Mexico sacks key USMCA negotiators

Bnamericas Published: Friday, October 14, 2022

Another key figure in Mexico's USMCA talks with the US and Canada was asked to resign by new economy minister Raquel Buenrostro.

Undersecretary for international trade and Mexico's chief trade negotiator, Luz María de la Mora, was forced out, according to Bloomberg. Mexico is negotiating to avoid arbitration over its energy policy.

The sacking came as part of a larger personnel adjustment at the economy ministry, which has also resulted in the removal of Orlando Pérez Gárate, the general counsel on international commerce. Gárate was also a key figure in the negotiations.

Mexico's negotiating team, starting with former minister Tatiana Clouthier on Wednesday, is being replaced amid a USMCA trade dispute that could reshape the commercial relationship with the US in the energy sector. 

The dispute, which was started by the US in July with Canada joining shortly after, pertains to regulatory and legislative changes undertaken by the administration over the past four years in an attempt to bolster public energy companies CFE and Pemex.

The US and Canada could have asked for the establishment of a panel since October 3, but they have decided to extend preliminary negotiations in a bid to reach a settlement. Mexican authorities have signaled they have also made strides in direct negotiations with affected private players.

De la Mora's team was overseeing several cases besides the one sparked by the US and Canada. These include those brought by Talos Energy, Whitewater and Odyssey

Iberdrola and CFE spat

One of the biggest claimants in the Mexican energy sector is Spanish renewables developer Iberdrola, which has long traded blows publicly with public utility CFE and regulator CRE over what it considers unfair treatment of its power plants and permits. The firm has long drawn heavy criticism from President Andrés Manuel López Obrador himself.

The company has two pending arbitration cases against CFE. The first, expected to be resolved in the first quarter of next year, concerns the Topolobampo III generation plant, for which CFE demands a US$16.5mn penalty from Iberdrola due to construction delays in 2020. The plant's operation has reportedly been made contingent on the payment of the fine. 

Iberdrola argues the circumstances were beyond its control and is asking for US$10mn in compensation in capacity payments and additional compensation for the months the plant has been unable to inject power despite being fully operational.

The second case was brought by Iberdrola against gas trading subsidiary CFEnergía. The former claims a US$20mn charge by the latter was calculated incorrectly. The case's first hearing is set to take place in December, according to Iberdrola.

CFE is estimated to face over 20 active international arbitration cases.

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