government but ultimately agreed to by Lopez Obrador, sought in part to protect private investors against an unwinding of the energy-industry opening.
US Trade Representative Katherine Tai’s office in recent weeks has been working on a request for formal consultations under the USMCA and discussing it with other agencies, according to the people, who asked not to be identified without permission to speak publicly. The timing for the request is still being determined, the people said.
Read More: Mexico’s GDP Expands Most in Year as Recovery Quickens
A spokesperson for the National Security Council said no decision has been made about a consultation request. USTR declined to comment.
Should the US win a panel case, and Mexico refuse to change its treatment of the energy industry, the US could strategically design retaliatory tariffs to maximize political and economic pressure, said Kenneth Smith Ramos, Mexico’s chief technical negotiator for the USMCA in 2018. It could do so by targeting sensitive products such as avocados, sugar or specific manufactured goods, he said.
“We’re talking about billions of dollars” in goods that could be affected, said Smith Ramos, now a partner at consulting firm AGON. “This could be extremely damaging for Mexican exports. Engaging with the US in a major trade dispute would definitely be a negative for the Mexican economy.”
—Eric Martin in Washington
bloomberg.com 06 27 2022
