US Rules Out Withdrawing from Energy Panel under USMCA Treaty

Photo: USMCA


The United States, on Saturday, Oct. 15, categorically denied that it has withdrawn its decision to request an arbitration panel to resolve the dispute over the energy policy of Mexican President Andrés Manuel López Obrador (AMLO) that has allegedly violated provisions in the United States-Mexico-Canada Agreement (USMCA).

On Friday, Oct. 14, in his daily morning press conference, López Obrador assured journalists gathered at the National Palace in Mexico City that the United States had given up on its plan to request for an arbitration panel, considering that the 75-day consultation period — as requested by the United States to address Mexico’s purported violations of the USMCA — had been extended, as mutually agreed upon by both countries.

However, the Office of the U.S. Trade Representative (USTR), headed by Katherine Tai, warned that the option to go to a panel is not closed to the U.S. government.

“At this time, we seek to engage constructively with Mexico through consultations and will continue to work towards a mutually acceptable resolution that addresses our energy concerns,” a USTR spokesperson, on Saturday, told Mexican daily newspaper Reforma of the current talks. “In the event that the consultations do not address our concerns, the United States may request a panel to resolve the matter.”

On July 20, Tai announced that the United States had requested dispute-settlement consultations with the Mexican government under the USMCA treaty. Shortly after, Canada announced its own request for consultations with Mexico.

According to former negotiators and specialists in a report by Mexican daily newspaper El Universal on July 24, Mexico specifically violated Chapters 14, 15, 22 and 32 of the agreement.

The consultation process requested by both the United States and Canada on Mexico’s energy policy started on August 23, and is supposed to end this month, but has since been extended.

According to the rules of the dispute-resolution mechanism of Chapter 31 of the USMCA, the United States has the option of requesting an arbitration panel to resolve what it considers to be violations of the agreement by López Obrador’s energy policy.

If the arbitration panel finds that Mexico was indeed in violation of the USMCA pact, it could authorize retaliatory measures, which means the imposition of tariffs against Mexican goods.

Jorge Molina Larrondo, who was part of the negotiating team of the then-North American Free Trade Agreement (NAFTA), said that if the dispute goes to a panel, the United States and Canada must define the amount of the damages.

“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,” said Molina Larrondo.

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