Energy: Mexico-US confrontation

The confrontation between the governments of the United States and Mexico over energy disputes is imminent.

At the center of the disputes is the change in the energy model of the López Obrador government.

The legal lawsuits that are coming are due to the change of rules, the uncertainty and, in general, the affectation of the rights of American companies and investors.

Some of these are already underway, and many more are in the making. They have to do with fuel terminal operators, renewable energy generators, and gas importers, among others.

The differences are in the field of hydrocarbons, electricity and gas.

The president of the organization Sociedad Americana de México (The American Society of Mexico), Larry Rubin said yesterday – in a videoconference – that Katherine Tai, head of USTR, is in the process of presenting the cases against Mexico, under the mechanisms of settlement of controversies of the Treaty between Mexico, the United States and Canada (T-MEC).

Rubin commented that the federal government’s energy policy has been a sensitive issue with the US government and US companies.

He warned that the government of President Andrés Manuel López Obrador has focused its efforts on strengthening the preponderant role of the productive state companies, Petróleos Mexicanos (Pemex) and CFE, as well as reversing the energy reform of the past six-year term, which opened hydrocarbons and electricity to private investment.

In recent days, the US ambassador to Mexico, Ken Salazar, revealed that his country is resolving disputes with the Mexican government with companies in the energy sector that involve more than 30 billion dollars in US investments.

He made it public when explaining his constant visits to the National Palace. He commented that he accompanies a group of 17 companies that have disputes with the Mexican government.

In parallel, the International Chamber of Commerce (ICC) Mexico -the private body that brings together 45 million companies internationally- and chaired by Claus von Wobeser reported that last year, Mexico climbed to fifth place with the highest number of private investment disputes in international arbitrations -among the 150 nations covered-, most of them in the energy and infrastructure sectors.

70% of the arbitration cases were located in energy. And they derive from the lack of rule of law and changes in the rules of operation in key sectors, such as energy and infrastructure, which limits private participation.

From the looks of it, the US government is seeking to resolve the disputes in two ways.

For conciliation, with the good offices of the US diplomat. And in parallel, it prepares its strategy to resolve disputes within the framework of the T-MEC under the dispute settlement mechanisms.

The Mexican government could be headed for a scenario in which it will simultaneously face energy disputes in a State-State conflict and, on the other, seek to reach agreements in government negotiations with the affected companies.

Additionally, it will have to face all the legal resources that are filed in the Mexican courts.

For now, the changes in the energy model are already affecting the level of investment that Mexico receives and implicitly the opportunity for private companies to promote the national energy sector is being lost.

In the context of high inflation and rising interest rates, and their possible impact on economic growth, the President of Mexico asks the central bank to be more creative in combating inflation, it would have to be said that investment is precisely one piece essential to trigger greater economic growth.

And, if not, at the time.

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Marco A. Mares


Rich and Powerful

He has worked continuously in newspapers, magazines, radio, television and the Internet, in the last 31 years he has specialized in business, finance and economics. He is one of the three hosts of the program Alebrijes, Águila o Sol, a program specialized in economic issues that is broadcast on Foro TV.

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