(Washington) Canada on Wednesday joined the United States in a bilateral attempt to challenge Mexico’s allegedly protectionist energy policies that would violate both the spirit and the letter of the new free trade agreement.
Posted at 6:13 p.m
James McCarten The Canadian Press
US Trade Representative Katherine Tai announced on Wednesday that her office would seek dispute-settlement talks. Washington argues that Mexico is unfairly prioritizing its state-owned companies in the energy sector and excluding US companies, including solar and wind power producers.
Hours later, Secretary of Commerce Mary Ng’s office in Ottawa delivered a similar speech. Mexico’s policies have been described as inconsistent with its obligations under the Canada-United States-Mexico Agreement (CUSMA).
“Canada has consistently raised concerns about Mexico’s energy transition,” wrote the minister’s spokeswoman, Alice Hansen. We will join the United States in taking action by launching our own consultations at CUSMA to address these concerns, while supporting the United States in its challenge. »
US energy producers have been complaining for months that Mexico is offering preferential pricing and setting favorable emissions standards to its two main energy companies, oil and gas producer Pemex and the Commission Federal Electricity.
The 2021 changes to Mexico’s electricity laws not only keep US companies out of the Mexican market, they also discourage investments in clean energy providers and potential customers looking to buy that energy, Ms. Tai said.
“We have attempted to work constructively with the Mexican government to address these concerns, but unfortunately American companies continue to be treated unfairly in Mexico,” she said Wednesday. We will seek to work with the Mexican government through these consultations to address these concerns and promote North American competitiveness. »
delaying tactics
The US trade representative also accuses Mexico of using delaying tactics to block US access to Mexico’s energy sector, including renewables such as wind and solar.
“To achieve our shared economic, development and climate goals, current and future supply chains need clean, reliable and affordable energy. »
The statement of solidarity between Canada and the United States may come as a surprise given their trade relationship, which has been marred by contention since the Trilateral Free Trade Agreement came into effect two years ago.
The two countries regularly clash over how Canada applies the CUSMA rules to allow US dairy farmers to enter Canada’s supply-side market. And just earlier this month, Joe Biden’s administration agreed to lift tariffs on Canadian-made solar products imposed by Donald Trump’s administration in 2018.
Softwood also remains an old bone of contention between Canada and the United States. In November 2021, the US Department of Commerce doubled tariffs on softwoods to 17.9%, but eventually decided earlier this year to lower them to 11.64%.
Envoys from the three CUSMA signatory nations met virtually on Wednesday to mark the second anniversary of the trade agreement’s entry into force. They underscored that this trilateral agreement provided a unified framework and code of conduct for what was proving to be quite a turbulent time in world trade.
“This deal completely disproves the misconception by some that free trade agreements are 20th-century instruments that should no longer be the focus of American trade policy,” said Texas Republican Representative Kevin Brady, who helped push the deal through in 2019 Chairman of the powerful House Ways and Means Committee.
Mr Brady also welcomed Ms Tai’s decision to question Mexico’s energy practices – although it’s a bit late, he said.
Louise Blais, former Canadian Ambassador to the United Nations, pointed out that the CUSMA framework has made it possible to resolve a number of disputes over the past two years, “some more discreetly than others”.
“He provided that intangible thing that isn’t always quantifiable: predictability,” she said. This has facilitated the access of investment flows from Europe and Asia to our three countries. »