Be Afraid, Be Very Afraid
By MARK LORENZANA
The initial request was reasonable enough.
U.S. Trade Representative Katherine Tai said on Wednesday, July 20, that her office — the Office of the United States Trade Representative (USTR) — had been requesting the Mexican government to address some concerns about Mexico’s energy policies that have been inconsistent with the United States-Mexico-Canada Agreement (USMCA). Those U.S. concerns in a nutshell: Mexico’s moves to prioritize energy from its state utility over private energy companies, as well as denials and revocations of U.S. firms’ ability to operate in the country’s energy sector.
What did Mexican President Andrés Manuel López Obrador (AMLO) do all this time?
Nothing. He ignored the request.
So now comes the reckoning — another request, but this time something that López Obrador won’t have the luxury to ignore. The United States has officially requested dispute-settlement consultations with Mexico, invoking the USMCA, which took effect two years ago. If unresolved, it could ultimately lead to heavy U.S. tariffs on Mexican products.
Make no mistake: This is essentially a serious trade fight that the United States is bringing to Mexico’s doorstep, thanks — or no thanks — to López Obrador.
So what was AMLO’s initial reaction when asked about the United States’ request for consultations with Mexico?
“Ooooh, I’m so scared,” López Obrador said at his daily morning press conference on Wednesday, paraphrasing a line from “Uy, que Miedo” (“Oh, How Scary”), a popular song by Chico Che, a musician who also hailed from AMLO’s native Tabasco state. López Obrador then ordered his staff to play the song in the middle of the press conference.
After the song, López Obrador told the journalists gathered at the National Palace that there was nothing to worry about; the United States is as strong an ally as ever — as evidenced by the recent meeting of the two heads of state at the White House — and U.S. President Joe Biden is “a good man.” AMLO chalked up the U.S. action to intense lobbying from — and this has been an oft-repeated refrain of his — “corrupt right-wing rivals” in Mexico.
“Nothing is going to happen,” López Obrador said. “I sent a text message to (Mexican trade negotiator) Jesús Seade, who was the one who represented us in the negotiation (of the USMCA), and now I have the answer — there is no violation of the USMCA treaty.”
On Thursday morning, though, López Obrador sang a slightly different tune.
“If it is a political sanction, we are going to defend ourselves,” he said. “I have indications that this has to do with vested interests because they were looting Mexico, and since they were stopped, they began to do their work in the United States. We are not going to sit idly by. I sense that it is a political issue.”
According to Bloomberg News, those sanctions could cost Mexico more than $30 billion, which, despite López Obrador’s initial amusement, is no laughing matter.
“I smell fear,” said a character in one of American novelist Neal Shusterman’s books.
But who are these people who were “looting Mexico” and have “vested interests” that López Obrador has claimed to have “stopped”?
An excerpt from an excellent report by the Wall Street Journal (WSJ) in June of this year — written by David Luhnow and Santiago Pérez — can best answer that question.
“The president says, without offering evidence, that past governments were paid off by multinationals to allow them to enter the market and destroy the state oil giant Petróleos Mexicanos, or Pemex, and the state-run utility, Federal Electricity Commission, or CFE, leaving Mexico’s energy security at risk and consumers at the mercy of profiteers. He also argues that Mexico’s turn to an open economy left too many poor people behind,” said the WSJ report.
López Obrador loves to say things at his press conferences without offering much in the way of evidence. For instance, he argued that the measures he is taking — the exact measures that violate the provisions in the USMCA — will benefit consumers and “make Mexico more self-sufficient.”
But AMLO’s critics have countered — and these are mostly experts in the energy industry who know what they are talking about — that these measures will raise electricity costs, undermine investor confidence and violate Mexico’s clean-energy commitments.
That’s the operative word here, too: commitments.
Mexico, Canada and the United States committed to the USMCA treaty two years ago, and collectively promised to adhere to the provisions in that accord. López Obrador can’t just, on a whim, turn his back on that agreement and expect no sanctions in return.
Canada, by the way, has also joined the party and has launched its own challenge to Mexico’s energy policy.
López Obrador turned to the novelty song “Uy, que Miedo” to poke fun at the U.S. (and now, in addition, Canadian) trade fight coming his way.
Perhaps he should take heed of a famous line from the classic horror movie “The Fly” instead:
Be afraid, be very afraid.