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An Energy Showdown With Mexico

An Energy Showdown With Mexico

Mexican economy minister Raquel Buenrostro



Photo:

Eyepix/Zuma Press

Mexican economy minister

Raquel Buenrostro

visits Washington Thursday for trade talks, and the stakes are higher than usual. Mexico is threatening to ban genetically modified U.S. corn and is discriminating against U.S. energy investors.

Banning U.S. corn would raise meat prices in Mexico and is unlikely ahead of the country’s 2024 elections. But the energy dispute is urgent and will be a test for U.S. trade representative

Katherine Tai,

who has been missing in action for two years.

Her job is to deliver a message to President

Andrés Manuel López Obrador

that the U.S. is serious about enforcing the U.S.-Mexico-Canada trade agreement. If Mexico refuses to comply with its treaty obligations on energy, the Biden Administration will need to seek an arbitration panel that could lead to U.S. retaliation.

Mr. López Obrador cheered the USMCA while still President-elect in 2018. He likes U.S. market access for Mexico’s manufacturers. But he’s a leftwing nationalist who uses “sovereignty” as an excuse to protect state-owned electrical utility, the Comisión Federal de Electricidad (CFE), and state-owned oil and gas company, Petróleos Mexicanos (Pemex).

Mexican sovereignty has never been at risk under the USMCA, but Mr. López Obrador is discriminating against U.S.-produced energy, investors and service providers. Canada, also on the receiving end of discrimination, has joined the U.S. complaint.

Mexico has granted some permits to select U.S. energy concerns in the hopes of quieting American objections. But in many other cases it has been slow-walking or indefinitely delaying permits for power plants, paperwork for gasoline importers and approval of storage facilities while Pemex and CFE receive favorable bureaucratic treatment.

The 1993 North American Free Trade Agreement…

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