Pemex Refinery in Salina Cruz, Oaxaca Pemex refinery in Salina Cruz, Oaxaca. The American Petroleum Institute says that President López Obrador's energy policies unfairly favor Pemex and CFE.

US oil companies renew call for action against treaty violations by Mexico

Top oil lobby says Mexico violating both new and old free trade agreements

The top oil lobby in the United States has once again written to the U.S. government to ask it to urge the Mexican government to uphold its trade agreement commitments to treat American petroleum sector investors and exporters fairly.

In a May 5 letter sent to senior U.S. officials, the president and CEO of the American Petroleum Institute (API) wrote that there have been “continued efforts” by President López Obrador to undermine the United States-Mexico-Canada Agreement (USMCA) and to “discriminate against U.S. investors in violation of commitments made by Mexico in both [the now-defunct] NAFTA and USMCA,” which took effect last July.

Mike Sommers noted that he wrote to the previous United States government last June to outline “discriminatory actions” taken by the Mexican government against U.S. oil companies.

“But recently President López Obrador has increased such actions — in both scope and severity — to change the fundamentals of the energy sector in Mexico,” he wrote in the letter addressed to U.S. Secretary of State Antony Blinken, Secretary of Energy Jennifer Granholm, Secretary of Commerce Gina Raimondo and U.S. Trade Representative Katherine Tai.

“President Lopez Obrador has spearheaded major amendments to two laws — the Power Industry Law and the Hydrocarbons Law — to change market rules in favor of Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) and against private companies,” the API chief wrote.

“The common denominator of both laws is to hinder new private investment in the energy sector as well as destroy the value of already operating private assets in violation of Mexico’s commitments under both NAFTA and USMCA,” Sommers said.

“… We encourage you to continue engaging diplomatically with President López Obrador and your cabinet-level counterparts in Mexico’s agencies to urge the Government of Mexico to uphold its USMCA commitments to treat U.S. investors and U.S. exporters fairly,” the letter said. “Additionally, we ask that you include these violations as a top discussion item for the upcoming Free Trade Commission meeting that Ambassador Tai and Mexican Secretary of Economy Tatiana Clouthier agreed to when they spoke in March.”

Gabriela Siller, head of economic and financial research at Mexican financial group Banco Base, said that the complaints shouldn’t be underestimated because the United States could respond by placing tariffs on Mexican products.

“… The sanctions could begin as nontariff barriers that hinder the entry of Mexican products to the United States,” she said.

Siller said that avoiding tariffs or other sanctions is very important because Mexico’s economic recovery from the coronavirus-induced downturn is heavily dependent on exports to the United States. Mexico’s economy slumped 8.5% last year and also shrank in the first quarter of 2021 compared to the same period of last year, although GDP grew 0.4% compared to the previous quarter, according to preliminary data.

Source: Milenio (sp) 

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