The United States initiated a trade dispute with Mexico last week, claiming that President Andrés Manuel López Obrador’s administration was favoring his country’s state-owned oil and utility company at the expense of competing American firms.
Luz Maria de la Mora, Mexico’s deputy economy minister, stated that she hopes for a “mutually agreeable solution” to the negotiations the U.S. and Canada have sought regarding alleged energy-related violations by Mexico of a regional trade agreement.
The demands of the U.S. and Canada spring from years of concern among the countries’ private businesses that consider Lopez Obrador’s drive to tighten control over Mexican oil and energy markets unfair to them and in violation of the United States-Mexico-Canada Agreement (USMCA).
To avoid tariffs on various Mexican goods, the U.S. is asking for dispute settlement talks under the USMCA. Since the trade agreement went into force two years ago, this call for talks represents the most bitter trade dispute between Washington and Mexico City. The U.S. could impose penalties if the issue is not resolved.
De la Mora said, “We want to take advantage of this consultation phase… to see how we can reach a mutually satisfactory solution through an open, frank, and constructive dialogue, which will allow us to overcome these differences,” according to Reuters.
She stated further that Mexico would demonstrate that its energy policies do not violate the trade agreement.
For his part, López Obrador was dismissive of the U.S. action, attributing it to intensive lobbying by what he called “corrupt right-wing rivals in Mexico,” according to The Wall Street Journal.
In initiating the dispute, U.S. trade representative Katherine Tai claimed that some Mexican policies disadvantage American businesses and energy produced in the U.S. in favor of CFE and Pemex.
Tai said, “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 USMCA.”
López Obrador, the left-leaning energy nationalist, has vowed to restore state-owned entities Petroleos Mexicanos (Pemex) and Comision Federal de Electricidad (CFE), which he claimed were “destroyed” on purpose by his predecessors to open up Mexico’s energy market to global competition.