[CTC] AMLO’s Oil Stand Keeping U.S., Mexico From Nafta Agreement

[Arthur Stamoulis]

https://www.bloomberg.com/amp/news/articles/2018-08-24/amlo-s-oil-stand-said-to-keep-u-s-mexico-from-nafta-agreement?__twitter_impression=true

AMLO’s Oil Stand Keeping U.S., Mexico From Nafta AgreementBy
Eric Martin <https://www.bloomberg.com/authors/AOaOh6XkAJY/eric-martin>
 and
Amy Stillman <https://www.bloomberg.com/authors/ASuSK0zdXsU/amy-stillman>
August 24, 2018, 1:30 PM EDT

   - President-elect said concerned investor protections too broad
   - Nafta representative met with Lopez Obrador team on Thursday


The incoming Mexican administration’s split with the current leadership
over opening up the oil and gas sector for investment is emerging as a key
hurdle for a bilateral agreement over Nafta, according to two people
familiar with negotiations. The peso reversed gains.

President-elect Andres Manuel Lopez Obrador’s Nafta representative, Jesus
Seade, has asked the Trump administration to address concerns that
U.S.-proposed language in the new Nafta deal would put too many
restrictions on how they can treat foreign companies looking to tap the
nation’s crude, according to the people, who asked not to be named
discussing private negotiations.

U.S. Trade Representative Robert Lighthizer has pushed back, and Seade has
been shuttling back and forth between Washington and Mexico City to try to
smooth out the issues, according to the people.

While Mexican President Enrique Pena Nieto’s government is officially in
charge of the negotiation, any Nafta deal will need Lopez Obrador’s support
because it needs to pass a Mexican Senate controlled by his allies, and it
will be up to his government to implement it. Lopez Obrador will be sworn
in Dec. 1.

After gaining as much as 1.2 percent to 18.7787 per dollar in early trading
Friday, the peso reversed gains to trade at 19.0527.
Trade Talks

Seade on Thursday night rejected the idea that the energy issue has become
controversial, but said that adjustments need to be made in the Nafta deal
language to reflect Mexican sovereignty and rights regarding hydrocarbons
in a way that isn’t confusing.

“It’s not about not touching the energy reform, but it’s touching it in the
right way,” Seade told reporters in Mexico City late Thursday. “The U.S.
has had this drafted up to the last comma for some time, so if you change a
single comma, then it needs to be discussed. But we’re discussing it, and
this is going to come out OK."

Nafta talks are poised to spill into next week, pushing up against the goal
for a deal by the end of the month, as the U.S. and Mexico work out their
issues before Canada is expected to rejoin the talks. For the past five
weeks, the talks between the U.S. and Mexico have largely focused on
narrowing differences over the rules governing auto production in North
America.

While President Donald Trump has floated the idea of negotiating bilateral
trade accords starting with Mexico, his Nafta partners have both said they
want to keep a trilateral deal.

Mexican Economy Minister Ildefonso Guajardo declined to comment on the
energy issue when approached by a reporter as he entered USTR headquarters
Friday morning. Seade visited USTR alone Tuesday afternoon and returned
with Guajardo’s team Wednesday, leaving before them to catch a flight back
to Mexico City.

Lopez Obrador’s team "is not against investors, it is in favor of making it
so that Mexico can develop its energy industry as it wishes, with private
or public investment," Jesus Ramirez, a spokesman for Lopez Obrador, said.
Pena Nieto "would like to make it so that the Mexican economy is only part
of the international market,” he added.

Seade said Thursday that he thinks it should be possible for Canada to
return to negotiations in Washington next week even if the U.S. and Mexico
need to continue to work on their bilateral differences at the same time.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826
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