U.S. requests dispute settlement consultations with Mexico over energy policy 

The Biden Administration requested dispute settlement consultations with the Mexican government over claims that its energy policies are discriminating against American companies and might violate a trade deal, Reuters reported on Tuesday. 

The U.S. Trade Representative (USTR) argues that the energy sector policies adopted by Mexico undermine American companies in the country and U.S.-produced energy and instead promote Mexican-state powered utility companies Comision Federal de Electricidad (CFE) and oil firm Petroleos Mexicanos (Pemex).

Mexican President Andres Manuel Lopez Obrador (AMLO) has pledged to revive Pemex and CFE, which he claims were destroyed by the market and foreigners. 

The U.S. claims that Mexico’s measures may violate commitments Mexico previously made under the United States-Mexico-Canada Agreement (USMCA) trade pact. 

"We have repeatedly expressed serious concerns about a series of changes in Mexico's energy policies and their consistency with Mexico's commitments under the USMCA," U.S. Trade Representative Katherine Tai said in the draft statement.

In April, Mexico’s Supreme Court ruled that CFE should take priority over private utility providers on dispatch. AMLO claims this measure would benefit Mexican consumers and make Mexico more self-sufficient. 

USTR argues that prioritizing CFE-generates power will disincentivize the use of cleaner sources of energy that are provided by the private sector, such as wind and solar. 

“Mexico’s policies have largely cut off U.S. and other investment in the country’s clean energy infrastructure, including significant steps to roll back reforms Mexico previously made to meet its climate goals under the Paris Agreement,” Tai’s office said in a statement.

Additionally, the U.S. claims that Mexico is delaying, rejecting, or failing to act on the applications by private companies to operate in the sector, as well as revoking or suspending existing permits. 

"We have tried to work constructively with the Mexican government to address these concerns, but, unfortunately, U.S. companies continue to face unfair treatment in Mexico," Tai said in the draft announcement.

USMCA rules state that the two countries should enter into conversations within 30 days of the first request, unless parties decide otherwise. If the dispute is not settled within 75 days, the U.S. can request a dispute panel.