Mexican President Andres Manuel Lopez Obrador is flouting his country’s obligations under the trade deal that U.S. officials negotiated with Mexico and Canada, according to a new rebuke from President Trump’s team.
“We are obligated to insist that Mexico lives up to its USMCA obligations, in defense of our national interests, which include investments funded by the U.S. taxpayer,” Secretary of State Mike Pompeo, using the acronym for the trade deal, wrote to the Mexican government in a Monday letter obtained by the Washington Examiner.
The dispute centers on Lopez Obrador’s desire to fortify state-run energy companies at the expense of the private sector. That initiative has developed into a trade controversy less than a year after the signing of the replacement pact that Trump touted as a deal to end the “NAFTA nightmare” when it was signed last January.
“He’s disregarding the energy component in the USMCA,” said the Heritage Foundation’s Ana Quintana, a senior policy analyst for Latin America.
AMLO, as the leftist president is known, has justified his desire to curb private sector investments as a means of protecting national sovereignty. “I don’t want the energy sector to be privatized because if we don’t have economic independence, energy independence, we cannot guarantee our sovereignty,” he said this fall.
That sentiment has taken arbitrary turns from the perspective of an American energy sector that has moved to capitalize on the “neoliberal” energy policies implemented by his predecessor. Pompeo, along with Energy Secretary Dan Brouillette and Commerce Secretary Wilbur Ross, flagged complaints that Mexican officials have “allegedly instructed to block permits for private sector energy projects and to exercise their regulatory authority to favor stateowned energy companies.”
“If true, this would be deeply troubling and raise concerns regarding Mexico’s commitments under the USMCA,” the trio wrote in the letter.
The shift in Mexico City comes at an inconvenient time for affected U.S. companies, which have anchored their operations in the legal framework established by Lopez Obrador’s predecessor in 2014.
U.S. companies that made that investment after those initial reforms those years ago … are now in a place where the facilities have been built, the infrastructure has been built, they’re getting ready to go online, and they’re finding out what the new rules are,” a consultant for the energy industry said. “They can’t get the five-year permit or the 10-year permit they thought they were going to get. They can only apply for a 365-day permit, and then, that gets held up.”
Such a fickle policy course could have a chilling effect on the broader U.S.-Mexico economic relationship if the USMCA proves incapable of curbing Lopez Obrador’s protectionist tendencies. “An attractive investment climate, backed by regulations applied in a non-discriminatory manner, can create jobs and foster the investment needed to secure Mexico’s energy self-sufficiency while keeping energy costs affordable for consumers,” Pompeo, Brouillette, and Ross wrote. “We sincerely hope that we can collaborate with you on these important objectives to ensure that our economic partnership continues to deepen and expand to the benefit of the Mexican and American people.”
Yet, the Mexican leader regards Petroleos Mexicanos as a central driver of Mexico’s “economic reemergence,” as Quintana put it. “We’re literally going back to, like, a 1970s Mexican administration where it’s like … this is how we’re going to essentially make Mexico great again,” the Heritage Foundation analyst said.
