The concern of the United States with the Mexican electricity reform already has a figure: more than 10,000 million dollars. It is the damage that the US government calculates for its companies if it goes ahead with the changes proposed in energy policy by Andrés Manuel López Obrador. This follows from the letter sent in person by the US trade representative, Katherine Tai, to the Secretary of the Economy, Tatiana Clouthier, during the diplomatic meeting held last Thursday at the National Palace, as revealed by the newspaper Reform. The visit of the US delegation, led by the White House Climate Envoy, John Kerry, ended without substantial progress despite the increasingly critical position of the White House, which has already put on the table the possible violations of the free trade agreement (T-MEC).
The Mexican president pointed out on Thursday that the full text of the legislative initiative, which remains stalled in Congress due to the refusal of the opposition to grant the necessary votes for its approval, had been shared with the US delegation. Washington spoke out the following day through a statement from the Embassy, which indicated that they “reiterated the important concerns that the United States has raised about the changes in Mexico’s energy policy, both the proposed constitutional amendment and the changes to the Law of the electrical industry.
Beyond the possible constitutional change, blocked for now, Morena’s second way to de facto achieve the desired changes without the need for the rocky support of the opposition goes through the Supreme Court of Justice. The highest Mexican court has in its hand the endorsement of the changes already made in the Law of the Electricity Industry and that were challenged by several companies. The Court’s response is scheduled for this Tuesday.
The US statement on Friday responded to the position of the Mexican president, who announced that the initiative would not be modified despite the demands of both the opposition and the companies involved. The position of the ruling party has been softening in any case with the passing of days. On Monday, before the closing of the ranks of the opposition, and in particular of the PRI, which announced that it would not vote on the text according to its current wording, Morena parliamentarians opened their hands to possible changes.
The content of the letter from the trade representative adds more pressure and raises the tone a couple of notches: “Unfortunately, although we have tried to be constructive with the Government of Mexico in addressing these concerns, there has been no change. US companies continue to face arbitrary treatment and more than $10 billion in US investment in Mexico, most of it in renewable energy facilities, is at risk now more than ever.”
The letter also refers, in a warning tone, to the conflict resolution mechanisms established by the free trade agreement. “I will consider all options available under the USMCA to address these concerns. Therefore, I urge your Government to suspend these worrying actions and ensure that the rights of US investors and exporters are protected.”
The electricity reform, whose vote is scheduled for Easter, seeks to dismantle the current model and grant a state company – the Federal Electricity Commission (CFE) – the majority management of the market. The changes are controversial because they seek to limit private participation and prioritize CFE’s fossil fuel plants over investments in renewables by private companies.
The US position has been hardening over the months. Ambassador Salazar opted at the beginning of the year to play the diplomacy card and held meetings with leaders of Morena, the party that supports the government, to explore the possibility of negotiating some change. In February, however, Kerry raised the tone after his meeting with Foreign Minister Marcelo Ebrard by asking Mexico to “strengthen an open and competitive market.” Some claims that were supported by both the Secretary of Energy, Jennifer Granholm, and the ambassador, Ken Salazar.
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