Reuters | 5 February 2021

US Chamber slams Mexico power bill as breach of USMCA trade pact

by Cassandra Garrison

WASHINGTON (Reuters) - The U.S. Chamber of Commerce on Friday slammed an electricity bill proposed by Mexico’s president as “deeply troubling,” saying it represented a breach of the country’s commitments under the United States-Mexico-Canada Agreement (USMCA).

The planned legislation will undermine foreign investor confidence as Mexico emerges from its worst economic contraction since the Great Depression, Chamber Senior Vice President of the Americas Neil Herrington said in a statement.

“Such drastic changes would open the door for the reinstatement of a monopoly in the electricity sector and, we believe, would directly contravene Mexico’s commitments under the U.S.-Mexico-Canada Agreement,” he said.

The USMCA, which took effect in July, replaced the 1994 North American Free Trade Agreement (NAFTA).

The bill sent by President Andres Manuel Lopez Obrador to Congress on Monday is the latest in a series of steps by his government to strengthen the state’s role in the energy sector.

It gives preference in electricity distribution to the state-run Comision Federal de Electricidad and seeks to eliminate its obligation to buy electricity through auctions.

The president has been a strong critic of the previous administration’s opening of the energy sector, saying it skewed the market in favor of private companies.

The U.S. Chamber’s statement follows an excoriation of the bill by Mexico’s top business lobby, which said the planned measures were tantamount to “indirect expropriation.”