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Energy Controversy: US & Canada Request Resolution from Mexico

In July 2022, following Mexican President’s regulatory changes regarding “energy sovereignty”, the United States and Canada requested consultations with Mexico. The consultation triggers the first step in state-to-state Dispute Settlement provision set up in Chapter 31 of the USMCA (United States Mexico Canada Agreement).

Recent timeline

November 2022, Canadian Minister Ng met with Mexico’s Secretary of Economy Raquel Buenrostro in Mexico City. During this visit the minister discussed the importance of Canada-Mexico commercial ties, bilateral initiatives such a Canada-Mexico High-Level Economic Dialogue, North American competitiveness, and Canada’s continued commitment to the Pacific Alliance.

December 2022, United States Ambassador Katherine Tai met with Mexico’s Secretary of Economy, Raquel Buenrostro to emphasize the significance of US-Mexico economic relationships and their commitment to USMCA. Other topic discussed included Mexico’s enforcement of its fisheries-related environmental laws and disruptions of corn export used for feed and human consumption.

In a recent interview U.S. Ambassador to Mexico Ken Salazar mentioned “17 companies have significant disputes with current Mexican policies”, while no specific companies were mentioned, some estimates calculate the dispute could cost an estimated 30 billion USD. These companies include oil, gas, operators of fuel terminals, generators of renewable energy and more.

While the Mexican government seeks to reach an agreement during the consultation phase, if an arbitration panel is needed and they rule in favor of the U.S and Canada, it would mark the first time since 1938 that governments retaliate against Mexico’s energy policies.

Contributor: Josue Delgado

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