USMCA Disputes Run Ramped Again, This Time with Mexico

The United States-Mexico-Canada Agreement (USMCA) entered into force in 2022 after years of negotiations, but it hasn’t been all smooth sailing.

Trade disputes between the U.S. and Canada played out in 2020 and 2021, with harsh tariffs and “unjustified” trade restrictions, according to Katherine Tai, U.S. trade representative. Disputes between the two countries were settled in Jan. 2022. However, more trade waves are forming.

A trade fight broke out between the U.S. and Mexico on Wednesday, with the U.S. accusing President Andrés Manual López Obrador’s government of favoring its own energy companies over American companies by:
1.    Prioritizing the distribution of Mexico’s Comisión Federal de Electricidad (CFE) generated power over cleaner energy sources from America, like wind and solar.
2.    Delaying, denying and revoking the U.S.’s ability to operate in Mexico’s energy sector.

The U.S. and Canada are both seeking consultations with Mexico under the USMCA, which formally initiates a dispute and opens the door to tariffs on imported products from Mexico.

Ambassador Tai says her team will consult with the Mexican government to “resolve concerns and advance North American competitiveness.

“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,” said Tai. “We have tried to work constructively with the Mexican government to address these concerns, but, unfortunately, U.S. companies continue to face unfair treatment in Mexico.”

Mary Ng, Canadian minister of international trade said Canada agrees with the U. S’s concerns and approach. She says Canada will be launching its own consultations “while supporting the U.S. in their challenge.” 

Luz Maria De la Mora, Mexico’s deputy economy minister, who handles trade disputes for the Mexican government, says she hopes to talk with U.S. officials and reach an agreement.

However, President Obrador said on Friday the Mexican government will respond to inquiries on energy policies made by the United States and Canada on Sept. 16. He maintains that Mexico will defend itself if sanctioned over its energy policy.

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