By KELIN DILLON
According to former United States-Mexico-Canada Agreement (USMCA) negotiator Kenneth Smith, Mexico may face historic sanctions levied against it by the United States and Canada if the trio cannot reach an agreement on Mexican energy policy during its presently ongoing energy panel.
These pending sanctions have the potential to be the highest penalties ever seen under the 20-plus-year history of the North American Free Trade Agreement (NAFTA) – which was replaced by the USMCA in 220 – and may total up to $30 billion, said Smith, though later panel discussions assessed the possible sanctions to be around a still-unprecedented figure of $15 billion.
“Just $15 billion would be about 6 or 7 times more than the largest retaliation in NAFTA history,” revealed Smith during the International Meeting of Energy Mexico. “When Mexico imposed measures for U.S. positions that violated NAFTA, the largest was for $2 billion for the cargo trucking dispute. That made the U.S. Congress mobilize, change its laws and open access to trucks.”
“If that happened in one of the largest economies in the world with $2 billion, imagine the impact that a sanction of $15 billion to $20 billion could have in Mexico,” added the expert.
In conclusion, Smith urged for Mexico to reach an agreement with its neighboring trade partners during the course of the economic panel to avoid the aforementioned sanctions, claiming that Mexico’s energy policy could bring on said penalities due to its purported violation of numerous sections of the USMCA – including provisions surrounding investment, discrimination against private initiatives and environmental impact.