Canada joined forces with the United States on Wednesday in a bilateral effort to reject what they see as protectionist energy policies in Mexico that violate both the spirit and the letter of new North American trade rules.
US Trade Representative Katherine Tai said her office would seek dispute resolution talks on the grounds that Mexico is unfairly prioritizing its state-owned energy operations and excluding US companies, including energy producers. solar and wind.
Within hours, Trade Minister Mary Ng’s office was saying much the same thing, describing Mexico’s policies as out of step with the US-Mexico-Canada Agreement, known in the US as USMCA and in Canada as NAFTA.
“Canada has consistently raised its concerns regarding the change in Mexico’s energy policy. We agree with the United States that these policies are inconsistent with Mexico’s obligations under NAFTA,” spokeswoman Alice Hansen said in a statement. .
“We will join the United States in taking action by launching our own consultations under NAFTA to address these concerns, while supporting the US in its challenge.”
US energy producers have complained for months that Mexico provides preferential prices and emissions standards for its two main companies: oil and gas producer Pemex and the Federal Electricity Commission.
The 2021 changes to Mexico’s electricity laws not only keep US companies out of the Mexican market, but also discourage investment in clean energy providers and potential customers looking to buy clean energy, Tai said.
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“We have tried to work constructively with the Mexican government to address these concerns, but sadly, American companies continue to face unfair treatment in Mexico,” he said.
“We will look to work with the Mexican government through these consultations to resolve these concerns to advance North American competitiveness.”
The USTR also accuses Mexico of using “delays, denials, and revocations” to prevent US access to Mexico’s energy sector, including renewable energy sources.
Canada sides with #USA. US in #CUSMA’s growing fight with #Mexico over energy policies. #USPoli #CDNPoli
“To meet our shared regional economic and development goals and climate goals, current and future supply chains need clean, reliable and affordable energy.”
The show of solidarity between Canada and the United States marks a turning point in a trade relationship that has been largely characterized by bickering between the two countries since the trilateral trade agreement took effect two years ago.
The two countries have regularly been at odds over how Canada uses the agreement’s rules to provide US dairy farmers with access to the managed supply 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 in 2018.
Softwood lumber also remains a long-standing bone of contention between Canada and the US, where two top members of Congress are urging Tai to make a deal to ease inflationary pressure in the US housing market.
Democratic Senator Bob Menendez of New Jersey and Republican Senator John Thune of South Dakota also want the Biden administration to provide more tariff relief on imports from Canada.
Doing so “would make homebuilding and homeownership more affordable for communities across our country,” Menendez and Thune wrote Monday in a letter to Tai and Commerce Secretary Gina Raimondo.
Since the last softwood lumber deal between the two countries expired in 2015, softwood lumber prices have more than doubled, they write.
“Addressing the inefficiencies of the lumber trade would help reduce unnecessary financial pressures on the US housing market,” the letter says. “We urge the US Trade Representative to prioritize a new US-Canada softwood lumber deal.”
In November, the Commerce Department doubled the tariff rate on softwood lumber to 17.9 percent, but decided earlier this year to lower it to 11.64 percent.
Tai says the US is willing to talk, but Canada must address the federal tariff regime that US producers say creates an uneven playing field, the central issue in a trade dispute that has raged for decades.
Federal officials in Ottawa say that while Canada will always come to the table, Tai is calling for a significant and fundamental change in the way the government manages Crown resources before the two sides have even sat down, something that just don’t agree.
Ottawa sets stumpage fees for timber harvested from federal and provincial lands that US growers, forced to pay market rates, have long insisted represent an unfair subsidy.
A panel of emissaries from the three countries met virtually on Wednesday to mark the second anniversary of the trade deal’s entry into force, praising it for providing a consistent framework and rules of the road for what has proven to be a tumultuous era in trade. world.
“This agreement completely refutes the mistaken view by some that free trade agreements are tools of the 20th century that should no longer be the focus of US trade policy,” said Texas Republican Rep. Kevin Brady, who he helped sign the agreement into law in 2019 as chairman of the powerful House Ways and Means Committee.
Brady described Tai’s decision to play offense against Mexico’s energy policies as “overdue but very welcome.”
“The Mexican government has been walking away from its obligations in the energy sector,” he said. “This hurts our business and North American competitiveness, and I think it hurts Mexico’s own consumers and their efforts in the environmental arena.”
Louise Blais, Canada’s former ambassador to the UN, noted that the USMCA framework has resulted in the resolution of a number of disputes over the past two years, “some more quietly than others.”
“It’s provided that intangible, that thing that you can’t always quantify: predictability,” he said. “It has facilitated the entry of investment flows from Europe and Asia to our three countries.”
This report from The Canadian Press was first published on July 20, 2022.