United States initiates consultations with Mexico over Energy Policies

Today, U.S. Trade Representative Katherine Tai announced in a press release that she has requested consultations with the Mexican government under the USMCA.

The United States argues that the Mexican government has undertaken measures that affect U.S. companies in the energy sector by unduly benefiting state-owned companies CFE and PEMEX.

Specifically, the United States challenges the 2021 amendment to Mexico’s Electricity Industry Law that prioritizes electricity produced by CFE over that generated by all private competitors; Mexico’s inaction, delays, denials, and revocations of the ability of private companies to operate in Mexico’s energy sector; a December 2019 regulation granting only PEMEX an extension to comply with the maximum sulfur content requirements under Mexico’s applicable automotive diesel fuel standard; and a June 2022 decision favoring PEMEX, CFE and their products in the use of Mexico’s natural gas transportation network.

These measures appear to be inconsistent with several of Mexico’s obligations in the USMCA, including the market access, investment and state-owned enterprises chapters.

Under USMCA the parties shall enter into consultations within 30 days of the U.S. request. If the parties do not resolve the matter through consultations within 75 days of the U.S. request, the United States may request the establishment of a panel.