Kairi brown 
EXPLAINED: US Energy Sector Dispute with Mexico
López Obrador doesn’t want the Federal Electricity Commission to go bankrupt or lose more market share. Last year, his allies in Mexico’s congress made legal changes that give preference to the state power utility, requiring it to buy power from its own plants first, while often cleaner energy from private generators would be last in line.
The president tried to enshrine some of those changes in the constitution, but those failed to get the required two-thirds majority in congress earlier this year.
Mexican law had required free competition in the power industry. And the U.S.-Mexico-Canada free trade agreement prohibits member nations from favoring domestic producers or state-owned firms.
WHAT DO THE SIDES SAY ABOUT THEIR DISPUTE?
In announcing the Formal Complaints of the U.S. Wednesday, U.S. Trade Representative Office said in a statement: “Mexico’s policy has largely cut the US and other investments in the country’s net energy infrastructure, including significant steps to restore Mexico reforms that were previously carried out to meet their climate goals under the Paris agreement. Changes in Mexican policy threatened to encourage private sector innovation out of the Mexican energy market. “
López Obrador underestimated Wednesday’s dispute, scratching it as a sufficient routine in the relationship between the two countries. He noted that there were no complaints mentioned to him when he visited President Joe Biden in Washington earlier this month.
On Thursday, López Obrador said this problem was “about the interests dedicated to looting Mexico.” He said he did not believe the company complained, but this was a “political problem.”
“We have many elements to respond (with),” said López Obrador. “We will defend ourselves.”
The Mexican Ministry of Economy said on Wednesday, “The Mexican government expressed its willingness to achieve a mutually satisfying solution during the consultation phase.”
Mexico announced Wednesday night that they had received similar notifications from Canada related to their electricity law.
WHAT IS HAPPENING RIGHT NOW?
The consultation phase between the sides should start in 30 days.
If the two countries cannot reach an agreement after 75 days of discussion, the US can ask for intervention by the dispute resolution panel based on the US-Mexico-Canadian agreement which can result in sanctions against Mexico if the United States wins.
