USTR Tells Mexico To Address 'Serious Concerns' Over Alleged Discriminatory Energy Measures

The office of the United States Trade Representative (USTR) told Mexico this week to address the issues regarding its energy measures that Washington flagged as discriminatory against American companies.

Deputy trade representative Jayme White told his Mexican counterpart Alejandro Encinas during a meeting in Mexico Wednesday that the country should address issues with its energy measures, which the U.S. believes are unfairly discriminating against American firms, as per a readout of the trade representatives' meeting published Thursday.

The U.S., along with Canada, first raised concerns about Mexican energy policies last year when it demanded dispute settlement talks with the Mexican government. At the time, the USTR's office said it requested consultations due to policies that it believed were disadvantageous to U.S. firms and were largely in favor of Mexico's state-owned power utility Comision Federal de Electricidad (CFE) as well as oil company Petroleos Mexicanos (Pemex).

Canada said it agreed with the U.S. that Mexico's policies were "inconsistent" with the Latin American nation's obligations under the United States-Mexico-Canada Agreement (USMCA), which was established to create a more "balanced, reciprocal trade supporting high-paying jobs for Americans and grow the North American economy."

White told Encinas during a meeting held in San Diego in January about U.S. concerns and Mexico's obligations under the USMCA. White "emphasized" the "urgency of making meaningful progress in the ongoing consultations under the USMCA regarding Mexico's energy measures."

The USTR's continued urging of Mexico to resolve energy-related concerns came weeks after Reuters reported that the Biden administration asked U.S. energy companies to prepare their affidavits documenting how Mexico's policies disrupted their business.

President Joe Biden's latest move in relation to the trade dispute followed complaints from companies such as Marathon Petroleum and Chevron regarding the denial of simple permits and licenses they sought to obtain to expand into Mexico.

Sources reportedly said the U.S. is likely to pursue a dispute panel before the end of 2023 if talks continue to stall. The White House is also expected to impose tariffs on Mexican goods should the dispute panel rule against Mexico and the latter fail to resolve the issues raised.

Mexico has denied that its energy policies were unfair to U.S. firms. Mexican President Manuel Lopez Obrador said in mid-2022 that he reached an agreement with 17 of 19 U.S. energy investors he spoke with. The Mexican leader did not provide further details about which companies he came to an agreement with.

On the other hand, he said his government would defend its oil and power market policies. "We have to make our sovereignty count," he said.

Lopez Obrador went on to insist that there was "no violation" of the USMCA pact, adding that his government had successfully addressed concerns regarding its energy measures.