The Biden administration plans to request consultations with the Mexican government on energy policies that the United States believes have hurt American businesses, an action that could result in punitive tariffs on Mexico if attempts to resolve the dispute fail, the administration said Wednesday. .
President Andrés Manuel López Obrador has worked to strengthen the dominance of Mexico’s two main state-owned energy companies, the Federal Electricity Commission, or CFE, and the oil and gas company Pemex, in an effort to make the country more more self sufficient.
But US energy companies say those steps have made it increasingly difficult for them to do business in Mexico, which they say gives its own giants favorable treatment, including on prices, emissions standards and contract terms.
Biden administration officials have also criticized the Mexican government for these practices. saying they limit competition, undermine US businesses and US-produced energy, and hinder the fight against climate change.
Officials from the Office of the US Trade Representative told reporters Tuesday that Mexico’s actions appeared to violate the US-Mexico-Canada Agreement. That free trade agreement, which entered into force two years ago, prohibits countries from adopting policies that discriminate against others and requires them to reduce the use of state-owned companies.
The officials said the United States had raised its objections to Mexico’s energy policy with Mexican officials on multiple occasions over the past 18 months.
“We have repeatedly expressed serious concerns about a number of changes to Mexico’s energy policies and their consistency with Mexico’s commitments under the USMCA,” Katherine Tai, the US Trade Representative, said in a statement. “We have tried to work constructively with the Mexican government to address these concerns, but sadly, U.S. companies continue to face unfair treatment in Mexico.”
Last week, López Obrador pressed President Biden on the issue of energy prices during a visit to the White House. He told Biden that he hoped Congress would pass proposals to lower gasoline prices, noting that Americans had been crossing the border to buy gasoline in Mexico, where, he said, it was a dollar cheaper. He did not elaborate on the reason gasoline prices in Mexico are cheaper: the government subsidizes them.
Under the United States-Mexico-Canada Agreement, the parties generally have 30 days after a consultation request to resolve the issue. If an agreement is not reached, the United States may request that a panel of legal and trade experts be established to examine whether Mexico has fulfilled its obligations under the trade agreement.
If that panel decides that Mexico’s actions have been inconsistent with the promises it made in the trade agreement, and Mexico still does not respond, the United States will likely be granted permission to impose tariffs on Mexican products in an amount equal to the damage caused. to American industry.
In a call Tuesday, senior administration officials said the goal was to reach a resolution, not impose more tariffs, but that levies were a possibility in the future if no other deal could be reached.