The leaders of the United States, Canada, and Mexico are due to hold a summit next week, where a major bone of contention could be a dispute centering on whether Mexico breached a trade pact by tightening state control of its energy market.
WHERE DOES THE DISPUTE STAND?
Tensions over Mexico’s nationalist policies boiled over into a formal dispute in July, when Washington and Ottawa filed a complaint against Mexico under the United States-Mexico-Canada Agreement (USMCA) trade deal.
The complaint argued that Mexican President Andres Manuel Lopez Obrador’s efforts to change the market to favor state oil company Petroleos Mexicanos (Pemex) and national power utility Comision Federal de Electricidad (CFE) had discriminated against U.S. and Canadian companies.
The companies also complained that bureaucratic delays are stymieing their operations.
Dispute resolution talks began, and although progress has been halting, the United States and Canada last year agreed to extend the process beyond an initial 75-day window.
Under USMCA, if the controversy is not resolved during consultations, a dispute panel can be called to adjudicate.
WHAT IS MEXICO’S DEFENSE?
Lopez Obrador has put on a bullish front, saying Mexico has broken no laws and that “nothing is going to happen.”
It comes after he overhauled the electricity market in the name of national sovereignty, giving CFE priority over private companies in connecting power stations to the grid.
Often couching his opposition to foreign and private participation in the energy sector as part of his drive to eradicate corruption, he argues past governments skewed the market in favor of private capital.
He also says that energy is a domestic matter, and points to an article he had inserted into USMCA stipulating Mexico’s “inalienable” ownership of its oil and gas. Critics say the article does not cover his treatment of foreign firms.
Source: El Financiero