US Plans Ultimatum In Mexico Energy Dispute, Raising Threat Of Tariffs

• The Biden administration plans to send Mexico an "act now or else" message in the coming weeks in an attempt to break a stalemate in an energy trade dispute as bipartisan calls grow for the U.S. to get tougher with its southern neighbour, according to people familiar with the discussions.
• The move would represent a significant escalation in already-strained tensions between U.S. President Joe Biden and his Mexican counterpart, Andres Manuel Lopez Obrador. Obrador's decision to roll back reforms aimed at opening Mexico's power and oil markets to outside competitors sparked the trade dispute.
• S. oil companies, such as Chevron and Marathon Petroleum, along with solar and wind power companies, have struggled to get permits to operate in Mexico in recent years. However, Mexican officials maintained that the companies were not being given discriminatory treatment, but rather that difficulties of a technical nature persist, and investments would be made to address them.
• The Office of the United States Trade Representative (USTR) is expected to make what was described as a "final offer" to Mexico negotiators to open its markets and agree to some increased oversight. If not, the U.S. will request an independent dispute settlement panel under the United States, Mexico, and Canada Agreement (USMCA).
• Under USMCA rules, after 75 days without a resolution the party is free to request a dispute settlement panel; a third party that rules on the case. The United States and Canada demanded dispute settlement talks with Mexico in July, 250 days ago.
• If the panel rules against Mexico and fails to take corrective action, Washington and Ottawa could ultimately impose billions of dollars in retaliatory tariffs on Mexican goods.
• This appeal could escalate trade tensions with Mexico and set back the US’ assistance on immigration and drug trafficking deals. In addition to this, Mexico’s 2023 economic growth is greatly hinged on the nation maintaining good relations with the United States.

(Source: Reuters)