The United States-Mexico-Canada Agreement: Energy Production and Policies

Abstract

The focus of this USMCA report is on the challenges posed by the energy reforms undertaken by the previous Mexican administration; the limitations the United States-Mexico-Canada Agreement imposes on changes in Mexico’s energy policies (such as restricting investment in the sector); other USMCA provisions that could affect energy; and a critique of Mexican President Lopez Obrador’s early energy-related policy decisions. It also includes a summary of changes in the legal treatment of U.S.-Canada energy relations under the USMCA compared to Chapter 6 of NAFTA. The success of the López Obrador presidency may well depend on its energy policies, including his treatment of the bloated, inefficient state-owned oil company, Pemex, and the ability to continue to attract foreign investment in the hydrocarbons sector. Because energy exports are a major source of foreign exchange for Mexico, maintaining and increasing energy export earnings are critical to generating the revenues the President will require to carry out many of his domestic reforms, including those designed to improve the lives of Mexico’s poor.

Keywords: NAFTA, USMCA, Mexico, Pemex, petroleum, Lopez-Obrador, international trade