Prime Minister Justin Trudeau announced on Friday that Canada and the United States will argue at a North American leaders conference next week that settling a dispute over measures that favor Mexican energy corporations will help Mexico attract more foreign investment.
Energy Policies
Last year, the United States and Canada initiated dispute settlement negotiations with Mexico under the North American trade agreement known as the USMCA, alleging that Mexican energy regulations were discriminatory and harmed multinational companies.
Trudeau will arrive in Mexico City on Monday for a three-day trip that will include bilateral talks with both Vice President Biden and Mexican President Lopez Obrador. On Monday, he will meet with business executives from all three nations.
Lopez Obrador, a leftist energy nationalist, has vowed to restore state-owned power provider Comision Federal de Electricidad (CFE) and oil producer Petroleos Mexicanos (Pemex), which he claims his predecessors intentionally damaged in order to abandon Mexico’s energy industry to foreign interests.
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US, Canada Urge To Revise Mexico’s Policy
The United States and Canada are challenging revisions to Mexican law that prioritize the distribution of power generated by CFE above greener sources of energy supplied by the private sector, such as wind and solar.
About C$13 billion ($9.7 billion) was invested by Canadian firms in energy infrastructure. In Mexico, $5 billion is dedicated solely to renewable energy Trudeau added. According to him, his message to business leaders would be that the new trade treaty is producing employment, opportunities, and prosperity across our countries.
Trudeau stated that discussions with Biden will likely center on maximizing economic potential because economic instability is expected in the next months, citing supply chains, the war in Ukraine, inflation, and increased interest rates.
However, tensions over Mexico’s nationalist policies culminated in a formal disagreement in July, when the governments of Washington, D.C., and Ottawa lodged a complaint against Mexico under the US-Mexico-Canada Agreement (USMCA).
The complaint said that Mexican President Andres Manuel Lopez Obrador discriminated against American and Canadian businesses by modifying the market to favor Mexico’s state oil company Petroleos Mexicanos (Pemex) and its national power provider Comisión Federal de Electricidad (CFE). Additionally, the businesses complained that bureaucratic delays were impeding their operations.
Although progress has been sluggish, Canada and the United States agreed last year to extend the dispute resolution process beyond its initial 75-day window. Under the USMCA, if the matter cannot be addressed through talks, a dispute panel may be convened.