US pinpoints investment trade barriers in Mexico’s energy sector

The energy sector policies of Mexican President Andrés Manuel López Obrador have led to several investment trade barriers with the US, according to Washington. 

“Multiple US companies have reported exiting Mexico’s energy market as a direct consequence of these measures,” the Office of the US Trade Representative (USTR) said in its 2024 National Trade Estimate Report on Foreign Trade Barriers after citing some decrees, reforms and policies announced since the leftist leader took office at the end of 2018.

The report recognizes that these measures are meant to favor state-owned oil and gas company Pemex and national power firm CFE over the private sector, a policy of López Obrador aimed at achieving energy independence from the US and diminishing the private sector’s participation, which he has described as unfair. 

Among the measures taken are the 2021 amendments to the electric power industry law (LIE), which Mexico’s supreme court declared unconstitutional in February; a decree to fight fuel theft published in October, popularly known in Mexico as the anti-guachicol decree, that temporarily restricts fuel trade of 68 products; and a five-year extension for Pemex to comply with maximum sulfur content requirements in fuel in certain parts of Mexico. 

Pemex was the only company that benefited from this extension, the report said, adding: “Without the extension, Pemex would have had to purchase ultra-low sulfur diesel imported from the United States or upgrade its facilities to produce ultra-low sulfur diesel in sufficient quantities.”

The US and Canada have filed complaints and reviewed proceedings against López Obrador’s policies under the three nations’ USMCA trade agreement. But all disputes have been reportedly resolved. 

“Certain actions or inactions by Mexico have also been curtailing the ability of private companies to participate effectively, if at all, in Mexico’s energy sector,” the report says. “They include delaying, denying, or failing to act on applications for new permits or permit modifications; suspending or revoking existing permits; and otherwise blocking private companies’ ability to operate renewable energy facilities (such as wind and solar installations), import and export electricity and fuel, store or transload fuel, and build or operate retail fuel stations.”