U.S. Expresses ‘Serious Concerns’ Over Mexico’s Electricity Plan

(Bloomberg) -- The U.S. has “serious concerns” about the nationalist electricity reform proposed by Mexico’s president, ambassador Ken Salazar said, echoing increasing congressional criticism of the nation’s treatment of private companies.

“I want to learn more about the impetus for the proposed constitutional reform,” Salazar said in a Tweet late Wednesday.

Mexico’s carbon emissions risk soaring by as much as 65% and electricity costs could jump if the changes to the constitution are adopted, according to a draft of a report by the U.S. Energy Department’s National Renewable Energy Laboratory seen by Bloomberg News.

Salazar’s comments came after dozens of Republican lawmakers urged the Biden administration to pressure Mexico over discriminatory actions that hurt U.S. energy companies and workers.

President Andres Manuel Lopez Obrador’s plans to privilege the state oil and electricity companies violate the terms of the U.S.-Mexico-Canada Agreement on trade that his administration signed last year, the 40 lawmakers wrote in a letter dated Wednesday. The signers include Texas Representative Michael McCaul, the top Republican on the House Foreign Affairs Committee.

“The overwhelming list of discriminatory actions has long passed the point of ‘merely’ raising serious questions,” about Lopez Obrador’s commitments to the letter and spirit of USMCA, the lawmakers said. “They actually suggest that the Mexican government is proactively attempting to enact policies and take actions that violate and undermine the treaty. Recent reports of discriminatory actions against U.S. companies require a timely and clear response.”

AMLO, as the Mexican president is known, has always opposed energy reforms enacted in 2013-14 that ended almost eight decades of energy nationalization. Since taking office in late 2018, he’s vowed to return the state-owned oil company Petroleos Mexicanos, known as Pemex, and electricity utility CFE to their former glory by scaling back private sector participation in the industry.

Read more: How AMLO Push for Electricity Revamp Is About Power: QuickTake

The comments come with Lopez Obrador set to visit New York next week to participate in the United Nations Security Council session, only his second trip outside Mexico since taking office almost three years ago. Mexico, which annually vies with Canada and China for the top U.S. trade partner, also has recently clashed with the Biden administration over rules for regional automotive content in the USMCA.

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