US legislators urge Biden to examine Mexican energy policy

Twenty US legislators, including members of the Senate and the House of Representatives from both the Democratic and Republican parties, have urged President Joe Biden to take a closer look at the Mexican government’s approach to competition in the energy sector in light of the challenges faced by US oil, gas and power companies working in Mexico.

In the letter, which was dated July 20, the legislators voiced serious concerns about the measures that the administration of Mexican President Andres Manuel Lopez Obrador has taken to insulate state-run organisations from competition. They said they had expressed similar worries in a letter to former President Donald Trump last year and thanked US Trade Representative (USTR) Katherine Tai, a Biden administration official, for drawing attention to the matter during a recent visit to Mexico.

“We were pleased to see Ambassador Katherine Tai raise this with her counterpart last month and believe this recent escalation requires your immediate and sustained attention and a timely solution,” they wrote.

The legislators expressed particular concern about Mexican legislation and policies that have been introduced this year for the express purpose of ensuring the dominance of government-run companies such as the national oil company (NOC) Pemex and the national power provider CFE. These moves have given Mexican regulators a green light to stall US investors by various means, including the cancellation or postponement of permits, they said.

They went on to say that the Lopez Obrador administration’s energy policy was at odds with the spirit of the US-Mexico-Canada Agreement (USMCA), a free-trade accord that took effect last year, replacing 26-year-old North American Free Trade Agreement (NAFTA). Without competition, they added, Mexican energy policy will not just hinder investment but may also threaten jobs within the US energy sector. The current Mexican policy regime “undermines the spirit and letter of the US-Mexico-Canada free trade agreement (USMCA) and affects the livelihoods of our fellow Americans working in the energy sector,” they said.

The letter to Biden drew criticism from Lopez Obrador, who stressed that the 20 signatories only represented a small fraction of the 435 members of the US Congress. “There is really no problem," he was quoted as saying by Argus Media last week. “Mexico’s situation is exceptional, unbeatable for investment. We see, as always, some who protest, but they are an insignificant minority.”