US pressure for Mexico to reduce the participation of Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) has increased following the submission of an initiative to the US Congress to include controls on the energy sector in the free trade agreement (TMEC). US businessmen argue that the Mexican government favors the two state-owned companies and this limits their investment opportunities in Mexico. The complaint reached lawmakers who drafted a bill requiring the installation of dispute resolution committees in the settlement. Mexico, the United States and Canada plan to review the treaty in July 2026.
The proposal came to the US Congress this week from Representative Jodey Arrington, a Texas Republican, who argues that the renegotiation of the USMCA in 2021 was intended to “open energy markets to US investment”. Arrington points out that Mexico has since failed to meet its energy commitments in the agreement and has hindered competition. The initiative is supported by both Republican and Democratic lawmakers, which increases the chances that it will thrive in the legislative process and become a non-negotiable for the United States.
American entrepreneurs point out that among the sectors in which Pemex and CFE monopolize operations are energy production, natural gas transportation, operation of renewable energy plants and fuel storage. John Murphy, vice president of the American Chamber of Commerce, stressed that the proposal could expand the potential of the treaty and counter political tensions between the two countries. “It is necessary to address new permits to import energy products from Mexico, policies that favor competing Mexican state-owned enterprises, excessive bureaucracy and administrative burdens, and unjustified customs and tax inspections and controls,” the businessman said.
Mexico has gone through several changes in its energy policy over the past decade. In 2014, then-President Enrique Peña Nieto changed the law to open the sector to private investment, something that hadn’t happened in a century. This reform opened up a number of possibilities for the industry, and American companies began to invest in Mexico. At the same time, the role of Pemex and CFE in the market decreased, and both companies even began to coexist with new players. However, after the election of Andrés Manuel López Obrador as president in 2018, the recent opening up of the energy sector has stalled.
López Obrador accused his predecessor of leaving state enterprises without the tools to compete and launched a new state policy whose goal was the country’s energy self-sufficiency. Sheinbaum, as soon as he became president, launched a new energy reform in which state companies returned to making decisions and added the possibility for them to enter into contracts with private companies. In this scheme, for example, the tycoon Carlos Slim opted for the exploration of oil fields in the Gulf of Mexico.
In response to the U.S. statement reaching Congress, the Mexican government responded that it does not engage in “discriminatory treatment against U.S. and Canadian investors.” The Ministry of Energy assured that the entrepreneurs’ accusations are unfounded and that the TMEC already has mechanisms in place to resolve disputes, so a committee would not be necessary. “Mexican legislation maintains and promotes private investments for the development and reactivation of the hydrocarbon and electricity sectors according to clear and transparent rules. An example of this includes the implementation of the new figure of mixed contracts between the private sector and public companies of the State,” he said.
An analysis by the Council of the Americas – an umbrella organization for several US companies – delivered to the Office of the United States Trade Representative (USTR) indicates that, with its preference for Pemex and CFE, Mexico touches on sections of the USMCA related to monopolies of state-owned companies, minimum acceptable investments for a sector and discrimination against businesses. The entrepreneurs point out that the CFE “delays, refuses or does not respond” to requests for permits for renewable energy projects, also that the Mexican state includes among its obligations to do business in the country the disclosure of sensitive commercial information that can then be used by state companies which, in turn, are their competitors. The process of revising the agreement appears increasingly complex.
