North American bloc; Mexico will avoid disputes

The Mexican government seeks to avoid the arbitration panel in energy matters. Its proposal is based on the validity of the Electricity Law of 2014 and to avoid discrimination against foreign companies.

However, it would maintain its energy sovereignty policy of strengthening state companies: Pemex and CFE.

It will shortly invest in distribution and transmission to interconnect clean energy companies.

Most likely, the start of the consultation process that the US could request from Mexico for the decree that prohibits the importation of yellow corn will not materialize either.

The even more astonishing news is that Mexico will shortly present two work programs to the United States government that, if approved, could trigger multimillion-dollar investments in the national territory.

A dramatic and unforeseen twist in the story being written around trade relations between Mexico, the United States, and Canada is about to take place.

Contrary to what was expected, the dramatic end of the train crash that would derail the commercial society and lead to the conflict between the “3 friends”: Andrés Manuel López Obrador, Joe Biden and Justin Trudeau will not be recorded.

On the contrary, if what comes to fruition, in a couple of weeks, the final chapter of the story will mark the beginning of the consolidation of the North American trade bloc.

The international circumstance – in which the war between Russia and Ukraine has changed international geopolitics – has opened a door to strengthen the North American region with the United States, Canada and Mexico.

The relocation of supplier companies to the North American industry from China is strengthening the strategic importance of Mexico.

The US can attract an important part of this business migration to its territory, but the lack of labor in that country and the existence of human capital in Mexico, raise the undeniable complementarity of the economies.

Neither the United States nor Canada are interested in commercial disputes with Mexico. What suits them is to negotiate and deepen their relationships. The Mexican government is focused on taking advantage of the opportunity that the international context opened up.

It will shortly present to the US government a package of polygon auctions in the Interoceanic Corridor that will take place at the end of February or beginning of March. The prospective marks potential investments of one billion dollars for each of the 10 development poles.

And on the other hand, Mexico will present a work plan to take advantage of the Semiconductor Law launched last August by President Joe Biden to encourage technology companies to invest in chip manufacturing.

The key protagonist in this strategy is the Secretary of the Economy, Raquel Buenrostro, who not only has the negotiating profile, but also has the valuable right of handle in the office of President López Obrador.

After the sudden appointment of Buenrostro, taking over from Tatiana Clouthier, it seemed that there was little chance of avoiding a confrontation with the US and Canada.

However, the former head of the SAT, as soon as she arrived, removed a good part of the team in charge of international negotiations, unraveled the issues, met her counterparts and identified the keys to make proposals to them.

Buenrostro has met with his colleague, the US Secretary of Commerce, Gina Raimondo, and with the White House trade representative, Katherine Tai, and other authorities to discuss the concerns surrounding energy and agricultural policy and promote the programs of work that trigger investment.

It found that of the 4 concerns expressed by the US government (to request Mexico, on July 20, 2022, the consultation process around the national energy policy), 3 are actually “balls of smoke”.

The basis for dissuading the US government from a dispute panel is that the 2014 Electricity Industry Law is still in force in Mexico and that it will be invested to increase the distribution capacity of the CFE and overcome the technical problems that have prevented the interconnection of renewable energy companies to national distribution and transmission networks.

We’ll see if Raquel Buenrostro’s strategy works and manages to change the collision path that until now, most anticipate.

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