U.S. says Mexico violating trade agreement
Trump administration warns country to stop favoring its state-owned energy companies
WASHINGTON — Top officials in the Trump administration are warning Mexico that it is violating the new North American trade agreement by favoring stateowned energy companies over American firms that have invested tens of billions of dollars since the nation opened its energy sector to foreign investment six years ago.
In a letter this week, Secretary of State Mike Pompeo, Energy Secretary Dan Brouillette and Commerce Secretary Wilbur Ross said reports of the Mexican government blocking permits for foreignowned firms and writing regulations to favor Pemex and other state-owned companies were “deeply troubling.”
“While we respect Mexico’s sovereign right to determine its own energy policies,” the letter said, “we are obligated to insist that Mexico lives up to its (United States-Mexico-Canada Agreement) obligations, in defense of our national interests.”
The move represented the most forceful intervention to date by the Trump administration in what U.S. observers describe as a deteriorating situation since the election two years ago of Mexican President Andrés Manuel López Obrador. He opposed the energy reforms that ended the monopolies of stateowned energy companies Petróleos Mexicanos, or Pemex, and the Federal Electricity Commission.
Last month, former U.S. Ambassador to Mexico Antonio Garza said López Obrador was engaging in a “slow-rolling expropriation done through Mexico’s regulatory bodies, and that’s making it increasingly difficult to do business in the country.”
Since former Mexican President Enrique Peña Nieto ended a nearly centurylong policy that kept foreign companies out of Mexico’s oil fields, close to $100 billion is estimated to have been invested in Mexico’s energy sector by foreign firms, including Texas companies such as the refiners Phillips 66 and Valero.
The trade group American Fuel and Petrochemical Manufacturers said last month that U.S.-branded gasoline stations in Mexico are being cited for minor or nonexistent infractions and fuel from U.S. refineries is being held up at the border.
In July, the Mexican government ordered Talos Energy to work with Pemex in developing a massive oil field in the Gulf of Mexico, which the Houston firm had discovered three years earlier after winning what had appeared to be exclusive drilling rights at a government auction.
So far López Obrador, a former mayor of Mexico City, has shown no sign of backing down, telling reporters in October that he was willing to roll back the 2014 energy reforms in order to protect Mexican jobs and keep domestic energy prices low.
“We need to rescue Pemex (and other state energy companies),” he said, according to the Mexican newspaper Reforma. “If that is not possible under the current legal framework, I will send, if necessary, an initiative to reform the Constitution.”