Page 5 - LatAmOil Week 06 2021

LatAmOil COMMENTARY LatAmOil

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

Lopez Obrador signed USMCA after Trump agreed to respect Mexico’s policy independence (Photo: Terceravia.mx)

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