Katherine Tai, the United States Trade Representative (USTR), has requested a consult on the US-Mexico-Canada-Agreement (USMCA) on July 20th, between Mexico and the US. Actions by Mexico may be undermining American companies and US-produced energy. By favoring Mexico’s state-owned power, the Comisión Federal de Electricidad (CFE) and state owned oil and gas company, Petróleos Mexicanos (PEMEX) the USTR stated, these actions could affect renewable energy projects.
Amendments to Mexico’s electricity law would treat the distribution of CFE-generated power as more important than cleaner energy sources provided by private sector suppliers. Sources like wind and solar would no longer be as accessible, rolling back reforms for a clean energy infrastructure. The amendments would also include rescinding US companies’ abilities to work out of Mexico’s energy sector.
The USTR also stated that these policies have largely cut off US and other investments in the country’s clean energy infrastructure, including reforms Mexico previously made to meet climate goals under the Paris Agreement. These changes threaten to remove private sector innovation out of the energy market.
According to the NCBFAA, in 2013, US companies invested in Mexico’s energy sector and have:
- “Established and operated wind and solar energy farms and cogeneration and combined cycle facilities in Medico that would contribute to Mexico’s grid.”
- “Strengthened interconnection contracts that bring US electricity to Mexico across the border through wires.”
- “Imported US-origin fuels to Mexico for sale at gas stations.”
December 2018, however, saw Mexico changing things to a state-owned electrical utility, CFE, PEMEX, and similar courses of action. Concerned with how these changes were affecting the US and Canada, Katherine Tai consulted Congress and industry stakeholders about Mexico’s energy policies and emissions.
Under USMCA Article 31.4.5b, “the parties shall enter consultations within 30 days of the U.S. request, unless the parties decide otherwise. Under USMCA Article 31.6.1, if the parties do not resolve the matter through consultations within 75 days of the U.S. request, the United States may request the establishment of a panel.”
As this continues to be disputed between Mexico and the US, Sobel will keep you up to date with the latest news and information regarding these changes. If you would like to view the five page consultation request, you can read here.
