The privileged treatment of state energy companies established by the recently approved constitutional reform in matters of strategic sectors, to the detriment of private investors, may “cost Mexico dearly” in the review of the Mexico-United States-Canada Treaty (T -MEC) in 2026, as counterparties could demand other advantages in exchange, analysts highlighted.
“That is going to be a topic in those talks and more so with a counterpart such as Donald Trump, if he wins the presidential election. They could say ‘I can give it to you’ (differential treatment for energy investments), but I will charge you dearly, because at this moment the complete opening is already a given,” said César Hernández, managing partner of the Publius firm.
The reform approved in the first minutes of this Wednesday by the Mexican Senate established changes to articles 25, 27 and 28 of the constitution and partially reverses the market opening of the 2013 reform.
It does not prevent private companies from continuing to participate in electricity generation and marketing activities, but now it sets limits for them since “in no case will they have prevalence over the State’s public company,” according to the new text of article 27 of the Constitution.
In the review of the T-MEC in 2026, Mexico will arrive with these changes under its arm, when the treaty was originally negotiated with the country’s commitment to a complete opening in the generation, transmission, distribution and electricity supply markets, as well as non-discriminatory treatment of investors compared to state companies.
According to César Hernández, if Mexico wanted its new energy legal framework to be accepted within the T-MEC, the country would have to give in on other issues of interest to its counterparts.
“And who is going to pay for it? The berry export industry, or automobiles, or the steel industry? Compensation for the United States for the loss they perceive they are receiving in the energy sector has to come from somewhere,” he commented.
Shock points
But not only the mandate of “prevalence” of state companies of the new energy reform would clash with what is established by the T-MEC. Regulatory discrimination would be another focus of concern, says Víctor Ramírez, an energy specialist.
Because the reform to article 28 of the Constitution establishes that it will be “the public company of the State that is established” that will be in charge of the planning and control of the national electrical system.
If that company is the CFE, a conflict of interest would arise, since on the one hand it would be a competitor in the market, but it would also carry out planning and operation tasks for the electrical network, in which it could impose non-competitive criteria for the rest of the market.
“For the purposes of the T-MEC it would have a problem because who you are having as an arbitrator, as a system operator, is a company that is part of the competition. This would be a complication for the USMCA or other trade agreements such as the Trans-Pacific Partnership,” Ramírez said.
According to an analysis by the Mexican Competitiveness Institute, the energy reform approved this week conflicts with at least five chapters of the T-MEC.
Among these, there is number 14, on Investment, where the so-called “ratchet clause” resides, establishing that, “if a country opens its economy allowing more trade or foreign investment, it will not be able to roll back these measures in the future or close sectors previously open to private participation.”
Likewise, Chapter 22, which regulates state-owned companies, is important. It warns that state companies must operate under commercial criteria and that the administrative bodies that regulate state-owned companies (including those in the energy sector) must be impartial.
A point of tension here is that in the change from productive to public companies, the new constitutional text exempts them from the application of antitrust legislation, which places them in an advantageous situation with respect to private companies.
“Respecting the disciplines of the treaties and instruments to which Mexico is a party is not only a legal issue, but also for the country’s competitiveness, since these will only serve to expand the country’s trade and investment if a credible commitment to their disciplines,” said IMCO.
Some points of conflict of the energy reform with the T-MEC
Chapter 14
(Investment):
• The “ratchet clause” included in the USMCA establishes that, if a country opens its economy by allowing more trade or foreign investment, it will not be able to roll back these measures in the future and the reform partially reverses the opening of the electricity sector.
Chapter 22
(State-owned companies):
• This chapter establishes that state companies must operate under commercial criteria. The reform frees public companies from antitrust legislation.
Chapter 32
(Exceptions and general provisions):
• Mexico is committed to granting the least restrictive measures regarding investment, cross-border trade in services, and state-owned companies and designated monopolies. The energy sector is fully incorporated into the TIPAT, ratified prior to the T-MEC, so it forms an integral part of this treaty.
