By MARK LORENZANA
According to former negotiators and specialists in a report by Mexican daily newspaper El Universal on Sunday, July 24, Mexico specifically violated Chapters 14, 15, 22 and 32 of the United States-Mexico-Canada Agreement (USMCA).
When the government of Mexican President Andrés Manuel López Obrador (AMLO) accepted Chapters 14, 15, 22 and 32 of the agreement — titled “Investment,” “Cross-Border Trade in Services,” “State-Owned Enterprises” and “Exceptions and General Provisions,” respectively — it promised in 2018 to allow companies from the United States and Canada access to the Mexican energy market, as well as to protect their investments and provide fair treatment.
But on Wednesday, July 20, U.S. Trade Representative Katherine Tai requested dispute-settlement consultations with the Mexican government under the USMCA, alleging that certain measures by the Mexican government, specifically discriminatory energy policies, have violated provisions in the accord. On Thursday, July 21, Canada launched its own challenge to Mexico’s energy policy.
Samantha Atayde Arellano, chief lawyer for the USMCA negotiations, said that Mexico accepted the 2013 energy reform in the text of the accord.
“Mexico accepted that reform in the USMCA, but now (AMLO’s administration) is ignoring it. The part about the 2013 energy reform was included in Article 32.11 of the USMCA,” said Atayde Arellano, who was in charge of the legal supervision of the text of the treaty and institutional issues.
In Oct. 1, 2021, López Obrador sent an electricity reform initiative to Congress. Known as the Electricity Industry Law (LIE), it has since restricted control of the sector to Mexico’s Federal Electricity Commission (CFE). The law was the final blow to the nation’s energy reform bill, implemented in 2013, by former Mexican President Enrique Peña Nieto.
Atayde Arellano said that, initially, the Mexican government “accepted the opening of the energy sector in Annexes I, II and IV of the CPTPP (the Trans-Pacific Partnership Progressive Integration Treaty),” which was the treaty that was being negotiated when Mexico liberalized the energy sector in 2013 under the administration of Peña Nieto. Atayde Arellano explained that these energy commitments were consolidated in Article 32.11 of the USMCA, which “provides that you cannot adopt more restrictive measures in a sector, in which you adopted commitments in another treaty,” in this case, the CPTPP.
The person in charge of the negotiations for the USMCA under the López Obrador government in 2018 was Mexican trade negotiator Jesús Seade, who said that the only thing he sought to reflect in the text of the agreement was “full respect for the (Mexican) Constitution,” but he admitted that no agreement was negotiated. Seade said that Mexico was expected to “respect the legal framework” as it was.
Shortly after the U.S. action hit headlines, Seade assured López Obrador at AMLO’s Wednesday morning press conference that “there is no violation of the USMCA.”
Jorge Molina Larrondo, who was part of the negotiating team of the then-North American Free Trade Agreement (NAFTA), has predicted that the dispute will not be resolved at the consultations or dialogue stage, and believed that it will end up in a panel.
“If the dispute goes to a panel, the United States and Canada must define the amount of the damages,” Molina Larrondo told El Universal. “In the case of the United States, the damages appear to reach $50 billion, which is the calculation made by so far by American think tanks.”
For its part, the Mexican Employers’ Confederation (Coparmex) asked the AMLO government to comply with its international obligations, especially with what was signed in the USMCA.
“The Mexican government’s compliance should not be understood as voluntary, but as mandatory, because there is not only a clear constitutional mandate that needs to be followed, but also international laws,” said Coparmex in a statement.