U.S. to seek dispute talks with Mexico over energy policy-sources

Excess natural gas is burnt, or flared, from Mexican state-owned Pemex’s Tula oil refinery, located adjacent to the Tula power plant belonging to national power company Comision Federal de Electricidad, or CFE, in Tula de Allende, north of Mexico City, Mexico June 22, 2020. REUTERS/Henry Romero/File Photo

MEXICO CITY, July 19 (Reuters) – The United States will request dispute settlement consultations with Mexico under a regional trade deal over what it considers discriminatory Mexican energy policies, according to two Mexican sources and a draft announcement seen by Reuters on Tuesday.

The consultations relate to measures taken by Mexico which the U.S. Trade Representative argues undermine American companies in Mexico and U.S.-produced energy in favor of Mexican state-owned power utility Comision Federal de Electricidad (CFE) and oil firm Petroleos Mexicanos (Pemex).

USTR did not immediately reply to a request for comment on the announcement, which was shared by the sources in Mexico and was set to be made public on Wednesday.

Mexican President Andres Manuel Lopez Obrador, a left-leaning energy nationalist, has pledged to revive Pemex and CFE, which he has said his predecessors deliberately “destroyed” to leave the market in the hands of foreigners.

The United States is now arguing his efforts to strengthen the state-run firms appear to contravene Mexico’s commitments under the United States-Mexico-Canada Agreement (USMCA) trade pact.

“We have repeatedly expressed serious concerns about a series of changes in Mexico’s energy policies and their consistency with Mexico’s commitments under the USMCA,” U.S. Trade Representative Katherine Tai said in the draft statement.

Tai argued that policy changes undertaken by Mexico are impacting U.S. economic interests in multiple sectors and “disincentivize investment” by clean-energy suppliers and by companies that seek to purchase clean, reliable energy.

Reporting by Dave Graham and Anthony Esposito
Additional reporting by Steve Holland in Washington D.C.

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