Page 6 - LatAmOil Week 12 2023

LatAmOil MEXICO LatAmOil

US to issue ultimatum as Mexican

government reverses energy reform

THE administration of US President Joe Biden The US could again seek a dispute settlement,
will issue an “act now or else” missive in the next as afforded by USMCA.
few weeks to Mexico over the two countries’ Washington and Ottawa had already for-
energy trade dispute, according to sources cited mally asked for settlement talks in July 2022, and
by Reuters. according to USMCA, could have demanded a
The US wants its southern neighbour to open dispute settlement panel 75 days after that, given
its energy market to foreign companies and that there was no resolution.
agree to more oversight. Biden, who will most likely soon announce
For its part, the government of Mexican a bid for re-election, needs Mexico’s help with
President Andres Manuel Lopez Obrador is immigration and drug trafficking issues, so will
reversing a previous administration’s opening not want to anger the Mexican government
up of the country’s oil and other energy mar- overly.
kets to private investment in 2013 and 2014. For On March 10, the American Petroleum Insti-
example, in October of 2021, Lopez closed down tute (API), National Association of Manufactur-
several private gasoline storage facilities owned ers and American Clean Power Association sent
by US companies. a letter to the USTR’s Tai, calling for continued
Lopez, a leftist with a populist streak, became action to hold Mexico accountable for its “dis-
president in 2018. Indeed, in recent years, US oil criminatory energy policies” by using every tool
companies including Chevron and Marathon available under USMCA.
Petroleum – as well as renewable energy com- “The government of Mexico’s escalating
panies – have also faced difficulties obtaining pursuit of discriminatory policies dramatically
permits to operate in Mexico. favours Mexico’s state-run electrical utility and
The Biden administration accuses Lopez of state-run oil and gas companies, hindering
giving preferential treatment to its state-owned private sector investment, threatening compa-
oil company Pemex over foreign competitors. nies in the United States and their workers, and
If an independent dispute settlement panel of undermining North American energy integra-
the US-Mexico-Canada Agreement (USMCA), tion and our regional competitiveness vis-à-vis
which replaced the North American Free Trade China and other rivals,” stated the letter.
Agreement (NAFTA), were to rule in the US’s The letter continued: “In our view, the gov-
favour, billions of dollars in retaliatory tariffs ernment of Mexico has not engaged construc-
could be imposed on Mexico by Washington tively in the consultation process with the
and Ottawa. United States, nor has Mexico taken meaningful
The US is Mexico’s largest oil supplier, while steps to address the issues raised by the United
Mexico is the second-largest exporter to the US States. As such, our organisations respectfully
after Canada. In 2021, the US imported 710,000 urge that the Biden administration continue to
barrels per day (bpd) from Mexico and exported hold Mexico accountable by using every tool
1.16mn bpd, according to the US Energy Infor- available to enforce the USMCA.” ™
mation Administration (EIA).
According to Reuters’ sources, the Office of
the United States Trade Representative (USTR)
will make a “final offer” in the coming weeks to
Mexico’s negotiators to open its markets and
agree to some increased oversight.
On March 23, the US Trade Representa-
tive, Katherine Tai, was asked about the issue
during hearings in front of the Senate Finance
Committee.
“We are engaging with Mexico on specific
and concrete steps that Mexico must take to
address the concerns set out in our consultations
request. This is still very much a live issue,” she
said. “We know that all the tools in the USMCA
are there for a reason.” She then told a House
committee the next day that the Biden admin-
istration had asked for “specific and concrete
steps” from Mexico in the matter, USTR Katherine Tai, shown in 2021 (Photo: Twitter/@AmbassadorTai)

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