The trade dispute with the United States and Canada will cost Mexico up to 30 billion US dollars

Mexico can receive between 10 billion US dollars and 30 billion US dollars in tariffs if you lose the trade dispute with the United States and Canada, according to former officials who negotiated the deal under which the dispute arose.

The United States and Canada requested consultations to resolve disputes under the Agreement between the United States, Mexico and Canada, known as T-MEC, On the pretext that Mexico is violating the North American Free Trade Agreement with its actions To prioritize energy from your state utility company over private renewable energy companies. Both countries point out that the policies of President Andres Manuel Lopez Obrador, known as AMLO, have led to the denial and elimination of the ability of US companies to operate in the Mexican energy sector.

Mexico discusses rate increases equal to those in the US, something that appears to be “exaggerated”

If no solution is found and Mexico loses the dispute, in the summer of 2023, the United States and Canada can impose tariffs Equivalent to the losses suffered by their companiesKenneth Smith Ramos, who was T-MEC’s ​​lead negotiator for Mexico until 2019, said in an interview. Former Economy Minister Ildefonso Guajardo, now an opposition lawmaker, said the same in an interview with Mexican journalist Carmen Aristegui.

US officials have already been martyred Losses range from $10 billion to $30 billionBloombergNEF estimates that at least $22 billion in private investment is at risk.

“It seems very difficult to resolve this during the consultation period because the violations are so subtle and specific,” Ramos said, who called it one of the costliest trade disputes since the USMCA’s predecessor came into force in 1994. “Reviewing two AMLO fundamental laws.”

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Guajardo added that the dispute could have a broad impact beyond Mexico’s energy sector, affecting automakers and farmers.

Damage to the attractiveness of investors

In the end, the battle can It hurts the attractiveness of Mexico and North America to investors Just as the region is expected to witness a commercial boom.

Amid disruptions in shipping networks, rerouting supply chains from Asia could boost exports by billions of dollars for Latin America’s second-largest economy, Luis de la Calle said in an interview, but the trade dispute puts risks in part. A report by the Inter-American Development Bank estimated the value of The annual value of Mexico is more than 35,300 million US dollars.

Economic problems in China and Europe have made North America the most competitive region in the world at the moment, de la Calle said, adding that if the three countries fail to reach an agreement, the main cost will be the opportunity cost for Mexico and North America not to benefit from the international context that tends to strongly to the area.

According to the rules of T-MEC, the request said Mexico will give up to 30 days to agree to schedule consultations. If no agreement is reached after 75 days, the United States can ask a formal commission to hear the two countries’ arguments. Although this process focuses on getting Mexico to agree to corrective measures, protracted disputes could eventually lead to the United States imposing punitive tariffs on imports from Mexico during the two-year trade agreement.

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Lopez Obrador, better known as AMLO, defended his policies on Thursday, saying the oil sector is exempt from the trade pact, an argument that Smith and other trade experts contested. And the president played, on Wednesday, in his daily press conference, a song titled “Oh, how scary”, which seems to lessen his fears. He also said he was protecting the country from “greedy companies,” and added that by launching the dispute, the Biden administration risked appearing to support “rogue” companies.

Lopez Obrador worked to return to the country Energy independence through the support of the state oil company Petroleos Mexicanos, better known as Pemex, and the state electric company CFE. The government has refused to grant permits for a number of semi-completed foreign energy projects.

“We’re looking at a potential train wreck between the United States, Mexico, and Canada,” Smith Ramos said.


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