The United States Trade Representative’s Office (USTR) announced on Monday that it has agreed to extend consultations to try to find a solution to its energy policy dispute with Mexico.
The USTR stated that there is “positive momentum” and agreed to extend the initial deadline for the consultation phase.
In July 2022, the United States and Canada announced that they had called for consultations with Mexico for dispute settlement under Chapter 31 of the Treaty between Mexico, the United States and Canada (USMCA) regarding certain measures that radically favor the state-owned electricity provider, Comisión Federal de Electricidad (CFE), and the state-owned oil and gas company, Petróleos Mexicanos (Pemex), at the expense of foreign investors.
The first round of consultations between the United States and Mexico, along with Canada, took place in August 2022.
Mexico’s actions include, but are not limited to, amendments to Mexico’s electricity law that would prioritize the distribution of CFE-generated power over cleaner energy sources provided by private sector suppliers, such as wind and solar.
They also include Mexico’s delays, denials and revocations of U.S. companies’ ability to operate in Mexico’s energy sector, including with respect to renewable energy projects.
Mexico’s policies have largely cut off U.S. and other countries’ investment in the country’s clean energy infrastructure, including significant steps to reverse reforms Mexico previously made to meet its climate goals under the Paris Agreement.
Since December 2018, Mexico has pursued an energy policy focused on restoring the primacy of CFE and Pemex.
Mexico has undertaken several measures to achieve this goal. For example, in March 2021, Mexico amended its Electricity Industry Law to require its grid operator to prioritize the dispatch to Mexico’s grid of electricity generated by CFE over that generated by all private competitors, regardless of cost or environmental impact.