The U.S. has officially launched a proceeding against Mexico for alleged violations of its USMCA agreement. The challenge hinges on amendments made to Mexico’s 2021 Power Act, with allegations that power generated by CFE continues to be prioritized over less expensive and more competitive energy technologies. That, along with alleged inaction on permitting, ongoing regulatory silence, and natural gas regulations that favor CFE and Pemex over American companies, has resulted in a breach of Mexico’s USMCA obligations, according to the U.S.
Inaction by Mexico’s Energy Regulatory Commission on the granting of power generation permits, along with interconnection delays and noncompliance to the Paris Agreement, have further damaged U.S.- Mexico relations.
“We have repeatedly expressed serious concerns about a series of changes in Mexico’s energy policies and their consistency with Mexico’s commitments under the USMCA,” Ambassador Katherine Tai said in a statement. “These policy changes impact U.S. economic interests in multiple sectors and disincentivize investment by clean-energy suppliers and by companies that seek to purchase clean, reliable energy. We have tried to work constructively with the Mexican government to address these concerns, but, unfortunately, U.S. companies continue to face unfair treatment in Mexico. We will seek to work with the Mexican government through these consultations to resolve these concerns to advance North American competitiveness.”
Tai, along with U.S. Vice President Kamala Harris, U.S. Special Presidential Envoy for Climate John Kerry, and members of Congress have repeatedly attempted to work with Mexico to resolve the ongoing concerns. However, Mexico’s refusal to address the issues continues to undermine U.S. companies.
According to USMCA Articles 31.4 and 31.5, the two nations must enter into consultations within 30 days of the U.S. action, which was filed on July 20. The U.S. can also request the establishment of an adjudicating panel if an agreement is not reached within 75 days.
If Mexico is found to be in violation of the USMCA agreement, it could face fines of up to USD $30 million.
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