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Mexico-US energy tensions ease as focus shifts to shared opportunities

NGI | 13 September 2022

Mexico-US energy tensions ease as focus shifts to shared opportunities

By Christopher Lenton

U.S. Commerce Secretary Gina Raimondo and Secretary of State Antony Blinken were in Mexico City on Monday to speak to top officials, including Mexico President Andrés Manuel López Orador, in what has been called the U.S.-Mexico High-Level Economic Dialogue (HLED).

Blinken said the two “deeply interconnected” nations had their differences, but would work through them “in a pragmatic way.” He told reporters that “it’s evident from conversations today that the U.S. and Mexico see a shared opportunity to build an energy future that advances climate goals.”

López Obrador, who had threatened to lay bare his grievances with U.S. policy in an upcoming Independence Day address to the nation, said he would no longer do so. He said Tuesday morning that “there is a lot of interest, desire to continue maintaining a good relationship.”

He said “in the energy part, basically it’s their goal, the goal of the United States, to be respectful of our energy policy and our sovereignty.”

He added that the “words tariffs or penalties weren’t used, nothing. Because we are working together to strengthen our relationship. Commerce between the United States and Mexico is growing a lot.”

In July, the United States said discriminatory treatment of U.S. energy companies amounted to a violation of the the United States-Mexico-Canada Agreement (USMCA).

U.S. Trade Representative (USTR) Katherine Tai said her office was requesting dispute settlement consultations with Mexico under the free trade pact, citing unfair treatment of U.S. firms in sectors including natural gas, power generation and marketing of liquid fuels.

The policies mentioned include a June 2022 directive from Mexico energy ministry Sener that would require natural gas marketers and large consumers to source the fuel from either national oil company Petróleos Mexicanos (Pemex) or state power company Comisión Federal de Electricidad (CFE).

Since then, the López Obrador government has temporarily suspended the natural gas rule change, and the Supreme Court has deemed it goes against the nation’s laws of free and fair competition. López Obrador has also touted multiple liquefied natural gas export projects planned in Mexico by U.S. firms such as Sempra, New Fortress Energy Inc. and Mexico Pacific Ltd. LLC.

Supply Chain Coordination

The focus of the talks on Monday was around how supply chains can be enhanced in the wake of disruptions caused by the coronavirus pandemic and Russia’s invasion of Ukraine.

“North America is an economic powerhouse,” the White House said in a statement. “Regional economic strength has enabled total trade between the United States and Mexico to surpass pre-pandemic levels. The HLED builds on this dynamic and flourishing economic relationship with specific projects to strengthen North American supply chains and regional competitiveness.”

The Inflation Reduction Act is expected to spur demand for electric vehicles and clean energy technologies. “It will also create jobs in both countries and position North America as a leader in clean energy,” the White House said.

The countries also said they would work together to pursue a pilot project to determine the feasibility of nearshoring semiconductor manufacturing inputs to reduce the risk of future supply chain disruptions.

“Later this year, the United States and Mexico will celebrate 200 years of bilateral relations. Our long-standing familial, cultural, and business ties propel us to explore new ways to facilitate legitimate trade and travel along our shared border through infrastructure modernization, partnerships with private sector stakeholders, and trade facilitation programs,” the White House said.

 source: NGI