Mexico's energy policies, constitutional reforms endanger USMCA benefits – think tank

Mexican public policy institute IMCO and the Wilson Center, an international think tank based in Washington D.C., have warned that Mexican policies in the energy sector and proposed constitutional reforms are jeopardizing the benefits of the US-Mexico-Canada Agreement (USMCA).

The fourth anniversary of USMCA was celebrated on July 1 and it is set to expire in July 2036. In July 2026, the agreement is scheduled to undergo its first review, when the three countries may decide to extend its validity for an additional six years.

IMCO and the Wilson Center said that a crucial element for a successful USMCA review in 2026 is resolving ongoing state-to-state disputes, including in the energy sector.

"Energy has the potential to be a sort of bomb under the treaty,” IMCO’s director of economy, Jesús Carrillo, told BNamericas. 

Two disputes related to the energy sector – and one concerning genetically modified corn – remain unresolved.

The US and Canada have alleged in two parallel cases that Mexican energy policies are negatively impacting their energy companies to the benefit of Mexico's national oil company Pemex and state-owned electricity supplier CFE.

These policies include delays in granting permits to private companies in the electricity sector and proposals to give precedence to CFE in the power market.

In February, Mexico’s supreme court ruled these measures unconstitutional. If constitutional reforms are approved in September which enable the measures to take effect, Carrillo said that US energy companies could exert greater pressure on their government to take action under the treaty.

“The toughest area now is agri-food. If the constitutional reforms in the energy sector are approved, this could raise more alarm,” Carrillo said.

The two think tanks said that the proposed constitutional reforms will potentially pose a challenge to the performance of the USMCA.

These reforms include eliminating autonomous regulatory agencies such as antitrust agency Cofece, telecommunications regulator IFT and energy watchdog CRE, and incorporating their functions into the ministries.

“If the constitutional reform in the energy sector takes the shape of not allowing CFE to invest more in transmission and distribution with the private sector, there could be more problems," Carrillo said. "It would be closing off a very important market to investment."

IMCO and the Wilson Center said that establishing CFE's precedence over private companies and introducing new restrictions for private companies in the energy sector could violate the provisions of the USMCA.

"Resolving pending disputes and aligning regulatory frameworks among the three USMCA countries is crucial," they said. "Fully implementing the agreement is vital to ensure its longevity and enable the countries to fully benefit from its provisions."