US President Donald Trump and his Mexican counterpart Enrique Peña Nieto’s conference call to publicly announce the successful conclusion of a preliminary NAFTA 2.0 between the US and Mexico calls for a closer look at its implications for President-Elect López Obrador’s upcoming oil and gas policy.
In the first enacted version of NAFTA in 1994, the Mexican government kept its oil and gas industry out of the negotiations. Now, with Mexico’s new energy model, the upstream, midstream and downstream sectors are open for business and NAFTA 2.0 seeks to reflect this new reality. López Obrador’s transition team members, however, had a different idea in mind. Led by chief negotiator Jesús Seade, who joined the negotiating table on July 26, 2018, López Obrador’s team wanted to avoid the inclusion of an energy investment chapter in the agreement. The prospect of cementing the unlocking of Mexico’s oil and gas industry in NAFTA 2.0 caused a standoff with the incumbent administration’s negotiating team.
However, López Obrador’s chief negotiator, Seade, said the chapter was rather refocused and rewritten to guarantee investment protection and ensure the Mexican government’s public policy scope in energy is reflected and coherent with the Mexican Constitution. In essence, Seade attributed concerns to disagreements over form and writing rather than the essence of NAFTA 2.0’s energy chapter. From the agreement’s standpoint, the legal structure born from Mexico’s Energy Reform will then serve as the basis for NAFTA’s 2.0 trade dynamics related to the industry.
The joint statements of the US and Mexico’s presidents dissipated the fear of a prolonged deadlock. Now, all eyes are turned toward Canada as it prepares to rejoin the negotiating rounds.
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