Alliance Announcements

• On July 1, AFTE released a statement on the two-year anniversary of the United States-Mexico-Canada Agreement (USMCA), urging the Biden-Harris administration to fully enforce the agreement in Mexico. Politico Weekly Trade referenced the statement in its July 5th and July 11th newsletter editions.

• On July 12, AFTE Executive Director Brian Pomper was quoted in The Hill prior to President Biden’s meeting with Mexican President López Obrador (AMLO) at the White House.

• On July 20, AFTE released a statement commending the U.S. Trade Representative’s request for dispute settlement consultation with Mexico under the USMCA over Mexico’s unfair energy policies and urging USTR to pursue more enforcement actions to bring Mexico into full USMCA compliance within other sectors as well. AFTE’s statement was included in USTR’s round-up of media and industry responses to the announcement, as well as articles from The Wall Street Journal and Fortune.

In the News

• U.S. HOSTS FIRST IPEF MINISTERIAL MEETING: Secretary of Commerce Gina Raimondo and U.S. Trade Ambassador Katherine Tai held a ministerial meeting with the 14 members of the Indo-Pacific Economic Framework for Prosperity (IPEF). They discussed the four pillars of the framework: trade; supply chains; clean energy, decarbonization, and infrastructure; and tax and anti-corruption. (USDOC, 7/27)

• U.S. TAKES USMCA ENFORCEMENT ACTION AGAINST MEXICO: In response to discriminatory energy policies that box U.S. firms out of the Mexican market, USTR requested dispute settlement consultations with the Mexican government. This is the first time the United States has sought consultations with Mexico on a commercial obligation in the USMCA. (USTR, 7/20)

• IPEF LACKS TEETH ON TRADE COMMITMENTS: A leaked ministerial statement on the Indo-Pacific Economic Framework lacks specific trade commitments and instead only provides broad mentions of trade. (Inside U.S. Trade, 7/18)

• BIDEN MTG W/ AMLO AMID USMCA VIOLATIONS: Presidents Biden and López Obrador met in Washington just after the two-year anniversary of USMCA entering into force. While the two leaders discussed U.S.-Mexico trade, they didn’t address the full range of Mexico’s USMCA violations. (White House, 7/12)

• OP-ED – WTO SHOULDN’T DO MORE DAMAGE WITH IP WAIVER: PhRMA President and CEO Stephen Ubl penned an op-ed condemning the World Trade Organization’s decision to suspend intellectual property protections on Covid-19 vaccines and urging against expanding the waiver to include Covid-19 treatments and diagnostics. (Modern Healthcare, 7/12)

• FREE TRADE IMPROVES CLIMATE RESILIENCE: The World Economic Forum released an explainer for how countries can use international trade to adapt more easily to changing climate patterns. (World Economic Forum, 7/8)

• GLOBAL TRADE HITS RECORD HIGH IN Q1 2022: UNCTAD’s Global Trade Update revealed a record $7.7 trillion value for global imports and exports in the first quarter of 2022. This metric is a trillion-dollar increase from the first quarter of 2021. (UNCTAD, 7/7)

Spotlight on Enforcement
(If you only focus on one enforcement issue this month, it should be this one.)

USTR just took a major step to enforce the United States-Mexico-Canada Agreement by calling for dispute settlement consultations with Mexico over the country’s discriminatory energy policies. This is the first time the United States has sought consultations with Mexico on a commercial obligation in the USMCA.

Under the Agreement, consultations begin 30 days after a request to begin consultations. If the government of Mexican President Andrés Manuel López Obrador (AMLO) continues to violate trade commitments, the process could eventually lead to new tariffs levied on Mexican goods imported into the United States to encourage Mexico to come into compliance with its USMCA obligations.

Specifically, the United States is challenging four Mexican policies: Laws passed in 2021 that give the state-owned Federal Electricity Commission (CFE) advantages over private-sector producers; inaction and delay on allowing private energy companies to operate; a 2019 regulation granting an extension to comply with diesel fuel standards exclusively to state-owned oil producer Pemex; and a 2022 policy that gives CFE and Pemex priority use of Mexico’s natural gas transportation network.

Though some of these policies are new, they are part of a years-long campaign by AMLO to drive private, foreign energy investment out of Mexico — even though this would increase both electrical generation costs and the country’s greenhouse gas emissions, according to both a U.S. Energy Department analysis and AMLO’s own domestic opposition.

While this enforcement action is good news, there’s still more to be done, both in the energy sector and beyond.

Recently, the Mexican president spearheaded legislation to nationalize lithium deposits, a key ingredient in electric-vehicle batteries. Mexico also has yet to bring its intellectual property regime into full compliance with the USMCA and earlier this year passed a worrisomely ambiguous law banning the unauthorized use of indigenous art and design. Additionally, expanded food labelling requirements have banned sales of U.S. packaged goods to minors in key Mexican states, restricted U.S. exports, and increased legal uncertainty, generating excessive costs and forcing U.S. companies to discontinue the sale of certain products.

Some five million U.S. jobs depend on trade with Mexico, not to mention billions of dollars in economic output. USTR needs to keep up the pressure and enforce Mexico’s USMCA commitments in other areas where it is falling short.