The American Petroleum Institute urged the Secretaries of State, Energy, Economy, and the United States Trade Representative to demand that the Mexican government comply with the commitments acquired in international treaties.
In a letter, the American Petroleum Institute (API) urged the Secretaries of State, Energy, Economy, and the United States Trade Representative to demand that the Mexican government comply with the commitments acquired in international treaties.
The API is a conglomerate of exploration, production, and services companies of the American Union, which have been said to be affected by the reform of the Hydrocarbons Law that came into force last Wednesday and that has generated at least 50 applications for protection.
This is the second call made by the body so far in the administration of President Andrés Manuel López Obrador, after the first letter sent in July 2020.
In the letter that Mike Sommers, president of API, sent to several United States secretaries, he requested that compliance with treaties such as the USMCA be the main topic of discussion at the next meeting of the Free Trade Commission that Tatiana agreed. Clouthier, Secretary of the Economy; and Katherine Tai, United States Trade Representative.
“We encourage you to continue to interact diplomatically with President López Obrador and his cabinet-level counterparts in Mexican agencies to urge the Government of Mexico to uphold its USMCA commitments to treat US investors and exporters in a manner fair, ”Sommers stated in the letter.
He noted that energy is critical to driving economic growth, creating jobs in all three countries, and consolidating North America’s global competitiveness, where over the past 25 years, North American energy markets have become increasingly more intertwined and interdependent.
“Unfortunately, we have seen continuous efforts by the López Obrador administration to undermine that agreement and discriminate against US investors in violation of the commitments made by Mexico in both NAFTA and the USMCA,” he said.
In this sense, he pointed out that “President López Obrador has increased such actions, both in scope and severity, to change the fundamentals of the energy sector in Mexico. He has spearheaded important amendments to two laws, the Electricity Industry Law and the Hydrocarbons Law, to change market rules in favor of Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) and against private companies. ”.
Miriam Grunstein, a senior partner at Brilliant Energy Consulting, warned that the letter could be the first wake-up call before initiating international arbitrations under the USMCA.
“This letter is a wake-up call of what could already be a warning of a major investment arbitration, because we are talking about an expropriation, and not only indirectly because you lose possession of the infrastructure and the product,” he said.
“Even if it is not directly posed as an expropriation, it increasingly smells of expropriation, and the USMCA is very clear that these types of acts are evidently in violation of the property rights of the parties. We are hearing the bells of investment arbitration, “he said.
For his part, Rogelio López-Velarde, managing partner of Dentons Lopez-Velarde, said that the letter is a great alert that says: “Here comes the wolf.”
“138 permits (to operate hydrocarbons) are going to expire and all the measures that the current government has taken in the energy sector are violating international treaties, which in Mexico have the category of supreme law and must be complied with. They do not want to allow private participation in the energy sector and that violates the treaty, “he commented.
“We have 29 reciprocal protection treaties and 14 free trade treaties, and in these agreements, there is a chapter on investment protection, and Mexico is violating principles that are called minimum treatment, and discriminatory treatment because state companies are being favored, in violation of the Law, ”he said.
He stated that the suspension and intervention established by the reform to the Hydrocarbons Law for permit holders who fail to comply with the regulation is actually a disguised form of expropriation, which is known as ‘de facto’.
“Now the expropriations are indirect, disguised, they beat you until you have no choice but to sell or deprive you of your investment,” he said.
“In addition, there may be indirect expropriations, at the moment the border is closed and you cannot import, they are expropriating the possibility of investing,” said the expert on legal issues.