Canada formalizes consultations against Mexico for its energy policy

The United States trade representative assured that they will seek to work with the Mexican government through the consultations to resolve their concerns and advance the competitiveness of North America.

According to the US government, Mexico’s actions include amendments to the electricity law that will prioritize the distribution of energy generated by the CFE over cleaner energy sources from private parties such as solar and wind power; also delays, denials and renewals by Mexico of the capabilities of US companies to operate in the country’s energy sector, including renewable energy projects.

In particular, the United States challenges the 2021 reform initiative to the Law of the Electricity Industry of Mexico that prioritizes the electricity produced by CFE over that generated by all private competitors; Mexico’s inaction, delays, denials and reversals of the capabilities of private companies to operate in Mexico’s energy sector, detailed the USTR.

Eu is also challenging a 2019 regulation that gives only Pemex an extension to meet the maximum sulfur content requirements under the applicable Mexican auto diesel standard.

Finally, the United States is against an action in July this year that favors both Pemex and the CFE and their products in the use of the natural gas transportation network.

“These measures appear to be inconsistent with several of Mexico’s obligations under the T-MEC, including under the chapters on market access, investment and state-owned companies,” says the US Trade Office.

Mexico receives applications

The government of Mexico, through the Ministry of Economy (SE), received the request to start consultations, a non-contentious stage of the general dispute resolution mechanism provided for in the T-MEC.

As of this July 20, the countries have 75 days to resolve the controversy surrounding the energy policy of the Mexican government.

“In case of not reaching a mutually satisfactory agreement on the correct application and interpretation of these provisions, the United States may request the establishment of a panel to decide on this matter,” the SE said in a statement.

Mexico’s energy policy activates for the fourth time the general dispute settlement mechanism of Chapter 31 of the Treaty between Mexico, the United States and Canada. Since July 2020, when the trade agreement entered into force, the United States initiated a procedure against Canada for the distribution of quotas in the dairy sector; Canada against the United States for a safeguard measure on photovoltaic cells; and Mexico and Canada against the United States for the interpretation and application of the rules of origin in the automotive sector.

“The Government of Mexico expresses its willingness to reach a mutually satisfactory solution during the consultation stage,” said the Ministry of Economy in the statement.

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