Former US president Donald Trump was frequently in conflict with Mexico over what he saw as his mission to keep automobile industry jobs within the US, a key part of his ‘Make America Great Again’ agenda. Now, there is a potential for conflict with the administration of President Joe Biden and his ‘Build back Better’ programme. This time the battle is about electric vehicles (EVs).
On 2 December the Mexican government announced that it was considering legal action against the US, over provisions in President Biden’s ‘Build Back Better’ Act which would give subsidies of up to US$12,500 per vehicle for US EV buyers, providing that the vehicles are made in the US by plants where the labour force is unionised.
Mexico’s economy minister, Tatiana Clouthier, said that the arrangement would violate non-discrimination clauses in the United States-Mexico-Canada Agreement (USMCA). She argued that it would hurt potential Mexican EV exports and unfairly protect US-based EV manufacturers.
Clouthier went on to suggest that Mexico might consider trade reprisals (a very Trumpian tactic) or, alternatively, make a case before the World Trade Organization (WTO). Clouthier also argued that giving the US manufacturers’ preferential treatment would accentuate irregular migration flows in North America.
Biden’s bill is expected to come up for a vote in the US senate in mid-December. By attacking it, however, Mexico leaves itself open to the charge of applying double standards: Mexico’s proposed power industry reform bill aims to provide preferential treatment for the state-owned electricity company Comisión Federal de Electricidad (CFE) at the expense of renewable power generators.
- Energy reform
Mexico’s proposed power-industry reform bill would give the state-owned electricity company CFE a dominant market share (“at least” 54%) and seeks to reduce supply unilaterally from US and other foreign-owned, Mexico-based, renewable power generators, as well as banning self-generation by large companies. As such it can also be described as discriminatory.
In November the US ambassador to Mexico, Ken Salazar, said Washington had “serious concerns” about the Mexican electricity industry reform. It is possible, however, that the two sides might ultimately negotiate some kind of compromise or quid-pro-quo that links the two cases.