Canada supporting the U.S. in CUSMA dispute with Mexico over energy policies
The show of Canada-U.S. solidarity marks a pivot of sorts for a trade relationship that has largely been marked by disputes between the two countries.
Canada joined forces on Jul. 20 with the United States in a bilateral effort to push back against what they consider protectionist energy policies in Mexico that violate both the spirit and the letter of North America’s new trade rules.
U.S. Trade Representative Katherine Tai said her office would be seeking dispute resolution talks on the grounds that Mexico is unfairly prioritizing its state-owned energy operations, and shutting out American firms, including solar and wind producers.
Within hours, Trade Minister Mary Ng’s office was saying much the same thing, and describing Mexico’s policies as offside with the U.S.-Mexico-Canada Agreement, known in the U.S. as USMCA and in Canada as CUSMA.
“Canada has consistently raised its concerns regarding Mexico’s change in energy policy. We agree with the United States that these policies are inconsistent with Mexico’s CUSMA obligations,” spokeswoman Alice Hansen said in a statement.
“We will be joining the United States in taking action by launching our own consultations under CUSMA to address these concerns, while supporting the U.S. in their challenge.”
U.S. energy producers have been complaining for months that Mexico provides preferential pricing and emissions standards for its two main companies: oil and gas producer Pemex and the Federal Electricity Commission.
Not only are the 2021 changes to Mexico’s electricity laws keeping U.S. companies out of the Mexican market, they are discouraging investment in clean-energy suppliers and would-be customers seeking to buy clean energy, Tai said.
“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,” she said.
“We will seek to work with the Mexican government through these consultations to resolve these concerns to advance North American competitiveness.”
The USTR is also accusing Mexico of using “delays, denials and revocations” to thwart U.S. access to Mexico’s energy sector, including on renewable energy sources.
“To reach our shared regional economic and development goals and climate goals, current and future supply chains need clean, reliable, and affordable energy.”
The show of Canada-U.S. solidarity marks a pivot of sorts for a trade relationship that has largely been marked by disputes between the two countries since the trilateral trade agreement went into effect two years ago.
The two countries have been regularly at odds over how Canada uses the agreement’s rules to provide U.S. dairy producers access to the supply-managed market north of the border. And the Biden administration only agreed earlier this month to lift Trump-era tariffs on Canadian-made solar products imposed back in 2018.
Softwood lumber, too, remains a long-standing bone of contention between Canada and the U.S., where two senior members of Congress are urging Tai to make a deal to ease the inflationary pressure on the U.S. housing market.