MEXICO CITY / OTTAWA (Reuters) – As Mexico entered into a new trade agreement with the United States and Canada on July 1, a group of Canadian energy investors warned their government that Mexico may already be violating the agreement for failing to honor contracts. .
FILE PHOTO: Trucks wait in a long queue for border customs control to cross into the United States, at the World Trade Bridge in Nuevo Laredo, Mexico, June 30, 2020. REUTERS / Daniel Becerril
In a letter to Canadian Deputy Prime Minister Chrystia Freeland, Finance Minister Bill Morneau, Foreign Minister Francois-Philippe Champagne, and other officials, four companies expressed concern about the threat of their Mexican investments and urged the government to pressure Mexico on the matter.
The letter, seen by Reuters, adds to evidence of frustration among investors over energy policy under President Andrés Manuel López Obrador, just as Mexico is trying to revive its battered economy from the impact of the coronavirus.
Canada, a former ally of Mexico and one of the country’s main sources of foreign direct investment (FDI), has already expressed concern about López Obrador’s energy policy.
Arguing that Mexico must forge a more important role for the state in energy policy and become more self-sufficient, López Obrador says that previous Mexican governments skewed the market in favor of private investors, raising prices for the public.
The President has tried to renegotiate contracts worth billions of dollars to obtain better conditions for taxpayers.
Foreign companies, which were given more leeway to invest in Mexico under a 2013-14 energy reform enacted by López Obrador’s predecessor, deny having increased costs to the public. They say the government is not abiding by existing agreements.
In the letter, Canadian Solar Inc, Atco Ltd, Northland Power Inc and JCM Power cited decisions to suspend testing of new renewable energy plants and limit the development and operation of power plants as steps that could jeopardize their projects. in Mexico.
Mexican courts have temporarily suspended some of the measures, pending a decision by the Supreme Court. However, disputes over a variety of energy policy decisions date back to last year and have fueled uncertainty among investors.
Northland Power spokesman David Timm confirmed that the company signed the letter, but declined to comment further, saying there are ongoing talks with both governments.
Ryan Nearing, spokeswoman for International Trade Minister Mary Ng, who was also sent the letter, said Canadian companies have indicated they are concerned about recent measures taken by the Mexican government that affect their energy investments.
“Canada shares these concerns, as Canadian companies have invested nearly $ 9 billion in the energy sector, including more than $ 3.1 billion in renewable energy,” said Nearing.
Ng raised this issue on May 29 with the Mexican economy minister, Graciela Márquez, and two agreed to hold a dialogue on it, Nearing added. The Canadian embassy in Mexico has also been actively involved with the Mexican government in the matter, he said.
The other companies did not immediately respond to requests for comment, nor did the Mexican Ministry of Energy.
The four companies have various investments in Mexico, including solar and hydroelectric power projects.
The letter, which was also addressed to the Minister of Natural Resources Seamus O’Regan and the Minister of the Environment Jonathan Wilkinson, was dated July 1, the same day that the trade agreement known as the United States Agreement entered into force- Mexico-Canada (USMCA).
Mexico’s actions risked breaching commitments under the USMCA and other trade agreements it had signed, the firms argued.
Six weeks earlier, Canada and the European Union sent letters to the Mexican government warning that their changes in energy policy could negatively affect billions of dollars in renewable energy generation projects.
In their letter, the energy companies proposed to discuss what diplomatic channels could be opened to ensure that the Mexican government respected commitments to Canadian investors.
In the past two decades, Canada has been the third largest source of foreign investment in Mexico, after the United States and Spain, according to data from the Mexican government.
Last year, total Canadian investment was worth more than $ 2.9 billion, or about 8.7% of the total, the figures show.
Reports by Dave Graham in Mexico City and David Ljunggren in Ottawa; Additional reports from Jeff Lewis in Toronto, Ana Isabel Martinez in Mexico City
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