Mexican official seeks ‘open, frank,’ dialogue with U.S. and Canada in energy dispute

By Anthony Esposito

MEXICO CITY (Reuters) – Mexico’s authorities will maintain frank and open discussions to resolve a dispute with the USA and Canada over Mexican vitality insurance policies that they argue breaches a regional commerce pact, a senior commerce official stated.

The U.S. and Canadian calls for come after years of concern amongst these nations’ personal companies that Mexican President Andres Manuel Lopez Obrador’s drive to tighten the state’s grip on oil and electrical energy output handled them unfairly and was in violation of the United States-Mexico-Canada Settlement (USMCA).

The united statesled request for consultations with Mexico marks probably the most severe commerce spat between Washington and Mexico Metropolis because the USMCA commerce pact took impact two years in the past. If unresolved, it might finally result in expensive U.S. tariffs.

Deputy Economic system Minister Luz Maria De la Mora, who handles commerce disputes for the Mexican authorities, stated she hoped talks with U.S. officers would yield a breakthrough.

“We wish to benefit from this session part … to see how we will attain a mutually passable answer by way of an open, frank and constructive dialogue, which can permit us to beat these variations,” she advised Reuters in an interview.

Although De la Mora stated Mexico would search to argue that its vitality insurance policies will not be in breach of the commerce deal, her conciliatory tone contrasts with Lopez Obrador’s defiant push again in opposition to the complaints.

A combative leftist, Lopez Obrador stated on Friday “we is not going to yield” on the matter, promising to proceed a strong protection of his nationalist vitality imaginative and prescient.

Lopez Obrador has pledged to revive state oil producer Petroleos Mexicanos (Pemex) and energy utility Comision Federal de Electricidad, which he argues his predecessors intentionally “destroyed” to cede Mexico’s vitality market to foreigners.

The U.S. Commerce Consultant says the strikes to bolster the state-run companies have undermined American firms in Mexico.

De la Mora stated Mexico wouldn’t use a separate dispute with Washington over the auto business as a bargaining chip.

“We hope this subject will likely be resolved earlier than the tip of the yr and we’re very optimistic that we’ve got a really stable case and that we are going to have a positive decision for Mexico,” stated De la Mora, referring to the auto spat.

Canada stated in January it will be part of Mexico in requesting a dispute settlement panel to iron out their variations with the USA over methods to apply automotive sector content material necessities underneath the treaty.

Requested if Lopez Obrador’s vitality insurance policies had been spooking traders, De la Mora pointed to current bulletins of investments in Mexico by U.S. vitality firm Sempra Vitality and Canada’s TC Vitality.

She argued that the USMCA’s dispute settlement mechanism gave traders certainty as a result of if variations come up, like they’ve now, its use would assist clear issues up.

“The dispute decision mechanism is a really stable mechanism, it’s a mechanism that enables the investor to have higher certainty and that is very constructive for the enterprise local weather,” she stated.

The U.S. requested consultations underneath the USMCA over Mexico’s vitality insurance policies on July 20.

Below USMCA guidelines, the USA and Mexico would enter into consultations inside 30 days of the U.S. request, except the events resolve in any other case. If they don’t resolve the matter by way of consultations inside 75 days of the U.S. request, the USA could request the institution of a dispute panel.

(Reporting by Anthony Esposito; Extra reporting by Dave Graham; Enhancing by Kim Coghill and Alistair Bell)