NAFTA: Oil & gas 'reforms' - included in negotiations?

NAFTA: Oil & gas 'reforms' - included in negotiations?

Postby Oscar » Sun Sep 03, 2017 10:34 am

Climate-killing oil & gas 'reforms' could be entrenched through NAFTA 2.0 negotiations

[ ... gotiations ][

September 3, 2017 - 9:28 am

(PHOTO: Running away from taking the action needed to confront the climate crisis? A Justin Trudeau and Enrique Pena Nieto photo-op in Ottawa, June 2016.)

The second round of NAFTA negotiations is happening now (September 1-5) in Mexico City. Reuters reports, "U.S., Canadian and Mexican negotiators are zeroing in on ways to enshrine Mexican President Enrique Pena Nieto’s sweeping energy reforms into a modernized North American Free Trade Agreement, Mexico’s chief negotiator said on [September 2]. The 2014 reforms wrung control of the country’s oil and gas sector from state hands, opening it up to private investment, and incorporating them into the 23-year-old NAFTA is seen as a way to help preserve them for the long term."

As I noted in this December 2013 blog [ ... ses-mexico ] -- Bloomberg reports, "Mexico will end 75 years of government control of its vast oil reserves after Congress approved the nation’s most significant economic reform since the North American Free Trade Agreement." The reform passed will mean that private corporations can now explore and extract oil and gas under licenses and production or profit-sharing agreements. "The reform could increase foreign investment by as much as $15 billion annually [and] industry analysts and the bill’s authors say the overhaul will ... increase production to as much as 4 million barrels per day by 2025 [from the current 2.5 million barrels a day now extracted]. ...Natural gas production would almost double to as much as 10.4 billion cubic feet by 2025 from current output of 5.7 billion feet, according to the bill."

That blog also highlighted that easing restrictions on foreign investment could mean more highly water-intensive shale gas fracking and make deep water oil and gas exploration attractive to foreign investors.

Bringing Mexican energy into NAFTA also implies the proportional sharing provision. That provision means that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Author-activist Gordon Laxer has commented, "Proportionality, the de facto, mandatory-exporting clause applies only to Canada, since Mexico refused it."

In May, the Los Angeles Times reported, "Duncan Wood, director of the Mexico Institute at the Washington, D.C.-based Wilson Center, [said] many Mexican government officials look forward to putting energy on the negotiating table because, with a Mexican presidential election coming in 2018, it would give the officials a chance to ensure Mexico’s energy reform policies stay in place regardless of political fortunes."

Now Kenneth Smith, Mexico's chief trade negotiator, says, “We’re working in this sense, analyzing all of the elements that need to be included in the energy discussion to reflect the reform Mexico established... [Negotiators will] look for mechanisms that allow us to integrate ourselves in a positive way in the energy sector.”

The Mexican general election will take place on July 1, 2018. A poll conducted by the newspaper Reforma in July showed that Andrés Manuel Lopez Obrador’s left-wing National Regeneration Movement (MORENA) had 28 per cent support among decided voters, the center-right opposition National Action Party (PAN) had 23 per cent support, while Nieto’s Institutional Revolutionary Party (PRI) stood at 17 percent.

The Economist has commented, "Mr López Obrador has been an unremitting opponent of measures to modernise the economy, from [NAFTA] to the opening up of the energy market to private investors under Mr Peña in 2014. If elected, Mr López Obrador promises to hold a referendum on energy reform."

Today's Reuters article adds, "Trade experts both in the United States and Mexico have said that increasing energy trade and investments through NAFTA would help reduce the $64 billion U.S. trade deficit with Mexico that irritates U.S. President Donald Trump, partly through increased U.S. gas and oilfield equipment sales to Mexico."

The third round of NAFTA talks is expected to take place September 23-27 in Canada, likely in Ottawa. On April 21, The Globe and Mail reported, "One Canadian official, speaking on condition of anonymity, said bringing Mexican oil and gas under NAFTA would be an attractive prospect in trade talks."

The Council of Canadians opposes the energy proportionality provision in NAFTA, highlights that entrenching Mexico's neo-liberal oil and gas laws through NAFTA 2.0 would only worsen the climate crisis, says that trade disciplines (like the investor-state dispute settlement provision) should not be allowed to impede climate action, and asserts the need for a 100 per cent clean energy economy by 2050.

Further reading:

Will Mexico sign on to the energy proportionality provision in NAFTA? (July 2017)
[ ... sion-nafta ]

McKenna's NAFTA environmental council includes former Shell president (September 2017)
[ ... -president ]

Brent Patterson's blog
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