Alliance Announcements

• On March 1, AFTE released a statement ahead of POTUS’ State of the Union Address. AFTE urges President Biden to recommit his administration to a robust trade agenda that prioritizes investment in innovation and creates a level playing field between the United States and its trading partners. You can read AFTE’s full statement here.

In the News

• The United States Trade Representative released its 2022 Trade Policy Agenda today, highlighting USTR’s work over the last year on labor enforcement, supply chains, and sustainability, among other issues. (Office of the U.S. Trade Representative, 3/1)

• The United States Chamber of Commerce released its International IP Index for 2022. The Index benchmarks the intellectual property frameworks of global economies and serves as a helpful tool for evaluating IP protections in foreign markets. Since the Index’s first edition ten years ago, the average score for all economies has improved by 1.5%. (U.S. Chamber of Commerce, 2/23)

• Director of the Africa Centres for Disease Control and Prevention, John Nkengasong, requested that all Covid-19 vaccine donations be paused until the third or fourth quarter of 2022 and stated that “the primary challenge for vaccinating the continent is no longer supply shortages but logistics challenges and vaccine hesitancy.” (Politico, 2/22).

• Global health experts Dr. Vanessa Kerry and Polly Dunford penned an op-ed about reinforcing the international health workforce to improve Covid-19 vaccine distribution, as inadequate healthcare infrastructure and other logistical issues pose the biggest challenges to global vaccination efforts. (Barron’s, 2/11).

• The United States Chamber of Commerce published a report detailing the benefits of digital trade and the potential gains to U.S. workers and companies from a global digital trade agreement. As the report explains, the digital economy is growing almost three times as quickly as the entire U.S. economy. (U.S. Chamber of Commerce, 2/9)

• The United States Climate Envoy John Kerry urged Mexican President Andrés Manuel López Obrador not to breach USMCA through his proposed energy industry reform. You can read more about Mexico’s discriminatory energy practices in this letter from AFTE to U.S. Trade Ambassador Katherine Tai and in our “Spotlight on Enforcement” section below. (Reuters, 2/9)

• Despite ongoing pandemic-related strains on the global economy, global trade has surpassed its pre-crisis level and was projected to increase by 2.4% in February. (Kiel Institute for the World Economy, 2/7)
   
• Former chair of the House Democratic Caucus Joe Crowley penned an op-ed arguing Covid-19 vaccine distribution logistics are complicated by global healthcare infrastructure and vaccine hesitancy, rather than intellectual property protections. (International Business Times, 2/6)

Spotlight on Enforcement

Mexican President Andrés Manuel López Obrador (AMLO) introduced a constitutional reform bill that would put Mexico’s energy sector in direct violation of the United States-Mexico-Canada Agreement (USMCA). AMLO’s latest maneuver is the culmination of a years-long campaign to drive private energy investment out of Mexico — and it has dire consequences for U.S. energy providers. If passed, the bill would eradicate competition in Mexico’s power generation sector and grant Mexico’s state utility company complete monopoly power and regulatory authority over the industry.

Under its USMCA commitments, Mexico must guarantee open, competitive markets and equal treatment to all entities, regardless of their foreign or domestic status. Yet if the constitutional reform bill passes, it would revoke all electric generation permits, cancel all power purchase agreements, and end all self-supply contracts and Clean Energy Certificates previously granted to private companies. It would also grant Mexico’s state utility company the exclusive right to supply 54% of the power required nationwide, regardless of cost competitiveness, and would subsequently reduce private sector participation from 62% to 46%. If it passes, the bill will cost private investors worldwide approximately $45 billion.

The move would be disastrous for a developing country in need of competitive electricity prices to support manufacturing and benefit consumers. Currently, the most affordable electricity suppliers are granted dispatch priority, which incentivizes cost-efficiency. An independent regulatory commission known as the Comisión Reguladora de Energía (CRE) is responsible for overseeing and pricing energy sales, thereby further ensuring competition. If the energy reform passes, the CRE would be eliminated and private companies would be forced to sell their supply directly to Mexico’s state-owned utility company, giving it complete price-setting power.

The constitutional reform would also destroy Mexico’s budding wind and solar energy industry, while stunting U.S. advances toward a clean-energy future. Preliminary analysis by the U.S. Department of Energy concludes that the reform would increase Mexico’s greenhouse gas emissions and electricity generation costs by up to 65% and 54%, respectively. American companies who operate in Mexico — like Walmart or Ford — would also struggle to achieve their net-zero targets because of limited access to clean energy.

AMLO seems intent on seeing this constitutional reform through, despite its direct violations to USMCA and the toll it would impose on clean energy initiatives. The Biden administration should protect the fair market access guaranteed by USMCA and oppose Mexico’s nationalist energy policies.