USMCA energy dispute consultations to start Tuesday

The first round of consultations on the USMCA treaty dispute over Mexican energy policy is set to take place Tuesday, economy minister Tatiana Clouthier has confirmed.

According to the ministry, the first round will be held virtually at the request of the US and Canada, Mexico’s partners in the trade agreement.

The session follows the apparent failure to reach an agreement two weeks ago with a delegation led by Clouthier and foreign minister Marcelo Ebrard.

The dispute centers on Mexico’s efforts to reassert the dominance of state-owned energy companies – oil and gas giant Pemex and public power utility CFE.

Mexico has introduced policies US and Canada say are discriminatory against firms from their countries looking to invest in Mexico under the USMCA framework.

The Mexican government wants to avoid an escalation of the trade dispute into an international arbitration process, which could lead to tariffs and other trade barriers.

Mexico received the initial request for consultations from the US on July 20, starting a 30-day period to begin the consultation process. Canada has subsequently issued its own complaint.

If the parties fail to arrive at an agreement within 75 days after the initial request was submitted, the consulting party may establish a formal dispute review panel, unless the parties agree on a different timeframe.

If a panel is required, this will push the process well into 2023.