Canada expressed concern to Tatiana Clouthier about electricity reform and investment climate in Mexico

One of the main reviews to the reform of the law on the electricity industry proposed by the president Andrés Manuel López Obrador, both of private initiative and of opposition political parties, seeks to promote, to the detriment of private companies and clean energies, to the Federal Electricity Commission (CFE), a productive public enterprise.

Agree with Reuters, this reform concerned the Government of Canada, which is Mexico’s second most important trading partner, after United States.

And it is that in a statement sent by email to the press agency, the office of Mary ng, Minister of International Trade of that country, reported that on February 9, a started a conversation with Tatiana Clouthier, head of the Ministry of the Economy, where he stressed that Mexico must maintain a stable and predictable business environment for Canadian businesses.

For this reason, his government be attentive to legal initiative on electricity, which would aim to strengthen the role of the State in the sector.

Minister Ng noted (to Clouthier) that Canada is monitoring the progress of the new electricity industry law (…) and expressed growing concerns about the investment climate in Mexico

However, Ng’s office did not respond when asked if he thought the Bill breached commitments government calling itself the “Fourth transformation»As part of the trade agreement between Mexico, the United States and Canada (T-MEC), which entered into force on July 1, 2020.

Last week the United States Chamber of Commerce says the electricity reform plan it represented a breach commitments in the said treaty.

It should be noted that the bilateral merchandise trade of Canada with Mexico in 2019 was worth CAD 44 billion (34639 million USD), while with the United States, it reached 780,000 million Canadian dollars (614,062 million USD).

Possible reprisals

February 9 Kenneth smith, former chief negotiator of the T-MEC in the six-year term of former president Enrique Peña Nieto (2012-2018), stressed that if the reform of the electricity law is approved as proposed, the governments of the United States and Canada could resort to trade retaliation to other economic sectors relevant to the country such as steel or agricultural.

This is what he said during his presentation at a meeting of the Mexican Association of Service Station Suppliers (AMPS):

It is possible that Canada and the United States will open a dispute resolution committee and this will allow the application of trade reprisals in Mexico on the part of these two countries, which can harm high-level sectors. export to these markets such as steel, agriculture, among other various sectors

He added that there is a Wrong interpretation from the López Obrador government to Chapter 8, where the energy sector is wrongly excluded. “It is not possible to see it in isolation apart from what is reflected in the protection of investments”said the former official.

And it is that this same day of the morning, López Obrador declared that this reform is important for energy sovereignty, that he declares to be in the TT-MEC, and that companies can go to court if they wish.

Well, they can do it, they are within their rights, we will do the same, but we have to defend the national electricity industry as we will defend oil. Plus, people voted for a change. We didn’t deceive anyone, we said that the privatizations and the looting and the thefts were going to end, and that they were going to take care of everyone, everyone was going to be listened to, everyone was going to be respected, but they were going to be given preference to the people

For its part, Oscar Albín, President of the national auto parts industry (IN ONE), explained that if approved, it will have an impact on the country’s competitiveness, as electric power is much more expensive than that offered in the United States and China.

“It’s a bad alternative in terms of energy costs, fortunately or unfortunately, we are next to the country which, along with China, has the lowest production costs. We are talking that in Mexico it is between 23% and 57% more expensive (…) If private production companies are in the queue, and CFE will be a priority, manufacturers will have to source from CFE with the resulting additional cost, ”he commented.

Meanwhile, the House of Representatives will have as deadline to evacuate it on March 2. The Senate, meanwhile, will have until April 1 in the event that in San Lázaro they occupy all the available time, or 30 calendar days after having received the initiative of their co-legislator.

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