US House Budget Chairman Jodey Arrington introduced the Mexican Energy Trade Enforcement Act last week, legislation designed to provide the US President and Trade Representative with congressional backing to hold Mexico accountable for alleged breaches of investment commitments under USMCA.
The bill is co-led by Representatives Carol Miller and Henry Cuellar, both co-chairs of the Congressional Energy Export Caucus. Arrington said the measure is needed because “Mexico gave its state-run oil and power companies preferential treatment while shutting out American competition,” while past US administrations had not enforced USMCA commitments.
The legislation, according to the release, would empower the US Trade Representative to initiate dispute-settlement or enforcement mechanisms against Mexico for what are described as violations of USMCA energy-investment provisions. These include alleged barriers to US energy producers seeking fair treatment in Mexican markets. The US Chamber of Commerce and various industry associations, such as the American Petroleum Institute and the Energy Workforce & Technology Council, expressed support for the bill, citing that American companies are owed more than US$1.2 billion by PEMEX and claiming systematic disadvantages in Mexico’s energy market.
Implications for Mexico’s energy sector could be significant. If the bill advances, Mexico may face formal US trade-sanction risk or enforcement actions under USMCA. Mexican policies favouring state-owned firms in hydrocarbons, electricity generation and storage contracts have been cited as inconsistent with USMCA commitments. The potential escalation could affect foreign investment sentiment in Mexico’s energy markets, add pressure on regulatory transparency and market access, and influence negotiations around Mexico’s upcoming round of energy contract awards. Moreover, Mexico’s efforts to attract upstream investment or liberate natural-gas pipelines could be placed under increased foreign scrutiny, potentially reshaping bilateral energy-investment dynamics.
The bill adds a new dimension to bilateral energy relations as Mexico advances reforms aimed at strengthening its sovereign control over energy infrastructure and projects led by state-owned enterprises. The US initiative may compel Mexico to revisit its regulatory framework and investor-state dispute risk ahead of planned auctions and private-sector participation in the energy sector. Given the interconnectedness of US–Mexico energy trade, including pipeline exports, cross-border power flows and LNG supply chains, the act has the potential to influence a wide array of projects tied to both countries’ energy and trade strategies.
The release notes that Mexico agreed under USMCA to prevent unfair treatment of US investors in Mexican energy markets, particularly where state-owned enterprises operate. The new bill signals that the US is seeking stronger enforcement tools and that energy trade issues may become a focal point in the US–Mexico economic relationship going forward.