New Mexican regime seeks clearer NAFTA language on oil

The incoming Mexican administration’s split with the current leadership over opening up the oil and gas sector for investment is emerging as a key hurdle for a bilateral agreement over NAFTA, according to two people familiar with negotiations.

President-elect Andres Manuel Lopez Obrador’s NAFTA representative, Jesus Seade, has asked the Trump administration to address concerns that U.S.-proposed language in the new NAFTA deal would put too many restrictions on how they can treat foreign companies looking to tap the nation’s crude, according to the people, who asked not to be named.

U.S. Trade Representative Robert Lighthizer has pushed back, and Seade has been shuttling back and forth between Washington and Mexico City to try to smooth out the issues, according to the people.

While Mexican President Enrique Pena Nieto’s government is officially in charge of the negotiation, any NAFTA deal will need Lopez Obrador’s support because it needs to pass a Mexican Senate controlled by his allies, and it will be up to his government to implement it. Lopez Obrador will be sworn in Dec. 1.

Seade on Thursday night rejected the idea that the energy issue has become controversial, but said adjustments need to be made in the NAFTA deal language to reflect Mexican sovereignty and rights regarding hydrocarbons in a way that isn’t confusing.

“It’s not about not touching the energy reform, but it’s touching it in the right way,” Seade told reporters late Thursday. “The U.S. has had this drafted up to the last comma for some time, so if you change a single comma, then it needs to be discussed. But we’re discussing it, and this is going to come out OK.”

NAFTA talks are poised to spill into next week, pushing up against the goal for a deal by the end of the month, as the U.S. and Mexico work out their issues before Canada is expected to rejoin the talks.

Seade said Thursday that he thinks it should be possible for Canada to return to negotiations in Washington next week even if the U.S. and Mexico need to continue to work on their bilateral differences at the same time.

For the past five weeks, the talks between the U.S. and Mexico have largely focused on narrowing differences over the rules governing auto production in North America.

While President Donald Trump has floated the idea of negotiating bilateral trade accords starting with Mexico, his NAFTA partners have both said they want to keep a trilateral deal.

Lopez Obrador’s team “is not against investors, it is in favour of making it so that Mexico can develop its energy industry as it wishes, with private or public investment,” Jesus Ramirez, a spokesman for Lopez Obrador, said.