US-Mexico Energy Trade Talks Stall Ahead of President Joe Biden’s Visit

Mexico’s economy ministry on Monday said that it presented to the US and Canada a working plan to establish working groups this month and in January

Electricity transmission pylons against a cloudy sky.
By Eric Martin
December 15, 2022 | 05:16 PM

Bloomberg — Just weeks before US President Joe Biden’s planned visit to Mexico, talks on the neighbors’ biggest trade dispute have stalled due to the departures of negotiators from the Latin American nation’s side and its reluctance to make concessions, according to people familiar with the matter.

The two sides have struggled to make headway on the energy-policy spat after Tatiana Clouthier, the economy minister at the start of the dispute in July, resigned in October, said the people, who asked not to be identified because the discussions are private. The dismissal of her trade deputy and more than a dozen senior staff also hindered progress, they said.

Divisions have affected the Mexican team, with Energy Minister Rocio Nahle and Manuel Bartlett, the head of the electric utility, refusing for months to provide the nation’s trade negotiators with key information needed to address US concerns, the people said.

PUBLICIDAD

President Andres Manuel Lopez Obrador also has been unwilling to push for major changes in the nationalist energy policy at the heart of the US complaint, the people said.

A spokesperson for the Mexican economy ministry didn’t immediately respond to a request for comment. A spokesperson for the White House National Security Council acknowledged the request but didn’t immediately respond. The US Trade Representative’s press office declined to immediately respond.

The two sides and Canada — which has some of the same concerns as the US — are working to address the conflict before Biden visits Mexico next month, but American negotiators have little expectation for advances in that period, the people said.

Lopez Obrador’s policy privileges Mexican state-owned oil producer Petroleos Mexicanos and the electricity provider known as CFE. The US says this violates the US-Mexico-Canada Agreement on trade, which went into force in 2020 to replace the two-decade-old Nafta pact. Canada filed a similar request for talks over Mexico’s electricity policy.

PUBLICIDAD

Lopez Obrador denies that his policies violate the pact, saying that the US must respect Mexico’s sovereignty.

If a panel were to rule against Mexico, it might have to pay tariffs on as much as $30 billion in exports, former officials who negotiated the agreement told Bloomberg News around the time that the US and Canada first lodged the complaint in July.

US Trade Representative Katherine Tai met with her new Mexican counterpart Raquel Buenrostro in Washington earlier this month and in a statement said she “underscored the urgency of prompt and meaningful progress” in the dispute.

The Mexican government initially focused on resolving individual cases with American and Canadian companies in an effort to try to dissipate the dispute.

The US didn’t consider this appropriate because it sees the problems being systemic, with Tai saying in October that the issues go beyond just a few companies.

The US trade chief said earlier this year that the dispute puts at risk more than $10 billion in American investment based on the arbitrary treatment of firms, especially in renewables.

PUBLICIDAD

The US and Mexico started consultations in August and in October agreed to continue them past an initial 75-day mandatory period.

Tai in October said she wouldn’t rule out requesting the formation of a panel to resolve the conflict, and said the US will only remain in talks “for as long as those consultations are meaningful.”

Mexico’s economy ministry on Monday said that it presented to the US and Canada a working plan to establish working groups this month and in January to try to resolve their concerns.

Buenrostro, who has been leading the talks for Mexico, is set to travel to Washington on Friday with Foreign Minister Marcelo Ebrard, but the meetings are expected to focus on a separate dispute over imports of American corn, according to people familiar with the plans.

PUBLICIDAD

--With assistance from Jordan Fabian and Maya Averbuch

Read more on Bloomberg.com