The US prepares a ‘coup’ for the energy sector in Mexico – El Financiero

The United States Trade Representative (USTR), Katherine Tai, will announce this Wednesday the request for dispute resolution consultations with Mexico under the United States-Mexico-Canada Treaty (T-MEC), since she considers that Mexico’s energy policy it violates the trade agreement and harms the investments of US companies, according to high-level Mexican sources who had access to a document signed by the USTR.

According to the sources, the United States accuses Mexico of giving unfair treatment to US companies and favoring both the Federal Electricity Commission (CFE) and Petróleos Mexicanos (Pemex).

“We have tried to work constructively with the Mexican government to address these concerns, but unfortunately, US companies continue to face unfair treatment in Mexico,” the document states.

The accusations are due to the Law of the Electric Industry of Mexico, which gives advantage to the distribution of energy generated by CFE over clean energy sources provided by private parties, in addition to delaying, denying and revoking permits for US companies to operate in the Mexico’s energy sector.

Currently, more than 100 applications for permits in the electricity sector are waiting to be resolved.

“We have repeatedly expressed serious concerns about a series of changes in Mexico’s energy policies and their consistency with Mexico’s commitments under the T-MEC. We will seek to work with the Mexican government through these consultations to resolve these concerns to advance North American competitiveness,” reads the document signed by Tai.

In this regard, César Hernández, former Undersecretary of Electricity and founding partner of the consulting firm Publius, pointed out that in this dispute Mexico “will hardly win”, since the energy issue is included in the T-MEC and there are several provisions of the treaty that have been seen affected by the regulatory and legislative measures of the local government in the energy sector.

“For Mexico the risk is that in a year and a fraction it will have to eliminate the measures or face tariff reprisals. The controversy is a way to institutionally channel the harshness that already existed in the energy issue, ”he told El Financiero.

In his opinion, it will be difficult for the Mexican government to maintain that its energy policy does not violate the T-MEC, and that this violation would not have costs for the rest of the economy, including the export sector.

Multi-million dollar impact

Kenneth Smith, former chief negotiator of the T-MEC, pointed out that although controversies are normal in large-scale trade agreements, the big problem is that investments in the energy sector are multi-million dollar, and could have a strong impact on all sectors of the economy. economy.

“The meetings did not work for Mexico. Despite Mexico’s attempts to offer solutions individually with US companies, it was not enough, and the dialogue they had in the United States in private did not work either,” said the AGON consulting partner.

Smith stressed that the problem could be greater because actions of the same order from Canada, which also has investments in the energy sector, can be added, so they would be “amounts never seen before”, as well as individual legal actions. by those affected.

“We are talking about billions of dollars in damages. This can have a very important impact on exports from the agricultural sector, appliances, steel, everything that is finished products, where there is also US production, ”he warned.

“I hope that this can be resolved in the consultation phase, that we do not go to a panel because I believe that the United States is right, and it will not reach the Mexican government if it comes out to say that there are no energy commitments in the T-MEC”, he pointed out.

Less than a month ago, Tatiana Clouthier, Secretary of the Economy, assured that good news was expected in this regard, after the representative Tai threatened with the request for consultations.

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