Mexico energy reforms: The Biden Administration is sending Mexico an ultimatum: open its energy markets to outside competitors or face the consequences. After months of negotiations between the United States and Mexico have yielded little progress, the USTR is preparing to make a “final offer” to Mexico in the coming weeks. The offer will require Mexico to open its energy markets and agree to increased oversight, or face the potential of a dispute settlement panel and retaliatory tariffs.
The move is a significant escalation in already-strained tensions between Presidents Joe Biden and Andres Manuel Lopez Obrador. Obrador’s decision to roll back Mexico energy reforms aimed at opening Mexico’s power and oil markets to outside competitors sparked the trade dispute, which has been ongoing since July of last year. The United States Trade Representative (USTR) Office has been entitled to call for a formal dispute settlement panel since October 3, and now the Biden Administration appears ready to take that step.
The move carries significant risk for Biden, who is expected to launch his re-election bid in the coming weeks and will face criticism over his handling of immigration and drug trafficking. He needs Mexico’s help to control the border after COVID-era restrictions are lifted on May 11.
In addition to the energy dispute, the Biden Administration has also escalated another trade dispute with Mexico over its plans to ban genetically modified corn for human consumption. The energy dispute is a step ahead under the United States Mexico Canada Association’s enforcement mechanism, and the USTR is now looking to leverage all the tools available to it to ensure Mexico opens its markets.
Also Read: A-maize-ing! Mexico destroys US corn industry in one move
Patience on Capitol Hill over the talks is wearing thin. Senator Ron Wyden of Oregon has urged the USTR to “say enough is enough” and escalate the dispute into a formal settlement case. He noted that American clean energy producers are still waiting for access and it was time to take action.
It’s now up to Mexico to decide whether to open its markets or face the consequences. The Biden Administration is sending a clear message: act now or else. As the USTR has hinted, all the tools in the USMCA are at its disposal, and the Biden Administration appears ready to use them.
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