US raises energy industry complaints with Mexico

Complaints by US energy firms against what they describe as Mexico City's discriminatory energy policies are among the issues US trade officials will raise tomorrow during the first annual review of the US-Mexico-Canada (USMCA) free trade agreement.

"An energy policy that respects US investment and is consistent with efforts to tackle climate change" is among the issues of importance to Washington, US trade representative Katherine Tai said during a meeting today with Mexico's economy minister Tatiana Clouthier. US, Mexican and Canadian trade ministers today will convene the first meeting of the USMCA free trade commission — a body that is supposed to meet at least once a year to allow each country to air grievances and help resolve them before resorting to a more formalized process of settling trade disputes.

The US Trade Representative's office (USTR) under President Joe Biden has prioritized labor rights and environmental protection in relations with Mexico, but Tai today listed more industry-specific complaints, including energy and agriculture.

US energy companies have complained since last summer that they are facing an increasingly hostile business climate in Mexico. These actions include recent reforms to the country's electricity law that prioritize state-owned generation, making fuel market operating permits harder to get and easier to lose and unequal requirements for private-sector fuel importers compared with state-owned Pemex. These led US industry group the American Petroleum Institute (API) to complain to US officials earlier this month.

Court have suspended some of the reforms, but the government has said it will continue to push for changes.

Mexico has defended the new laws as strengthening the regulatory framework against fuel theft and against an unfair playing field that has made state-owned Pemex lose market share. Clouthier's readout of the meeting omitted mention of the issue, but acknowledged concerns raised by US officials about "agriculture and investments."

Giving prominence to the complaints raised by oil and gas companies should address concerns expressed by industry that the Biden White House was not keen to help fossil fuel companies in trade relations with Mexico. Biden's predecessor largely shelved the issue in favor of addressing immigration concerns, even though outgoing officials in former president Donald Trump's administration in their last month made the symbolic gesture of asking their Mexican counterparts to solve the issue.

Perhaps with an eye to Biden's climate agenda, the API argued that addressing its complaints would align with new White House priorities. A recent turn in Mexico's electricity markets disadvantaged US investors in the country's renewable generation in favor of fuel oil-fired power plants, the US oil group said.

USTR separately plans to hold the inaugural chapter of the UMSCA environmental committee with Mexico and Canada on 17 June and today asked all US stakeholders to suggest issues that require resolution.

By Haik Gugarats