Page 9 - NorthAmOil Week 06 2021

NorthAmOil COMMENTARY NorthAmOil

US President Joe Biden
has not yet made
any statements with
respect to the question
of whether Mexico is
upholding its obligations
to US businesses under
USMCA.

the North American Free Trade Agreement Higher stakes
(NAFTA). Granted, neither of the parties quoted above
This is not an easy question to answer. Lopez was talking about a constitutional amendment.
Obrador only agreed to sign USMCA last year Rather, both were talking about the bill that
after then-US President Donald Trump con- Lopez Obrador is trying to push through the
sented to the inclusion of provisions stating that legislature.
both the US and Canada recognised Mexico’s It seems reasonable to assume, though,
right to establish its own energy policy through that the Chamber, which is keen to safeguard
constitutional reforms and new legislation. The investment opportunities for US companies,
agreement also states, though, that Washington is unlikely to drop its oppositional stance if
and Ottawa were extending this recognition Lopez Obrador changes course and seeks to
“without prejudice to their rights and remedies” amend the constitution. Instead, it would
under USMCA. probably be even more critical of the Mexican
As such, there are arguments to be made on government, especially since a constitutional
both sides. The US Chamber of Commerce, for amendment would be more difficult to rescind
example, appears to be more concerned about than an ordinary bill. It might also step up
upholding the “rights and remedies” of its mem- efforts to make the case that the new policies
bers. It asserted in a statement last week that the violate USMCA.
CFE bill was not in line with the terms of the Likewise, Lopez Obrador is not likely to The issue
new trade agreement. Additionally, it described retreat from his own conviction that state-
the draft legislation as “deeply troubling” and owned companies ought to be the main players at stake is
argued that Mexico would be in direct violation in the fuel and energy sector. As such, if the pres- whether policies
of USMCA if it were to implement preferences ident opts for amending the country’s constitu-
for the power provider. tion, he and his supporters will probably step up favouring state-
Members of Lopez Obrador’s administra- efforts to make the case against US interference
tion, meanwhile, say they are confident that in Mexican energy policy, invoking the relevant run companies
policies favouring state-run companies will provisions of USMCA.
not contravene USMCA. The president himself As of press time, officials in Washington would violate the
has emphasised the provisions of USMCA that had not weighed in on the matter. President terms of the US-
guarantee Mexico’s right to set its own energy Joe Biden, who assumed the US presidency
policy. Meanwhile, a member of the MORENA last month, has not made any statements with Mexico-Canada
Party told Reuters earlier this week that he did respect to the question of whether Mexico is
not expect any problems, since the bill would upholding its obligations to US businesses Agreement.
not have any retroactive effect. under USMCA. But this could change if Lopez
“Investments already made in accordance Obrador starts pursuing a constitutional
with the rules of the energy reform are guaran- amendment. If so, Mexico’s oil and gas sector
teed and will continue,” said Manuel Rodriguez, might have to face a trade dispute this year,
the head of the energy committee in the lower even as it works to recover from the damage it
house of Mexico’s legislature. “There won’t be a sustained last year because of the coronavirus
change of rules for those investments.” (COVID-19) pandemic.™

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