President Joe Biden's administration has reportedly opted to escalate a trade dispute with Mexico, making plans to demand that its neighbor to the south opens up its power and oil markets to US suppliers or face an arbitration and the threat of retaliatory tariffs.
The demand will be made in the coming weeks through an "act now or else" notice to Mexico City from US trade officials, Reuters reported on Monday, citing unidentified people familiar with the discussions.
At issue is Mexican President Andres Manuel Lopez Obrador's decision to roll back reforms aimed at opening Mexican energy markets to outside competitors - allegedly in violation of the 2018 US-Mexico-Canada Agreement (USCMA), a trade deal that requires the countries to curtail protections of state-owned enterprises.
The US and Canada last July requested settlement talks with Mexico on the energy dispute. Having made little progress since then, the Biden administration has decided to ratchet up the pressure by making a so-called "final offer" requiring Mexican officials to eliminate trade barriers and agree to increased oversight.
If they refuse, the US will request that the row be settled by an independent panel, as called for under the USCMA. If Mexico loses that arbitration and still declines to take corrective action, the US and Canada could impose billions of dollars in punitive tariffs on Mexican goods.
Comment: It wouldn't be a surprise if the 'independent panel' was not so independent.
Comment: Operating 'off script', AMLO is expected to fulfill US demands or face consequences. Threats will likely increase as Mexico bids to join BRICS.